REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Negotiate and Execute Amendments to the Agreement with KONE, Inc. for Citywide Elevator Maintenance and Repair Services to Increase the Total Not-to-Exceed Maximum Compensation to $1,148,452, Inclusive of All Option Years
Report
BACKGROUND
The Department of Public Works (DPW) Facility Services Division oversees elevator maintenance and repair services at multiple City locations, including the Tasman Garage, Santa Clara Senior Center, Santa Clara Police Department, Santa Clara Convention Center Garage, and City Hall. These elevators are critical to continuing operations at these locations. The City uses a contractor to perform preventative maintenance, required testing, and as-needed repairs to ensure safe and reliable operation.
In February 2021, the City Council authorized the City Manager to execute an agreement with KONE, Inc. (KONE) for citywide elevator maintenance and repair services following a competitive Request for Proposals process (RTC 21-1069, Attachment 1). The agreement includes an initial five-year term beginning March 1, 2021 and ending February 28, 2026, with up to five additional one-year options to extend the agreement through February 28, 2031 (Attachment 2). The maximum compensation authorized for the initial five-year term was $413,161, plus an $82,000 contingency, for a total of $495,161.
Subsequent amendments to the agreement added additional City facilities to the scope of services. Amendment No. 1 added Central Park Library (Attachment 3), and Amendment No. 2 added Mission Library (Attachment 4). Both amendments were executed within the City Council authorized maximum compensation.
DISCUSSION
Since contract execution in 2021, KONE has provided preventative maintenance, required annual testing, and as-needed repair services in accordance with the agreement. Maintaining continuity of these services is essential to minimize elevator downtime, address repair needs promptly, and ensure continued safe operations at City facilities.
To continue these services beyond February 28, 2026, staff requests authorization to increase the agreement’s not-to-exceed amount from $495,161 (initial five-year term) to $1,148,452 (an increase of $653,291) to cover the five one-year option periods and associated contingency. Table 1 below provides a summary of the costs under the agreement.
Table 1 - Cost Summary
|
Description |
Amount |
|
Initial Five-Year Term (3/1/21 - 2/28/26) |
$495,161 |
|
Option Year 1 (3/1/26 - 2/28/27) |
$107,000 |
|
Option Year 2 (3/1/27 - 2/29/28) |
$110,210 |
|
Option Year 3 (3/1/28 - 2/28/29) |
$113,517 |
|
Option Year 4 (3/1/29 - 2/28/30) |
$116,922 |
|
Option Year 5 (3/1/30 - 2/28/31) |
$120,430 |
|
Total Option Period (5 Years) |
$568,079 |
|
Contingency (15%) |
$85,212 |
|
Total Not-to-Exceed Maximum Compensation |
$1,148,452 |
Option Years 2 through 5 assume an annual price increase of 3%. KONE may request adjustments to the rates; however, KONE must demonstrate to the satisfaction of the City that any increase is warranted. All price adjustments are subject to the City’s written approval.
A contingency is included to account for unanticipated service requirements and potential rate increases exceeding the assumed amount. Staff will manage expenditures throughout the term of the agreement based on operational needs, provided the overall maximum compensation is not exceeded.
Upon approval, staff will amend the contract to include the additional compensation for the option years and will provide notice of the City’s intent to exercise the option to KONE, as applicable.
KONE, Inc. will be required to pay prevailing wages under the terms of the agreement.
ENVIRONMENTAL REVIEW
The action being considered is exempt for the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15301 “Existing Facilities” as the activity consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities mechanical equipment or topographical features involving negligible or no expansion of use beyond that existing at the time of the lead agencies determination
FISCAL IMPACT
The total not-to-exceed maximum compensation amount the City Council approved on February 23, 2021, was $495,161. The proposed Amendment No. 3 increases the total not-to-exceed maximum compensation amount to $1,148,452. Funding for this amendment is covered by the maintenance budgets for various buildings. Sufficient budget is available to fund anticipated Citywide Elevator Maintenance Services in FY 2025/26 and 2026/27. Costs beyond FY 2026/27 are subject to the appropriation of funds by the City Council.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Determine that the proposed actions are exempt from CEQA pursuant to Section 15301 (Existing Facilities) of Title 14 of California Code of Regulations;
2. Authorize the City Manager or designee to execute amendments to the agreement with KONE, Inc. for citywide elevator maintenance and repair services, to increase the maximum compensation up to $1,148,452, subject to the appropriation of funds and final review and approval as to form by the City Attorney; and
3. Authorize the City Manager or designee to take any actions necessary to implement and administer the agreement with KONE, Inc., including exercising up to five one-year options in accordance with the agreement through February 28, 2031, and to negotiate and execute future amendment(s) to (a) add or delete City facilities and/or related services, (b) adjust rates consistent with market conditions, and (c) make de minimis changes, subject to the above maximum compensation limit and final review and approval as to form by the City Attorney.
Staff
Reviewed by: Craig Mobeck, Director of Public Works
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. RTC 21-1069
2. Original Agreement with KONE, Inc.
3. Amendment No. 1
4. Amendment No. 2