REPORT TO COUNCIL
SUBJECT
Title
Action on Agreement for Services with NAZ & CO., dba True Blue Automation Services, for Electrical Support Services for the City's Water, Sewer, and Storm Assets
Report
BACKGROUND
The Water & Sewer Utilities Department (Department) is responsible for the operation and maintenance of 21 water well sites, four water storage tank sites, seven sewer pump stations, and 22 storm pump stations. These facilities rely on a wide range of electrical and control systems equipment, including control panels, generators, motors, pumps, communication equipment, breakers, relays, and other electrical components necessary to support safe and reliable operation.
The Department does not maintain the specialized in-house expertise required to perform electrical troubleshooting, testing, calibration, repair, installation, and control system services for this equipment. Accordingly, the Department has historically contracted with a licensed electrical contractor to provide these specialized services.
On May 25, 2021 (RTC# 21-1078), following a Request for Proposal (RFP) process, the City Council authorized an agreement with NAZ & CO., doing business as True Blue Automation Services (True Blue), to provide on-call electrical and control system services in support of the Department’s utility operations (the “2021 Agreement”).
DISCUSSION
On March 10, 2026, pursuant to Section 2.105.140(c) of the Santa Clara City Code and in preparation for the expiration of the City’s 2021 agreement, staff issued a new RFP for electrical support services, with the award recommendation based on “best value”. The RFP was published on the City’s e-procurement system, which notified 363 vendors, 17 of which downloaded the solicitation documents. One proposal was received by the proposal due date of April 10, 2026, from the City’s current contractor, True Blue.
The limited response is likely attributable to the specialized nature of the services required. The scope of work encompasses not only general electrical services, but also highly specialized work involving water utility infrastructure, including pumps, variable frequency drives (VFDs), Supervisory Control and Data Acquisition (SCADA) systems, and remote terminal units (RTUs). These requirements significantly narrow the pool of qualified firms capable of performing the full range of services required by the Department. Additionally, True Blue was the sole proposer under the City’s previous solicitation and has successfully performed the work for the City without significant issues.
Following a thorough review and evaluation of True Blue’s proposal, staff determined that it satisfied all requirements of the RFP and demonstrated the firm’s ability to successfully perform the required scope of services. Staff also conducted a detailed review of the proposed compensation to determine whether the pricing was fair and reasonable. The evaluation included a comprehensive comparison of the proposed rates against the Consumer Price Index (CPI) over the previous five years, current prevailing wage determinations issued by the California Department of Industrial Relations (DIR) for electricians, and pricing contained in comparable agreements between True Blue and other public agencies for similar services.
Based on this analysis, staff determined that the proposed hourly rates for the Electrician and Automation Engineer classifications were fair and reasonable. However, the proposed rates for the Electrician Apprentice classifications exceeded what could be supported by these same benchmarks. As a result, staff negotiated a 9% reduction to the proposed standard, overtime, and weekend rates for the Electrician Apprentice classifications, as well as the Materials Handler classification.
The negotiated rates appropriately reflect increase in labor costs since the execution of the 2021 Agreement, including inflation and current prevailing wage requirements, while remaining consistent with market pricing for comparable electrical and control system services. Based on the negotiated rates and the results of its comprehensive review, staff determined that the final proposed compensation is fair and reasonable. In addition, True Blue has demonstrated extensive experience providing on-call electrical and control system services for the City and other public and private utility operators, further supporting staff’s recommendation.
Staff recommends awarding a new agreement to True Blue for the proposed five-year term starting on or about September 1, 2026, and ending on August 31, 2031, with a maximum allowable compensation of $1,537,500 throughout the full term of the Agreement. This amount reflects an estimated annual budget of $300,000, while providing flexibility to accommodate fluctuations in annual service needs. Actual expenditures in any given year may be higher or lower than the estimated annual amount, provided that the total compensation does not exceed the Agreement maximum. Rate adjustments may be considered by the City once annually following the initial year of the Agreement, and must be tied to the relevant CPI.
Contractor’s compensation under the agreement is based on time-and-materials according to established hourly rates. Prior to the commencement of any work, the contractor will be required to provide the City with a not-to-exceed estimate of the cost of the specific project, and must receive pre-authorization from the City if that estimate is exceeded once work begins. The City will be invoiced in arrears at the fixed hourly rates for the services. The hourly rates are fully loaded and include wages, overhead, general and administrative expenses, profit, tools, and most equipment required for the work. Any specialty equipment or materials will be invoiced at the contractor’s actual cost plus a 10% markup.
Additionally, the City will require the Contractor to furnish payment and performance bonds, each in an amount equal to 100% of the estimated annual budget of $300,000, or $1,500,000 throughout the duration of the Agreement. A payment bond guarantees that a contractor will pay its subcontractors, laborers, and material suppliers, protecting the City from claims for unpaid project costs. In addition, although performance bonds are not specifically required by statute for contracts of this value, the City is also requiring a performance bond to protect its interests by ensuring the faithful performance of all repair and maintenance services performed under the Agreement. While the bonds must be obtained by the Contractor, the City will reimburse the Contractor for the cost of the bonds, at an estimated annual cost of $7,500 and a maximum of $37,500 throughout the duration of the Agreement. The forms of such bonds will be subject to final review by the City Attorney.
ENVIRONMENTAL REVIEW
The action being considered is exempt from formal environmental review under the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15301(b) (Class 1 - “Existing Facilities”) as the activity consists of the operation, repair, and maintenance of existing public structures, facilities, and mechanical equipment, including publicly-owned utilities, involving negligible or no expansion of the existing use.
FISCAL IMPACT
The cost of the proposed work shall not exceed $1,537,500 over the term of the agreement. The not-to-exceed amount was established based on budgeting projections developed from historical spend and future needs for work of similar nature. The estimated cost of this service is $300,000 annually. There is sufficient funding in the Water & Sewer Utilities adopted operating budget to cover $209,700 of the contract. This will be split with $66,000 funded by existing appropriations in the Sewer Utility Fund and $143,700 covered by the Water Utility Fund. The remaining $90,300 will be funded with the existing appropriations in the Storm Pump Motor and Control Maintenance, Repair and Replacement project in the Storm Drain Capital Fund. The allocations dedicated to each utility fund are a result of a coordinated effort between the Water and Sewer Utilities and the Public Works Department.
COORDINATION
This report has been coordinated with the Finance Department, the Department of Public Works, and the 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 statutorily exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15301(b) of Title 14 of California Code of Regulations;
2. Authorize the City Manager or designee to negotiate and execute an Agreement with NAZ & CO., dba True Blue Automation Services, for electrical support services for the City’s water, sewer, and storm assets, for a five-year term starting on or about August 31, 2026 and ending on October 31, 2026, with maximum compensation not-to-exceed $1,537,500; and
3. Authorize the City Manager or designee to take all actions necessary to implement and administer the Agreement with NAZ & CO. dba True Blue Automation Services, including negotiating and executing future amendments to (i) add or delete related line item services; (ii) implement rate adjustments on the terms provided in Exhibit B, and (iii) make de minimis changes, provided that the total not-to-exceed maximum compensation is not exceeded, subject to review and approval as to form by the City Attorney.
Staff
Reviewed by: John Ramirez, Director, Water & Sewer Utilities Department
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. Agreement for Services between the City of Santa Clara and NAZ & CO., dba True Blue Automation Services