REPORT TO COUNCIL
SUBJECT
Title
Action to Award a Public Works Contract for the Juliette Substation Expansion Project CIP No. 2462 to Par Western Line Contractors, LLC, for a Not-to-Exceed Amount of $12,889,123, Inclusive of a 15% Contingency, Funded by the Electric Utility Capital Fund, and Approve a Related Budget Amendment
Report
BACKGROUND
The City of Santa Clara’s Electric Department, Silicon Valley Power (SVP), issued a public works bid packet to support its Capital Improvement Program (CIP) for the Juliette Substation Expansion Project CIP No. 2462 (Project).
The Juliette Substation was constructed by SVP in the mid-1990s to serve Intel Corporation (Intel) as a single-customer substation. Intel funded the construction of the original facility, which consisted of two transformers. In recent years, Intel has experienced a significant increase in electrical demand due to the continued expansion of its data center operations at this location. Intel requested additional electric capacity to accommodate its load growth which resulted in negotiation and execution of a new Substation Agreement approved by the City Council back in June 2025 (RTC# 25-80). This Substation Agreement establishes the terms under which SVP will increase the electric capacity available to Intel.
To implement the Substation Agreement, the Juliette Substation must be expanded. Intel will fund the substation expansion, including all SVP costs associated with design, procurement, construction, inspection, and testing. To expedite procurement, Intel will procure a third transformer, while the City will contract for the installation of that transformer and for the construction of the required substation improvements. In addition, Intel will pay applicable load development fees for the increased capacity in accordance with the City’s Municipal Fee Schedule in effect at the time fees are due, currently estimated at approximately $10 million.
DISCUSSION
In accordance with Section 1310 of the City of Santa Clara Charter, which governs the competitive bidding for public works, a competitive Request for Bids (RFB) for the Project was published on the City’s e-procurement system.
The RFB was initially published on September 8, 2025, with a bid opening held on October 2, 2025. No bids were received.
Staff subsequently republished the RFB on October 15, 2025. On November 18, 2025, two bids were received, as shown below:
|
Bidder |
Bid Amount |
|
Par Western Line Contractors, LLC |
$11,207,933 |
|
Rosendin |
$12,623,505 |
Both bids were below the Engineer’s Estimate of $14,597,644. However, upon review, both bids were deemed non-responsive due to material deviations from the bid requirements. Par Western Line Contractors, LLC (Par Western) was deemed non-responsive due to the inclusion of additional or conflicting contract language. Rosendin was deemed non-responsive due to its failure to submit the required subcontractor list document. As a result, staff rejected both bids.
Generally, California law recognizes that public agencies may dispense with formal competitive bidding requirements where they are determined to be impractical or impossible, where competitive bids would be an “idle act,” or where the bidding process is not likely to produce an advantage to the agency. Statutorily, this principle is contained in Public Contract Code section 20166 (PCC 20166). PCC 21066 provides, in part, in a formal competitive bid process, if no bids are received, or all bids are nonresponsive, a public agency may award a contract through an alternative process. In this case, as discussed above, there have already been two failed formal bid processes. The first bid process resulted in no bids being submitted, and the second resulted in two bids being submitted that were both “non-responsive.” After analyzing this situation, staff have determined that reissuing the bid a third time would be unlikely to yield a different result and would further delay completion of the Project. Additional delays would also increase staff time and administrative effort and could expose the City to higher project costs due to labor availability and market conditions. After determining that further bidding would be impractical and to no further advantage, as contemplated by applicable law, staff pursued an alternative approach. Following the bid rejection, staff contacted Par Western, the lowest of the two bids received, to determine if the non-responsive aspect of their bid could be eliminated. After discussions, Par Western removed all proposed “non-responsive” contract changes and confirmed its willingness to accept the contract, and the amount, as originally bid. Staff have verified that Par Western possesses the required qualifications and licenses and is an existing vendor in good standing with the City. Accordingly, staff recommend that the City Council waive the competitive bid requirements and proceed to authorize a direct award of the project to Par Western.
The recommended contract with Par Western includes a maximum compensation of $11,207,933, plus a 15% contingency, or $1,681,190, for any potential change orders, for a total not-to-exceed contract amount of $12,889,123. The scope of work under this public works contract includes replacing two existing end-of-life transformers with two City-supplied transformers, installing one new customer-supplied transformer, expanding the existing grounding grid, modifying bus work and foundation pads as needed to accommodate the new transformers, and resurfacing the substation. Upon completion, the Juliette Substation will continue to be owned, operated, and maintained by SVP up to the point of interconnection with Intel’s equipment.
Approval of the contract award will authorize the City Manager to execute the public works contract for the Juliette Substation Expansion Project Contract No. 2462 in substantially the same form as attached to this Report to Council (Attachment 1). Upon City Council approval, Par Western will be required to provide performance and payment bonds. The contract includes prevailing wage requirements.
Upon execution of the contract, construction is anticipated to begin in April 2026, with completion expected in April 2027.
ENVIRONMENTAL REVIEW
Staff recommend that the City Council determine that the Project and associated actions being considered are exempt from the California Environmental Quality Act (“CEQA”) pursuant to sections 15302 (Class 2 - Replacement or Reconstruction) and 15303 (Class 3 - New Construction) of Title 14 of the California Code of Regulations as the Project involves (1) the replacement of existing transformers and modification of existing facilities and (2) installation of limited new electric facilities.
FISCAL IMPACT
The cost of the public works contract is $11,207,933, plus a 15% contingency, or $1,681,190, for any potential change orders, for a total not-to-exceed contract amount of $12,889,123. A budget action is recommended below to appropriate an additional $13,056,000 to the Project (CIP No. 2462) in the Electric Utility Capital Fund for the construction contract and estimated remaining Project costs of approximately $166,877 for the completion of the project. All costs will be funded by contributions from the customer in accordance with the Substation Agreement payment schedule. Any additional budget needs will be brought forward to the City Council in a future budget action and a final reconciliation of costs and collections from Intel will be done once the Project is completed.
Budget Amendment
FY 2025/26
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Electric Utility Capital Fund (591) |
|
|
|
|
Revenue |
|
|
|
|
Other Revenue (Developer Contributions) |
$44,838,849 |
$13,056,000 |
$57,894,849 |
|
|
|
|
|
|
Expenditure |
|
|
|
|
Juliette Substation Expansion Project (CIP 2462) |
$12,085,631 |
$13,056,000 |
$25,141,631 |
COORDINATION
This report has been coordinated with the Finance Department 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 exempt from CEQA pursuant to sections 15302 (Class 2 - Replacement and Reconstruction) and 15303 (Class 3 - New Construction) of Title 14 of the California Code of Regulations;
2. On the facts presented, determine that further public bidding would be impractical and not in the best interests of the City, and award the Public Works Contract for the Juliette Substation Expansion Project CIP No. 2462 to Par Western Line Contractors, LLC, in the amount of $11,207,933, and authorize the City Manager or designee to execute and negotiate a public works contract (Contract) in substantially the form attached to this Report to Council, subject to the review and approval as to form by the City Attorney;
3. Authorize the City Manager or designee to take any actions necessary to implement and administer the Contract including executing any and all documents in furtherance of the award, completion, and acceptance of the Project, and approving any necessary change orders not to exceed a 15% contingency, or $1,681,190, for a total contract amount not to exceed $12,889,123, funded by the Electric Utility Capital Fund and subject to the review and approval as to form by the City Attorney; and
4. Approve the FY 2025/26 budget amendment in the Electric Utility Capital Fund to increase the Other Revenue estimate and the Juliette Substation Expansion project in the amount of $13,056,000 (five affirmative Council votes required to appropriate additional revenue).
Staff
Reviewed by: Nico Procos, Director of Silicon Valley Power
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Public Works Contract for the Juliette Substation Expansion Project CIP No. 2462