REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Negotiate and Execute Amendments to Agreements with Henkels & McCoy West, LLC and PAR Western Line Contractors, LLC for As-Needed Preventative Maintenance, Inspection, and Repair Services for Silicon Valley Power’s Utility Overhead and Underground Transmission Facilities and Distribution Systems and Approve Related Budget Amendment
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
The City of Santa Clara’s Electric Department, Silicon Valley Power (SVP), owns and maintains overhead and underground transmission facilities and distribution systems to deliver electricity to its customers. This infrastructure includes manholes, utility poles, overhead transformers, capacitor banks, substructure vaults, high voltage power lines, underground cables, and other critical components. To ensure optimal system operation, SVP uses multiple contractors to perform regular preventative maintenance, conduct inspections, and respond promptly to emergency repairs. These contractors are essential in providing the necessary services to ensure the reliability of the system.
DISCUSSION
Pursuant to City Code Section 2.105.140(c), a formal Request for Proposals (RFP) was conducted, with the award based on “best value.”
The RFP for Preventative Maintenance, Inspection, and Repair Services for Utility Overhead and Underground Transmission Facilities and Distribution System was published on the City’s e-procurement system. Seven proposals were received from the following firms:
• Henkels & McCoy West, LLC
• Hotline Construction, Inc.
• Intren West
• kV Power Pacific
• PAR Western Line Contractors, LLC
• Rising Edge Technologies, LLC
• VIP Powerline Corp.
The proposals were independently evaluated by a five-member evaluation panel against the criteria and weights published in the RFP, including experience, technical capability, and cost. The evaluation panel recommended entering into master agreements with Henkels & McCoy West, LLC and PAR Western Line Contractors, LLC, as the highest-ranked proposers.
On May 31, 2024, after the evaluation committee selected the firms for the award, staff executed agreements with both firms, each within the City Manager’s authority of $250,000. This action was to ensure the availability of both contractors to perform critical repair services, if needed, while awaiting City Council approval for an amount exceeding $250,000. Staff did not authorize any work under these agreements that exceeded the City Manager’s authority.
The term of both proposed agreements will end on May 31, 2029, with an option to extend the term by one additional year through May 31, 2030. Staff is seeking City Council approval to negotiate and execute amendments to both agreements to increase their combined maximum compensation to $20 million. This amount represents SVP’s estimate to maintain the overhead and underground transmission facilities and distribution. Staff anticipates that additional services may be needed in the future but will use this authorization to initiate services and better forecast future years. Rates for labor and materials are established in the agreements and are subject to reasonable annual increases after the initial fixed period. Any rate increases must be approved by the City and substantiated by the contractors to the satisfaction of the City.
Actual work will be assigned to the contractors pursuant to a secondary bid process. When work is identified, SVP will obtain quotes from Henkels & McCoy West, LLC and PAR Western Line Contractors, LLC, taking into account factors such as their schedule availability, experience, and cost. Staff requests authorization for the City Manager to negotiate and execute amendments as needed for the projects assigned to each contractor.
ENVIRONMENTAL REVIEW
Staff recommends that the City Council determine that the actions being considered are exempt from the California Environmental Quality Act (“CEQA”) pursuant to section 15301 of Title 14 of the California Code of Regulations as the services involve maintenance and repair of existing facilities and mechanical equipment.
FISCAL IMPACT
Staff recommends authorization for the City Manager to negotiate and execute amendments with an aggregate maximum compensation for both agreements not to exceed $20 million over the five-year term. As noted previously, staff anticipates additional funding may be needed but recommends starting at this level of authorization in order to establish a program and perform a set of services to support future forecasting.
It is recommended that $5 million is transferred from available fund balance in the Electric Utility Fund to the Transmission and Distribution Betterments Project in the Electric Utility Capital Fund, as detailed in the table below.
Budget Amendment
FY 2024/25
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Electric Utility Fund |
|
|
|
|
Transfers To |
|
|
|
|
Electric Utility Capital Fund |
$59,363,700 |
$5,000,000 |
$64,363,700 |
|
|
|
|
|
|
Fund Balance |
|
|
|
|
Unrestricted Ending Fund Balance |
$108,095,323 |
($5,000,000) |
$103,095,323 |
|
|
|
|
|
|
Electric Utility Capital Fund |
|
|
|
Transfers From |
|
|
|
|
Electric Utility Fund |
$59,363,700 |
$5,000,000 |
$64,363,700 |
|
|
|
|
|
|
Expenditures |
|
|
|
|
Transmission and Distribution Betterments Project |
$23,679,539 |
$5,000,000 |
$28,679,539 |
COORDINATION
The 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, or by email to: clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov>.
RECOMMENDATION
Recommendation
1. Determine that the proposed actions are exempt from CEQA pursuant to Section 15301 (Existing Facilities) of Title 14 of the California Code of Regulations;
2. . Approve the following FY 2024/25 budget amendments:
A. In the Electric Utility Fund, increase the transfer to the Electric Utility Capital Fund and decrease the Unrestricted Ending Fund Balance in the amount of $5.0 million (five affirmative Council votes required for the use of unused balances); and
B. In the Electric Utility Capital Fund, increase the transfer from the Electric Utility Fund and increase the Transmission and Distribution Betterments Project in the amount of $5.0 million (five affirmative Council votes required to appropriate additional revenue).
3. Authorize the City Manager or designee to negotiate and execute amendments to the agreements with Henkels & McCoy West, LLC and PAR Western Line Contractors, LLC for as-needed preventative maintenance, inspection, and repair services for Silicon Valley Power’s Utility overhead and underground transmission facilities and distribution systems for a five-year term ending May 31, 2029, to (a) increase the maximum compensation of each agreement, with a total aggregate maximum compensation of $20,000,000 between both agreements, (b) add or delete services consistent with the scope of services, (c) adjust future rates to account for changes such as contractor labor rates, (d) authorize a one-year option to extend the term of each agreement through May 31, 2030, to be funded by the SVP Operating or Capital Fund as applicable and subject to the appropriation of funds and the review and approval as to form by the City Attorney; and
4. Authorize the City Manager to take any actions as necessary to implement and administer the above agreements.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Agreement for Services with Henkels & McCoy West, LLC
2. Agreement for Services with PAR Western Line Contractors, LLC