REPORT TO COUNCIL
SUBJECT
Title
Action to Delegate Authority to the City Manager to Issue Purchase Orders to Mader Supply, LLC for the Purchase of Steel Transmission Poles for an Aggregate Maximum Amount of $5,000,000, Funded by Silicon Valley Power
Report
BACKGROUND
Silicon Valley Power (SVP), the City of Santa Clara’s electric utility, has multiple planned transmission line extension and rebuild projects that will require the procurement of steel transmission poles over the next several years. These projects include Transmission Loop 1 (CIP 2459), Agnew Substation Rebuild and Expansion (CIP 2469), Walsh-Uranium 60kV Reconductor (CIP 2458), Homestead Substation Rebuild (CIP 2431), and NRS-KRS 115-kV Line Project (CIP 2455). The substation projects necessitate overhead transmission lines as the pole work is occurring within or directly adjacent to the substations. Undergrounding for short segments have numerous challenges, including the addition of riser poles to go from overhead to underground resulting in negative aesthetic impacts. While reconductoring projects typically reuse existing poles, SVP has planned for the replacement of several poles based upon their condition. SVP anticipates ordering approximately 200 steel transmission poles over the next five years.
In 2023, the City conducted a competitive solicitation for steel transmission poles to support several transmission infrastructure projects. The City Council subsequently authorized the issuance of purchase orders with an aggregate amount of $6,500,000 (RTC 23-1311). Of this amount, approximately $2,000,000 remains unspent under this authorization. The primary electric pole supplier is Wireless Structures Consulting, Inc. dba Western Utility Telecom, Inc. Although there are significant funds remaining under the current authorization, they are insufficient to meet insufficient to support SVP’s anticipated needs for its upcoming transmission projects. Because the $6,500,000 is a hard cap and cannot be exceeded, it was determined a new procurement would be initiated once expenditures reached 70% of the maximum amount issued in purchase orders under RTC 23-1311. Therefore staff conducted a new competitive solicitation and is requesting additional authorization to issue purchase orders for steel transmission poles. This is in addition to City Council approval under RTC 23-1311. Together, these authorizations will keep SVP projects on schedule.
DISCUSSION
Pursuant to Section 2.105.140(d) of the Santa Clara City Code (City Code), a formal Request for Bids (RFB) was conducted to procure steel transmission poles. The RFB was published on the City’s e-procurement system to solicit bids from qualified vendors for the fabrication and delivery of galvanized tubular steel transmission poles.
To submit a bid, bidders were required to meet certain minimum requirements, including the capability to manufacture steel transmission poles of at least 140 feet and demonstrated experience in steel pole fabrication for electrical transmission lines. Bidders were also required to submit unit pricing based on length and class for standard poles and a price per pound of steel for custom poles.
Two bids were received from Mader Supply, LLC (representing CHM Industries) and Wireless Structures Consulting, Inc. dba Western Utility Telecom, Inc. Staff reviewed the bids and determined that Mader Supply, LLC (Mader) was the lowest responsive and responsible bidder. Reference checks confirmed that CHM Industries, the manufacturer represented by Mader, has satisfactorily performed similar steel transmission pole fabrication projects.
Staff requests approval to issue purchase orders to Mader using predetermined rates for an aggregate not-to-exceed amount of $5,000,000 through June 30, 2031. Due to volatility of steel prices, Mader’s original bid prices will be adjusted at the time of each purchase order based on the change in the cost per pound between (1) the original bid unit prices and (2) the published steel price for the month prior to purchase order issuance, as reflected in the Bureau of Labor Statistics Producer Price Index (PPI).
Standard steel transmission poles vary in pricing depending on pole length and class, with typical prices ranging from approximately $4,600 to $21,900 per pole. Custom poles may require design, additional steel weight, or unique fabrication requirements, and pricing may vary based on the total pounds of steel required and project requirements.
During the transition to the new supplier, staff may utilize the remaining authorization from the 2023 City Council approval, as needed, to maintain project schedules.
Approval of this recommendation will streamline the procurement process and ensure timely deliveries of steel transmission poles to support current and future transmission projects. Staff will issue a new RFB for purchases issued after June 30, 2031, or when the maximum compensation is reached, whichever occurs first.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(2) of Title 14 of the California Code of Regulations as it involves the purchase of supplies for City electric infrastructure projects. These projects and associated work will undergo or have already undergone environmental review under CEQA.
FISCAL IMPACT
Purchases associated with this contract will be funded by individual project budgets allocated to approved Capital Improvement Program projects in the Electric Utility Capital Fund.
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, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Authorize the City Manager or designee to issue Purchase Orders to Mader Supply, LLC, for the purchase of steel transmission poles with an aggregate maximum compensation of $5,000,000 through June 30, 2031, with price escalations based on adjustments to the Bureau of Labor Statistics Producer Price Index, subject to the appropriation of funds; and
2. Authorize the City Manager or designee to take any actions as necessary to implement and administer the Purchase Orders, and to negotiate and execute amendments to the Purchase Orders to make de minimis changes, subject to the above maximum compensation limit and review and approval as to form by the City Attorney.
Staff
Reviewed by: Nico Procos, Director of Silicon Valley Power
Approved by: Jovan Grogan, City Manager