REPORT TO COUNCIL
SUBJECT
Title
Action on the Award of a Public Works Contract for the Fiber Optic Aerial and Substructure Project, Contract No. 2004F, to West Valley Construction Company, Inc., for a Not-to-Exceed Amount of $8,792,787, Over a Two-Year Period, Inclusive of a 15% Contingency, Funded by Silicon Valley Power and Other Departments
Report
BACKGROUND
In 2000, the City of Santa Clara’s Electric Department, Silicon Valley Power (SVP), upgraded its communication system from an older copper-based network to a modern fiber-optic network. The upgraded system was intentionally designed with excess capacity to ensure long-term reliability for internal City operations and to allow for future commercial leasing.
Today, the SVP fiber-optic network (“SVP Fiber Program”) spans approximately 100 route-miles, with about 70% installed underground and 30% installed aerially. This network supports critical SVP operations, City communication networks, local schools, and connectivity for 33 data centers.
Through its SVP Fiber Program, SVP also makes limited use of the excess capacity by leasing dark fiber to third parties. Dark fiber consists of City-owned, unlit fiber-optic network that customers use for their own communication needs. SVP Fiber currently provides services to 16 commercial customers and generates approximately $2.1 million in annual revenue.
As demand for fiber-optic capacity continues to grow, SVP must actively improve and expand its existing fiber-optic infrastructure to ensure system reliability and operational continuity. To support these ongoing needs for both external customers as well as internal City departments and facilities, SVP requires on-call public works services to perform minor construction and improvements on an as-needed basis across the City’s fiber-optic network. This contract is needed for work that SVP Fiber Program’s City forces do not perform, such as underground and aerial construction for fiber installation.
DISCUSSION
On November 12, 2025, in accordance with the City of Santa Clara Charter Section 1310, which governs the competitive bidding for public works, a Request for Bids (RFB) for Fiber Optic Aerial and Substructure Projects was published on the City’s e-procurement system.
On December 11, 2025, the City publicly opened the bids at the City Clerk’s Office. The City received two bids from Daleo, Inc. and West Valley, as shown in Table 1 below.
Table 1 - Bid Results
|
Bidder |
Total Bid Amount (Rounded to the Nearest Dollar) |
|
West Valley Construction Company, Inc. |
$3,822,951 |
|
Daleo, Inc. |
$4,402,500 |
Bidders were required to provide unit pricing for each bid item in the bid schedule, which included estimated quantities for trenching, conduit installation, traffic control, boring, splicing support, and related fiber-infrastructure work. The sum of all extended line-item totals formed each bidder’s total bid amount.
At the bid opening West Valley Construction Company, Inc. (West Valley) was identified as the lowest apparent bidder, with a submitted bid in the amount of $3,822,951. This amount is approximately 18% higher than the Engineer’s Estimate of $3,224,204.
Following the bid opening, staff reviewed the difference between the bid amount and the Engineer’s Estimate. This review determined that the Engineer’s Estimate compared all the same unit price items as each bidder, but used the same pricing methodology as the Engineer’s Estimate in the prior contract without increases for inflation or tariffs. Both bids, however, did account for inflation and tariffs, and they also included overhead costs such as mobilization and demobilization costs. West Valley and Daleo were the only bidders for the work; both have provided services to the City under other contracts and do quality work. Based on this review, staff determined that West Valley’s bid pricing is fair and reasonable.
SVP staff reviewed the bid for compliance with the terms and conditions of the bid documents and determined that West Valley is the lowest responsive and responsible bidder. Accordingly, staff recommend awarding a contract to West Valley for a one-year term beginning on or around January 26, 2026, and ending on or around January 26, 2027, with an option to extend for a second year.
The recommended contract includes a maximum compensation of $3,822,951 for the initial year. If the optional period is exercised, the total two-year contract amount would be $7,645,902. In addition, a 15% contingency is included to address variable work location and field conditions associated with the as-needed nature of the services, as well as potential rate increases in the second year. The total not-to-exceed contract amount, including contingency, is $8,792,787, as summarized in Table 2 below.
Table 2 - Cost Summary
|
Description |
Amount |
|
Year 1 Contract Cost |
$3,822,951 |
|
Year 2 Option Cost |
$3,822,951 |
|
Subtotal (Two Years) |
$7,645,902 |
|
15% Contingency |
$1,146,885 |
|
Not-to-Exceed Maximum Compensation (Two years) |
$8,792,787 |
The proposed agreement is an as-needed, unit-priced public works contract. Individual tasks will be authorized through call orders issued by SVP, and the contractor will be bound to the unit prices in its bid. Use of contingency funds will require prior staff approval.
The contract includes prevailing wage requirements.
ENVIRONMENTAL REVIEW
Staff recommend that the City Council determine that the proposed actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to: (1) sections 15301 and 15302 of Title 14 of the California Code of Regulations, in that the proposed work consists of the reconstruction, replacement, repair, maintenance or minor alteration of existing SVP fiber infrastructure involving negligible or no expansion of existing capacity; and (2) section 15303 of Title 14 of the California Code of Regulations, as the work consists of a limited number of small new fiber infrastructure construction.
FISCAL IMPACT
The cost for the first year of the contract is $3,822,951. If the option for the second year is exercised, the contract amount would increase to $7,645,902. In addition, the recommendation includes a 15% contingency, or $1,146,885, for maximum compensation of $8,792,787 over two years.
Funding for the contract is available from the Fiber Development Design and Expansion CIP project (2004) in the Electric Utility Capital Improvement Program Budget. When work is associated with developer projects or projects associated with other departments, funds will be used from the applicable project or department, and a budget action will be brought forward if necessary. The majority of the construction costs for this contract are not anticipated to be funded from the Fiber Development Design and Expansion CIP project (2004), but instead will be developer funded or projects associated with other departments. Staff anticipates over 90-95% of the total contract cost will be paid directly by customers requesting service
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. Determine the proposed actions are exempt from CEQA pursuant to Section 15301 (Class 1 - Existing Facilities), 15302 (Class 2 - Replacement or Reconstruction), and 15303 (Class 3 - New Construction or Conversion of Small Structures) of Title 14 of the California Code of Regulations;
2. Award the Public Works Contract for the Fiber Optic Aerial and Substructure Projects to the lowest responsive and responsible bidder, West Valley Construction Company, Inc., for a maximum compensation amount of $3,822,951, for the initial year, and authorize the City Manager or designee to execute any and all documents associated with, and necessary for the award, completion, and acceptance of the projects, 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 execute contract amendments or change orders to (a) increase the amount by up to (i) $1,146,885 for contingencies, and (ii) $3,822,951 for an optional second year, for a maximum compensation amount of $8,792,787, and (b) adjust unit rates consistent with market conditions, subject to the appropriation of funds and final review and approval as to form by the City Attorney.
Staff
Reviewed by: Nico Procos, Director of Silicon Valley Power
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Proposed Public Works Contract with West Valley Construction Company, Inc.