REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on an Amendment No. 2 to the Agreement with Integrated Communication Systems for Fire Alarm Testing, Inspection, Maintenance, and Related Services at Levi’s Stadium to Extend the Term by One Year, Increase the Total Agreement Amount, Update the Compensation and Fee Schedule, and Delegate Authority to the Executive Director for Future Amendments
Report
BACKGROUND
Pursuant to Section 2.9 of the Stadium Management Agreement between the Santa Clara Stadium Authority (Stadium Authority), Forty Niners SC Stadium Company LLC (StadCo), and Forty Niners Stadium Management Company LLC (Stadium Manager), the Stadium Manager is responsible for maintaining Levi’s Stadium (Stadium) “in the Required Condition and operate the Stadium as a quality NFL and multi-purpose public sports, public assembly, exhibit and entertainment facility.…”
In 2023, the Stadium Manager conducted a Request For Proposals (RFP) process for fire alarm testing, inspection, maintenance, and related services. The highest scoring proposer took exception to the terms and conditions agreed upon in their initial proposal response during the agreement execution stage. Representatives from the Stadium Manager and vendor attempted to resolve issues related to indemnity and liability provisions but could not mutually agree on the terms proposed by the vendor. The Stadium Authority Counsel reviewed the vendor’s proposed language and concurred with the Stadium Manager’s concerns. As such, the Stadium Manager recommended moving forward with the second-highest rated proposer in the Stadium Manager’s RFP process, Integrated Communication Systems (ICS).
On May 23, 2023, the Stadium Authority Board approved an Agreement with ICS to provide fire alarm testing, inspection, maintenance, and related services at Levi’s Stadium (Agreement) (Attachment 1). The Agreement included an initial three-year term through March 31, 2026, with the option to extend the agreement for two additional one-year periods, in an amount not to exceed $115,000 for the first contract year, $117,000 for the second contract year, and $120,000 for the third contract year, for a total not to exceed amount of $352,000 over the three-year period. The Stadium Authority Board also authorized the Executive Director to approve the Stadium Manager’s exercise of the option to extend the agreement with the same basic terms and conditions for two additional one-year periods, subject to budget appropriations.
On June 24, 2025, the Stadium Authority Board approved an Amendment No. 1 to the Agreement with ICS to increase the not to exceed amount to $133,000 for the second contract year and $160,000 for the third contract year, for a total not to exceed amount of $408,000 over the three-year period, with the option to extend the agreement for two additional one-year periods, subject to budget appropriations (Attachment 2).
To ensure continuity of fire alarm testing, inspections, maintenance, and related services in advance of the initial three-year term expiring on March 31, 2026, the Stadium Manager is requesting approval of the following actions related to the Agreement with ICS:
1. Approve and authorize the Stadium Manager to execute an Amendment No. 2 to the Agreement with ICS to increase the maximum compensation by $160,000 to cover services from April 1, 2026 to March 31, 2027 (Attachment 3).
2. Authorize the Executive Director to approve future amendments to the Agreement with ICS to exercise the final one-year option for the fifth contract year and increase the not-to-exceed amount by $168,000 to cover services from April 1, 2027 to March 31, 2028 and increase the compensation and fee schedule to reflect rate increases not to exceed 5% over the prior year upon providing reasonable justification of rate increases, all subject to the same basic terms and conditions and budget appropriations.
3. Authorize the Executive Director to approve future amendment to the Agreement with ICS, under the same basic terms and conditions, for a period not to exceed six months beyond the fifth contract year through September 30, 2028 and increase the not-to-exceed amount by $88,200 to cover up to six months of services and increase the compensation and fee schedule to reflect rate increases not to exceed 5% over the prior year upon providing reasonable justification of rate increases, provided the Stadium Manager is engaged in an active competitive solicitation process and subject to budget appropriations. This extension is intended to support the transition to a recommended contractor and maintain continuity of business.
4. The total not-to-exceed maximum compensation for the Agreement, inclusive of all contract years and the six-month extension period, shall not exceed $824,200.
The Stadium Manager’s request for an Amendment No. 2 to the Agreement with ICS to extend the agreement by one additional year to cover services from April 1, 2026 to March 31, 2027 is within the Executive Director’s delegated authority to approve. However, the requested Amendment No. 2 to the Agreement with ICS includes an increase to the total agreement amount, an updated compensation and fee schedule in Exhibit B-2, and additional delegation of authority to the Executive Director for future amendments related to contract year five and the additional six months, which require additional Stadium Authority Board action. As such, Amendment No. 2 is being presented for the Stadium Authority Board’s approval.
A Recommendation Memo was submitted describing the Stadium Manager’s request in more detail (Attachment 4).
DISCUSSION
Regular testing of the fire alarm system is critical to the safe operation of the stadium. To maintain a consistent and safe operating environment for Non-NFL and NFL events, the vendor performs regular inspections of the fire alarm system, performs corrective maintenance as issues arise, and provides on-site response and emergency services as needed.
As noted above, the Executive Director has delegated authority to approve the Stadium Manager’s exercise of the option to extend the agreement with the same basic terms and conditions for two additional one-year periods, subject to budget appropriations. As the delegated authority did not cover increases in the not-to-exceed agreement amount and updates to the compensation and fee schedule, the requested Amendment No. 2 is provided for approval.
The rate increases in Exhibit B-2 ranged from 5-6.4%, exceeding the regional Consumer Price Index (CPI). As such, Stadium Authority staff followed up with the Stadium Manager for additional information. The Stadium Manager explained that the rate increases for contract year four aligned with CPI trends and the percentage increases year over year for the first three years of the agreement. The rate increase in the second year was 5%, and in the third year, it was 4%.
To ensure efficiencies through administrative approval, which was intended through the original request for approval of the Agreement with ICSs with delegated authority to the Executive Director to approve their exercise of option years, the Stadium Manager is also requesting the Stadium Authority Board also delegate authority to the Executive Director for future amendments, specifically, 1) approve future amendments to the Agreement to exercise the final one-year option for the fifth contract year and increase the not-to exceed amount by $168,000 (reflective of a 5% increase) to cover services from April 1, 2027 to March 31, 2028 and increase the compensation and fee schedule to reflect rate increases not to exceed 5% over the prior year upon providing reasonable justification of rate increases, all subject to the same basic terms and conditions and budget appropriations, and 2) approve future amendment to the Agreement, under the same basic terms and conditions, for a period not to exceed six months beyond the fifth contract year through September 30, 2028 and increase the not-to-exceed amount by $88,200 (reflective of a 5% increase) to cover up to six months of services and increase the compensation and fee schedule to reflect rate increases not to exceed 5% over the prior year upon providing reasonable justification of rate increases, provided the Stadium Manager is engaged in an active competitive solicitation process and subject to budget appropriations. This extension is intended to support the transition to a recommended contractor and maintain continuity of business. The total not-to-exceed maximum compensation for the Agreement, inclusive of all contract years and the six-month extension period, shall not exceed $824,200.
Table 1 below provides a summary of the costs under the agreement.
Table 1 - Cost Summary
|
Description |
Amount |
|
Initial Three-Year Term (4/1/23 - 3/31/26) |
$408,000 |
|
Optional Year 4 (4/1/26 - 3/31/27) |
$160,000 |
|
Optional Year 5 (4/1/27 - 3/31/28) |
$168,000 |
|
6-Month As-Need Extension Period (4/1/28 - 9/30/28) |
$88,200 |
|
Total Not-to-Exceed Maximum Compensation |
$824,200 |
Optional Years 4 and 5 assume an annual increase of 5%. The Stadium Manager has provided the following reason for the increased agreement amounts that reflect a 5% increase and maximum 5% for rate increases, “This percentage is based on the potential rate increases exceeding the prior year fees given the overall lack of market certainty due to current economic and political factors.” The Stadium Manager or vendor is responsible for providing reasonable justification for any rate increases for future amendments. If the Stadium Manager’s requests are approved, the Executive Director will have delegated authority to approve such rate increases, up to 5%, and any higher rate increases will have to go to the Stadium Authority Board for additional approval. The Stadium Manager will be responsible for managing expenditures throughout the term of the agreement based on operational needs, provided the overall maximum compensation is not exceeded. This approach allows for continued Stadium Authority oversight, while streamlining the approval process for future amendments.
Based on the review of the Stadium Manager’s request, the agenda reports and Stadium Authority Board actions related to the approval of the original and Amendment No. 1 to Agreement with Integrated Communication Systems, and the draft Amendment No. 2, staff recommends approval of the Stadium Manager’s requests related to the Agreement with ICS to continue fire alarm testing, inspection, maintenance, and related services at Levi’s Stadium with minor modifications - with respect to the recommendation to approve Amendment No. 2, include reference of the updated compensation and fee schedule; and with respect to the recommendations related to the amendments for the fifth contract year and additional six month extension, update the word “increase” to “adjust” regarding the compensation and fee schedules. For clarity, the Executive Director will have delegated authority to approve rate increases of up to 5%, subject to the maximum compensation.
The Stadium Authority Counsel’s Office has reviewed the requested Amendment No. 2 described above for comparison to the Stadium Authority’s customary language. Nothing in the proposed Amendment No. 2 or Agreement changes the Stadium Authority’s rights under the Management Agreement and specifically with respect to any dispute that may arise from the Stadium Manager’s obligations under the Management Agreement.
The Stadium Authority reserves all rights to confirm and dispute charges by and payments to the Stadium Manager during a fiscal year-end reconciliation/true-up, including but not limited to changes based on improper allocation, calculation, lack of support, or failure to comply with the Parties’ contracts or California law. The Stadium Authority may raise related questions before the fiscal year-end reconciliation/true-up, which the Stadium Manager agrees to assess and respond to in good faith.
ENVIRONMENTAL REVIEW
The action being considered is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15301 “Existing Facilities” as the activity consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities mechanical equipment or topographical features involving negligible or no expansion of use beyond that existing at the time of the lead agencies determination. The proposed action does not constitute a “project” within the meaning of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378(a), as it has no potential to result in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.
Additionally, the action being considered is exempt from the CEQA pursuant to CEQA Guidelines section 15061(b)(3) as the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.
FISCAL IMPACT
The requested Amendment No. 2 to the Agreement with ICS will increase the agreement’s total not-to-exceed amount by $160,000, from $408,000 to $568,000 over the four-year term. Future amendments to the agreements, as requested through delegated authority to the Executive Director for approval, may increase the agreement’s total not-to-exceed amount to $842,200 through September 30, 2028.
The Stadium Authority Fiscal Year (FY) 2026/27 Budget includes Shared Stadium Expenses, such as Security, Stadium Operations, Engineering, Guest Services, and Groundskeeping. In accordance with the Stadium Lease, most Shared Stadium Expenses are allocated 50/50 between the Stadium Authority and StadCo.
There are sufficient funds in the FY 2026/27 Shared Stadium Expenses Engineering line item to cover the Stadium Authority’s fifty percent (50%) share of the agreement costs for the Amendment No. 2 to the Agreement with ICS (up to $80,000). As the requested action for the fifth contract year and additional six-month extension covers FY 2027/28 and FY 2028/29, those agreement amendments will be subject to future budget appropriations.
COORDINATION
This report has been coordinated with the Stadium Authority Counsel and Treasurer’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. Approve and authorize the Stadium Manager to execute an Amendment No. 2 to the Agreement with Integrated Communication System for fire alarm testing, inspections, maintenance, and related services at Levi’s Stadium to increase the maximum compensation by $160,000 to cover services from April 1, 2026 to March 31, 2027 and update the compensation and fee schedule to reflect Exhibit B-2;
2. Authorize the Executive Director to approve future amendments to the Agreement with Integrated Communication Systems to exercise the final one-year option for the fifth contract year, increase the not-to-exceed amount by $168,000 to cover services from April 1, 2027 to March 31, 2028, and adjust the compensation and fee schedule to reflect rate increases not to exceed 5% upon providing reasonable justification of rate increases, all subject to the same basic terms and conditions and budget appropriations;
3. Authorize the Executive Director to approve future amendment to the Agreement with Integrated Communication System, under the same basic terms and conditions, for a period not to exceed six months beyond the fifth contract year through September 30, 2028, increase the not-to-exceed amount by $88,200 to cover up to six months of services, and adjust the compensation and fee
schedule to reflect rate increases not to exceed 5% over the prior year upon providing reasonable justification of rate increases, provided the Stadium Manager is engaged in an active competitive solicitation process and subject to budget appropriations; and
4. The total not-to-exceed maximum compensation for the Agreement with Integrated Communication Systems, inclusive of all contract years and the six-month extension period, shall not exceed $824,200.
Staff
Prepared by: Christine Jung, Deputy City Manager
Approved by: Jovan D. Grogan, Executive Director
ATTACHMENTS
1. Agreement with Integrated Communication Systems
2. Amendment No. 1 to Agreement with Integrated Communication Systems
3. Draft Amendment No. 2 to Agreement with Integrated Communication Systems
4. Stadium Manager’s Recommendation Memo