REPORT TO COUNCIL
SUBJECT
Title
Action on Award of Purchase Orders to Reed & Graham, Inc. and Granite Construction Company for the Purchase of Backfill and Asphalt Materials in an Aggregate Not-to-Exceed Amount of $1,750,000, Including the Initial Term and Up to Four Additional One-Year Options
Report
BACKGROUND
The Water and Sewer Utilities Department (Department) maintains the City’s water distribution and sanitary sewer collection systems to ensure reliable, safe, and uninterrupted utility service for residents, businesses, and public facilities. This work includes inspecting, repairing, rehabilitating, and replacing underground water and sewer pipelines, valves, hydrants, utility maintenance holes (manholes), and related infrastructure.
The Department maintains a potable water distribution system consisting of approximately 335 miles of potable water distribution pipelines, 288 miles of sewer main, and 33 miles of recycled water pipelines. In the past year, City Water crews responded to 1,700 water service requests, 1,000 sewer service requests, and installed just over 7,500 linear feet (LF) of main replacement.
Because much of this infrastructure is located beneath public streets, sidewalks, and other paved areas, maintenance and emergency repair activities may require excavation and pavement removal to access underground facilities. After utility work is complete, the Department provides temporary pavement restoration to maintain safe access until the Streets Division of the Department of Public Works (DPW) can schedule and complete permanent pavement repairs. Temporary restoration stabilizes the work area, reduces safety risks, and supports continued use of the public right-of-way while allowing time for settlement, coordination, and final surface restoration. To perform this work promptly for both planned and emergency utility activities, staff require reliable access to suppliers of cold-mix asphalt and other necessary materials. The Department purchases approximately 4,200 tons of cold-mix asphalt annually for temporary pavement restoration, making a dependable supply of these materials essential.
On November 21, 2025, pursuant to Section 2.105.140 (d) of the Santa Clara City Code (City Code), the City issued a formal competitive Request For Bids (RFB) on the City’s e-procurement system for backfill and asphalt materials used in utility repair and temporary pavement restoration work. The RFB included five bid items: ¾-inch Class 2 virgin aggregate base, 3/4-inch Class 2 recycled aggregate base, Quail Hollow utility/trench sand, Class 1 permeable material, and ¼-inch cold-mix asphalt. The RFB stated the City’s intent to award multiple Purchase Orders based on the lowest responsive and responsible bid received for each line item.
The City received three bids in response to the RFB. After evaluating the bids, the City determined Reed & Graham, Inc. (Reed & Graham) to be the lowest responsive and responsible bidder for recycled aggregate base and cold-mix asphalt. At the same time, the City determined Granite Construction Company (Granite Rock) to be the lowest responsive and responsible bidder for virgin aggregate base, utility and trench sand, and Class 1 permeable material. After evaluating the bids, staff recommended issuing Purchase Orders to Reed & Graham and Granite Rock.
Pursuant to Section 2.105.300(a) of the City Code, which authorizes the City Manager to execute Purchase Orders in amounts up to and including $250,000, the City issued Purchase Orders to Reed & Graham and Granite Rock, each for an initial term of one year with up to four options to extend and not-to-exceed compensation amounts of $250,000.
When the Department requires the materials available under the Purchase Orders, staff first contacts the lowest bidder for the applicable line item. If that supplier cannot provide the required materials within the timeframe needed by the City, the Department contacts the second-lowest bidder for that line item.
The initial term of the Purchase Orders began on January 1, 2026, and will end on December 31, 2026. The City intends to exercise the available options to extend the Purchase Orders in one-year increments, with price adjustments subject to City approval and the Consumer Price Index.
DISCUSSION
To meet ongoing operational demands, the City initially issued Purchase Orders to Reed & Graham and Granite Rock with not-to-exceed compensation amounts of $250,000 each, consistent with the City Manager’s contracting authority under Section 2.105.300(a) of the City Code. The initial Purchase Order amounts allowed the City to promptly begin purchasing materials after completing the RFB. They were not intended to represent the total value of purchases anticipated over the potential five-year term.
The RFB identified the backfill and asphalt materials the Department required and included anticipated annual quantities for each bid item based on projected operational needs. During the first eight months of the initial term, the Department purchased approximately $220,000 in backfill and asphalt materials from Reed & Graham and Granite Rock. Based on actual expenditures to date and the anticipated annual quantities included in the RFB, the Department projects annual expenditures of approximately $350,000 for these materials. Accordingly, additional contracting authority is necessary to support the Department’s anticipated material requirements through the remainder of the initial term and any exercised options.
Staff recommends that the City Council authorize an increase in the aggregate not-to-exceed compensation amounts for the two Purchase Orders to $1,750,000 for the initial term and all exercised options. The proposed increase does not change the materials, bid items, or scope of the RFB.
Establishing an aggregate not-to-exceed amount across the two Purchase Orders allows the City to allocate purchases between the two suppliers based on actual operational needs, material availability, and project schedules. This approach provides flexibility to accommodate variations in annual demand, material availability, and project schedules while ensuring the Department can obtain the materials needed to complete work promptly.
ENVIRONMENTAL REVIEW
The action being considered is not a project as defined by the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(2), as a continuing administrative or maintenance activity, including the purchase of supplies.
FISCAL IMPACT
Funding for asphalt materials is allocated in both the Department’s operating and capital budgets. The Department will split costs between the Distribution System Replacement and Restoration capital project (55%), Water Utility Fund (30%), and Sewer Utility Fund (15%). The capital project will fund water main replacement costs, while the water and sewer operating budgets will fund as-needed water system repair and sewer system repair costs, respectively.
COORDINATION
This report has been coordinated with the Finance Department and 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. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, by email at clerk@santaclaraca.gov, or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Authorize the City Manager to increase the maximum compensation for the Purchase Orders with Reed & Graham and Granite Rock from $250,000 per Purchase Order to an aggregate not-to-exceed amount of $1,750,000 between both Purchase Orders, covering the initial term and up to four additional one-year options, if exercised by the City, with a term not to extend beyond December 31, 2030, subject to the appropriation of funds and the review and approval as to form by the City Attorney; and
2. Authorize the City Manager or designee to take any actions as necessary to: (a) implement and administer the Purchase Orders, including exercising the additional one-year options and issuing or amending Purchase Orders for each option year; (b) implement rate adjustments in accordance with the terms of the Purchase Orders; and (c) make de minimis changes, subject to the aggregate not-to-exceed amount set forth above and the review and approval as to form by the City Attorney.
Staff
Reviewed by: John Ramirez, Director, Water & Sewer Utilities
Approved by: Jovan Grogan, City Manager