BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Receive Report of Bids, Ratify Addenda, Waive Minor Irregularities, Approve the Contingency Fund, and Award the Construction Contract to Mountain Cascade, Inc., for the Penitencia Water Treatment Plant Residuals Management Project, Project No. 93234044, Contract No. 0711 in the Sum of $90,569,600 (City of San Jose, District 3).
End
RECOMMENDATION: Recommendation
A. Ratify Addenda No(s). 1 through 10 to the Contract Documents for the Penitencia Water Treatment Plant Residuals Management Project;
B. Waive minor irregularities in Mountain Cascade, Inc.’s bid;
C. Award the Construction Contract to Mountain Cascade, Inc., located in Livermore, CA, in the sum of $90,569,600; and
D. Approve a contingency sum of $13,585,440 and authorize the Chief Executive Officer or designee to approve individual change orders up to the designated amount.
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SUMMARY:
The objective of the Penitencia Water Treatment Plant Residuals Management Project (Project) is to address age, capacity, efficiency, and reliability issues with the plant’s existing Residuals Management System (RMS) to ensure that the plant efficiently and reliably provides potable water to retailers in the Santa Clara Valley Water District’s (Valley Water) service area while meeting applicable regulatory standards. The scope of work for the Project includes improvements to the following components of the RMS: washwater handling and treatment, sludge handling and dewatering, and sedimentation basin sludge withdrawal.
Project Background
The Penitencia Water Treatment Plant (PWTP), constructed in 1974, is the smallest of Valley Water three potable water treatment plants. The plant delivers up to 42 million gallons of water per day to retailers, businesses, and residents within Valley Water’s service area. The plant services the North San Jose and Milpitas areas, supplying safe drinking water to approximately 270,000 residential and commercial users.
The existing RMS facilities have become increasingly inefficient, less reliable, and labor intensive to operate and maintain. The original design of the RMS process makes it difficult to achieve current water quality standards and constrains existing plant operations. The Project construction is estimated to take four (4) years to complete.
Addenda Ratification
Ten (10) addenda were issued during the bid advertisement period to clarify the Project Contract Documents and answer bidders’ questions. To formally incorporate the Addenda into the Project Contract Documents, staff recommends that the Board ratify the addenda.
Releasing certain information in the Addenda, including identification of the sole source products and details of the integration of the products into the existing information technology systems, to the public, may increase the potential for an attack on a Valley Water information technology system. To protect Valey Water’s information technology systems, all parties interested in accessing the Project Plans, Specifications and addenda were registered as a vendor at the Valley Water Vendor Portal and submitted a completed Non-Disclosure Agreement (NDA) to access the Contract Documents.
The Penitencia Water Treatment Plant Residuals Management Project Plans and Specifications were provided by separate communication to the Board for their review prior to taking the recommended action to adopt the Plans and Specifications for bid advertisement. As the Addenda include similar sensitive information, the Addenda were also provided by separate communication to Valley Water’s Board of Directors for their review prior to taking the recommended action to ratify.
Waiver of Minor Irregularity
During the bid evaluation process, staff identified that Bid Form 7 (Bidder’s General Information) submitted by Mountain Cascade, Inc. (MCI) was missing the attachment for the Resume of Designated Authorized Representative under Article 5. MCI subsequently provided the required document in accordance with the requirements. The submittal of this document did not result in any material change to MCI’s bid.
The staff is recommending that the Board of Directors waive this minor irregularity and authorize the award of the construction contract for the Project to Mountain Cascade, Inc.
Contract Award
A report of bids received at the bid opening for the Project on November 12, 2025, is summarized in Table 1, including the Engineer’s estimate for Project budgeting purposes (refer to the Financial Impact section).
The lowest responsible, responsive bid was submitted by Mountain Cascade, Inc.,of Livermore, CA. The bid submitted by Mountain Cascade, Inc., is 3% below the Engineer’s estimate of $93,414,386.
Staff reviewed the bid proposals and recommends the Board award the Construction Contract to Mountain Cascade, Inc., as the responsible bidder, submitting the lowest responsive bid.
Table 1: Bid Opening Results
|
Contractor(s) |
Bid Price |
Difference from EE (-) or +% |
Deemed Responsive |
|
Mountain Cascade, Inc., (Livermore, CA) |
$90,569,600 |
(-) 3.% |
Yes |
|
Anvil Builders Inc., (Emeryvile, CA) |
$98,649,900 |
(+) 6% |
Yes |
|
J.F. Shea Construction, Inc., (Walnut, CA) |
$103,386,200 |
(+) 11% |
Yes |
|
Steve P. Rados, Inc., (Santa Ana, CA) |
$117,171,000 |
(+) 25% |
Yes |
|
Kiewit Infrastructure West Co., (Fairfield, CA) |
$133,189,200 |
(+) 43% |
Yes |
|
Engineer’s Estimate (EE) |
$93,414,386 |
|
|
Contingency Funds
The Contract award sum for the Project is $90,569,600. To allow staff to quickly address unforeseen or changed site conditions and other unanticipated occurrences, without causing unnecessary delays or consequential costs to the Project, staff recommends the Board approve encumbering a contingency amount of $13,585,440, which amounts to 15% of the contract amount for the subject Project.
The above contingency amount was estimated due to the known and unknown risks, such as:
1. Unforeseen internal conditions and field conditions that may be different from the baseline and as-built information used in preparation of the Project Contract Documents;
2. Unanticipated variances in quantities and cost of various lump sum items estimated in the Bid Proposal;
3. Differing site conditions;
4. Coordination issues and risks associated with weather conditions; and
5. Impacts associated with plant shutdowns, operation and maintenance activities, and keeping the plant operational during construction.
Approval of individual change orders for the Project will be subject to approval at the following designated amounts:
|
Engineering Unit Manager: |
$250,000 |
|
Deputy Operating Officer: |
$500,000 |
|
Assistant CEO |
$2,500,000 |
|
CEO: |
Up to $5,000,000 |
Relevant Prior Board Actions
On March 25, 2025, the Board adopted a resolution setting the time and date of a Public Hearing on the Final Mitigated Negative Declaration (MND) and Engineer’s Report for the Project, to be held on April 8, 2025.
On April 8, 2025, the Board conducted a Public Hearing on the Final MND and Engineer’s Report for the Project, adopted a resolution approving the Final MND and the Mitigation Monitoring and Reporting Program (MMRP) for the Project, adopted a resolution approving the Engineer’s Report for the Project, and approved the Project.
On August 12, 2025, the Board found the Project is substantially complex and requires a construction contract retention of ten percent (10%), designated certain components as sole source products, adopted the Plans and Specifications, authorized advertisement for bids, and authorized the Designated Engineer to issue addenda during the bidding process.
Outreach to Bidders
The Notice to Bidders was made available to Valley Water’s registered PlanetBids vendors with the appropriate classifications to perform the Work. Chambers of Commerce, plan rooms (Builder Exchanges), and Valley Water’s website were also used to solicit interest in the Project. Broader advertising efforts also included three placements of the Invitation to Bid in the San Jose Post-Record.
Small Business Program
This project was advertised incorporating the Small Business Enterprise (SBE) Outreach Program that establishes a small business subcontracting participation goal of at least 30 percent for non-SBE Bidders. The contractor met the goals of the program by demonstrating compliance through the Good Faith Effort process.
Right of Way and Agreements
All work will be done on Valley Water property.
Valley Water and GL Renewables, LLC have reached an agreement related to the relocation of third-party owned solar equipment located in the Project area. The Letter of Agreement - Solar Power Site license Agreement Section 6.b, has been approved by the Valley Water Interim Chief Executive Officer and is fully executed by the parties.
Regulatory Permits
Permits to be obtained by the Contractor during the construction of this Project include but are not limited to the following:
1. Hazardous Materials Permit(s) from the City of San Jose Fire Department
2. Fire Alarm and Sprinkler Permit(s) from the City of San Jose Fire Department
3. Short Term Wastewater Discharge Permit from the City of San Jose Environmental Services Department
Public Outreach
As the proposed Project involves replacing and upgrading the existing treatment plant facilities, their impacts on the surrounding community are anticipated to be relatively modest. The construction contract documents include requirements and measures to minimize impacts during construction. Neighbors will be informed of potential issues, as appropriate.
Next Steps
If the Board approves the recommendations, staff will proceed with administering the Project construction, which is anticipated to begin in February 2026 and be completed by January 2030.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with the recommended action for the Project. The recommended action is unlikely to or will not result in any significant adverse effect upon the environment because mitigation measures have been incorporated into the Project to avoid, minimize, and reduce potential impacts to less-than-significant.
FINANCIAL IMPACT:
The Penitencia Water Treatment Plant Residuals Management Project, Project No. 93234044, is included in the Capital Improvement Program (CIP) Fiscal Years (FY) 2026-30 Five-Year Plan and in the FY 2026-27 Adopted Budget. The total cost for the recommended construction contract, including the change order contingency of $13,585,440, is $104,155,040. The impact of the construction contract would be an increase of approximately $35 million to the total Project cost reflected in the CIP FY 2026-30 Five-Year Plan. The increase in the total Project cost will be incorporated into the Preliminary CIP FY 2027-31 Five-Year Plan.
Funds to cover the remaining anticipated construction costs will be included in the biennial budget process and recommended by staff during the annual fiscal year budget process or through budget adjustment(s) if needed.
The Project, is funded by the Water Utility Enterprise Fund (Fund 61) with 100% of the costs allocated to Zone W-2 (North County).
CEQA:
A Final Mitigated Negative Declaration (MND) and Mitigation Monitoring and Reporting Program (MMRP) for the Penitencia Water Treatment Plant Residuals Management Project was adopted by the Board on April 8, 2025. A Notice of Determination has been prepared and filed with the County of Santa Clara Office of the Clerk-Recorder on April 23, 2025. During Project construction, Valley Water and its contractor will comply with all applicable BMPs and MMRPs from the Project MND and permit conditions.
ATTACHMENTS:
Attachment 1: Project Delivery Process Chart
Attachment 2: Location Map
UNCLASSIFIED MANAGER: Manager
Emmanuel Aryee, 408-630-3074