COMMITTEE AGENDA MEMORANDUM
Capital Improvement Program Committee
Government Code § 84308 Applies: Yes ☒ No ☐
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: title
Receive Information on Change Orders to Anderson Dam Tunnel Project Construction Contract.
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RECOMMENDATION: Recommendation
Receive information on Change Orders to Anderson Dam Tunnel Project Construction Contract.
Body
SUMMARY:
During the May 17, 2021, Capital Improvement Program (CIP) Committee meeting, staff provided an update on the Anderson Dam Tunnel Project (ADTP) No. 91864006. The Committee requested staff provide monthly change order status updates after construction of the ADTP commences on July 7, 2021.
Project Background
Santa Clara Valley Water District (Valley Water) is undertaking the Anderson Dam Federal Energy Regulatory Commission Order Compliance Project (FOCP) as a result of the February 20, 2020, directive from the Federal Energy Regulatory Commission (FERC) to implement interim risk reduction measures at Anderson Dam. One of those measures is the ADTP.
On April 27, 2021, Valley Water’s Board of Directors awarded the construction contract for the ADTP to the top-ranked, best-value proposer, Flatiron Dragados West, Inc. (FDW), in the sum of $161,140,321 and approved a contingency amount of $40,000,000 (25% of the contract price). The Board directed staff to discuss delegating authority for contingency expenditures with the CIP Committee. On January 28, 2025, the Board of Directors approved an increase of $40,000,000 to the construction contract contingency sum, bringing the total construction contract contingency to $80,000,000.
By unanimous roll call vote at its May 17, 2021, meeting, the Committee approved recommending to the full Board that it consider delegating authority to staff to approve change orders for the ADTP at the amounts stated below and that the CIP Committee receive regular monthly reports with information regarding approved change orders, pending change orders, and the cumulative amounts. Valley Water’s Board of Directors accepted the CIP Committee recommendations at its regular meeting on May 25, 2021.
Delegated Approval Authority
Unit Manager: Up to $100,000
Assistant Operating Officer: Up to $250,000
Deputy Operating Officer: Up to $500,000
Assistant Chief Executive Officer: Up to $2.5 million
Chief Executive Officer: Up to $5 million
Board of Directors: $5 million and above
Construction Contract Change Orders Status
There is one new Contract Change Orders (CCO No. 67) to present to the CIP Committee. The value of CCO No. 67 is $108,284.00. Two attachments, providing information on construction contract change orders (Attachment 1) and construction contract financials (Attachment 2), are included for reference.
Contract Change Order No. 67
1. VTS NTP 3 Delay Labor Escalation - This change was submitted by Flatiron Dragados West, Inc. (FDW) on behalf of its subcontractor, Vadnais Trenchless Services (VTS), for escalation costs associated with the delayed microtunneling scope of work on the Project. FDW/VTS originally requested approximately $1.3 million in additional compensation for increases in both material and labor costs resulting from the delayed issuance of the Phase 3 Notice to Proceed (NTP) and schedule extensions.
Following review of the supporting documentation and multiple discussions among Valley Water, FDW, and VTS, staff did not find merit in the steel-related escalation components, including microtunneling pipe, specialty equipment, and miscellaneous steel materials. VTS would have experienced similar or higher steel pricing under the original procurement schedule, irrespective of the timing of the Phase 3 NTP.
Staff found merit in the labor escalation associated with the delayed performance of VTS’s microtunneling work, originally planned for spring of 2023 but performed in spring of 2024 due to construction schedule extensions. On this basis, Valley Water, FDW, and VTS agreed to settle the labor escalation component including subcontractor markups for $108,284.00 as full and final compensation for this issue.
Other Changes from Previous Month Contract Change Order Status
1. CCO No. 62 was presented at the March 2026 CIP Committee meeting for two items: (1) Installation of Large Diameter Pipe Outside the Tunnel; and (2) Ultrasonic Testing of Microtunneling Pipe Welds, estimated to be valued at $4,500,000.00 and $39,803.00, respectively. The total amount of CCO No. 62 was estimated at $4,539,803.00 at the time. Item 2 was removed from CCO No. 62 and executed as part of CCO No. 61, which was updated and presented in the May 2026 CIP. Item 1 has been updated after negotiations have finalized for $4,520,474.00, an increase of $20,474.00 from the original estimate. CCO No. 62 has now been revised to reflect the approved total amount of $4,520,474.00.
2. CCO No. 64 was presented at the May 2026 CIP Committee meeting and included one item: Diversion Tunnel Steel Liner and Concrete Backfill - Additional Scope and Escalation. CCO No. 65 was presented at the June 2026 CIP Committee meeting and included one item: Bond Name Change from Flatiron West Inc. to Flatiron Dragados West LLC. To allow the bond name change to be processed and executed earlier, staff administratively revised the change order numbering: CCO No. 64 is now assigned to the Bond Name Change, and CCO No. 65 is now assigned to the Diversion Tunnel Steel Liner and Concrete Backfill - Additional Scope and Escalation. This is an administrative renumbering only and does not change the previously reported scope or negotiated value of either item.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with this item.
ATTACHMENTS:
Attachment 1: Construction Contract Change Orders Status
Attachment 2: Construction Contract Financial Status
UNCLASSIFIED MANAGER:
Manager
Ryan McCarter, 408-630-2983