BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☒ No ☐
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Approve the Agreement No. A5443A with Aon Risk Insurance Services West, Inc., for Owner Controlled Insurance Program for the Anderson Dam Seismic Retrofit Project, Project No. 91864005, PlanetBids File No. VW0583, for a Total Fee of $3,650,000 and an 11-year term (Morgan Hill, District 1).
End
RECOMMENDATION: Recommendation
A. Approve Agreement A5443A with Aon Risk Insurance Services West, Inc., for Owner Controlled Insurance Program for the Anderson Dam Seismic Retrofit Project for a Fixed Fee of $2,750,000 and a 9% Builder’s Risk Placement Commission Estimated at $900,000 for a Total Fee of $3,650,000 and an 11-year term; and
B. Approve and authorize the Chief Executive Officer to Negotiate and Execute amendments related to Builder’s Risk Placement Commission for Agreement A5443A with Aon Risk Insurance Services West, Inc.
Body
SUMMARY:
The Anderson Dam Seismic Retrofit Project (ADSRP) construction will utilize an Owner Controlled Insurance Program (OCIP) Consultant to provide OCIP design, marketing, and management beginning with the bid process through project closeout.
The majority of large construction projects utilize OCIPs. An OCIP is whereby the owner of a construction project provides specific lines of insurance for all parties involved. An OCIP allows for cost savings, increased insurance limits, less chance of gaps in coverage or inconsistent insurance terms, and less frictional costs. The OCIP for the ADSRP will include all lines of insurance, except for Workers’ compensation as follows: Builders Risk, Owners Protective Professional Liability, Environmental Liability, OCIP General Liability and Excess Liability coverage.
The proposed consultant, Aon Risk Insurance Services West, Inc., will manage the OCIP as the expert consultant and go-between, securing the best terms of coverage and lowest possible pricing.
The fixed fee portion of the agreement includes all services provided for this project by Aon Risk Insurance Services West, Inc. The Builder’s Risk Placement Commission Fee is estimated at $900,000 and could vary based on actual commissions. Amendments to the agreement may be needed based on actual commission fees. The term of this Agreement is 11 years with two one-year extension options.
In addition to approval of this agreement, this Board action would authorize the Chief Executive Officer to negotiate and execute any future amendments to this Agreement related to builder’s risk placement commissions.
Project Background
Anderson Reservoir has been operated under restriction and the ADSRP was initiated based on preliminary findings from a seismic stability evaluation. Planning for the ADSRP commenced in 2012. The Planning Study Report was provided to the Board in a Non-Agenda Memo dated August 29, 2013.
On February 20, 2020, the Federal Energy Regulatory Commission (FERC) directed Santa Clara Valley Water District (Valley Water) to: (i) immediately maintain Anderson Reservoir below elevation 565 feet; (ii) begin to further lower Anderson Reservoir to dead pool (elevation 490 feet) no later than October 1, 2020, and maintain Anderson Reservoir at dead pool (elevation 490 feet) thereafter; and (iii) design and construct a new low-level outlet as soon as possible.
The ADSRP will remove and replace most of the existing dam with a well-compacted, zoned embankment dam; construct a new low-level outlet and a new high-level outlet to meet the California Division of Safety of Dams (DSOD) requirements for emergency drawdown of the reservoir; remove, replace, and extend the existing concrete spillway to safely pass the probable maximum flood; and make other improvements to Anderson Dam. Upon completion of the ADSRP, Anderson Reservoir will return to its original storage capacity.
This Agreement will provide the OCIP services for the ADSRP.
Consultant Scope of Services
The recommended Agreement with Aon Risk Insurance Services West, Inc., includes the necessary services to provide design, marketing, and management of the OCIP during ADSRP construction. A summary of the tasks and budget is presented in Table 1 below. The scope of services includes: Project Management, Insurance Program Design and Marketing, Contractor Bidding Services, Claims Management Services, Risk Control Services, OCIP Administration Services, OCIP Risk Management Information System Services (RMIS), OCIP Close-out Services, and Supplemental Services.
Table 1 - Summary of Tasks and Budget for
Proposed Consultant Agreement with Aon Risk Insurance Services West, Inc.
|
Task |
Description |
Fixed Fees |
|
1 |
Project Management |
$250,000 per year ($62,500 per quarter) for Tasks 1 - 9 |
|
2 |
Insurance Program Design and Marketing |
|
|
3 |
Contractor Bidding Services |
|
|
4 |
Claims Management Services |
|
|
5 |
Risk Control Services |
|
|
6 |
OCIP Administration Services |
|
|
7 |
OCIP Risk Management Information System Services (RMIS) |
|
|
8 |
OCIP Close-out Services |
|
|
9 |
Supplemental Services |
|
|
Total Task Fixed Fees |
$2,750,000 |
|
Estimated Total Builder’s Risk Placement Commission |
$900,000 |
|
Total Fixed Fees and Commission |
$3,650,000 |
Consultant Selection Process
On May 22, 2025, a Request for Proposal (RFP) for an OCIP for the ADSRP was published on Valley Water’s Procurement Portal, Planet Bids. The RFP was sent to firms that are registered in Planet Bids under category codes: 91869 Insurance Consulting; 95300 Insurance And Insurance Services, (All Types), and 95861 Insurance And Risk Management Services.
Valley Water received proposals from two (2) consultant firms, Aon Risk Insurance Services West, Inc. and Arthur J. Gallagher & Co. An Evaluation Committee (EC), consisting of subject matter experts evaluated and ranked the written proposals. Based on the technical proposal rating score, the EC recommended that staff enter into contract negotiations with Aon Risk Insurance Services West, Inc.
Negotiations with Aon Risk Insurance Services West, Inc. have successfully completed. Staff recommends the Board’s approval of the Agreement with Aon Risk Insurance Services West, Inc., for Owner Controlled Insurance Program for the Anderson Dam Seismic Retrofit Project (ADSRP), for a fee of $3,650,000.
ENVIRONMENTAL JUSTICE IMPACT:
There are no Environmental Justice impacts associated with this item.
FINANCIAL IMPACT:
The Anderson Dam Seismic Retrofit Project, Project No. 91864005 is included in the Capital Improvement Program (CIP) Fiscal Years (FY) 2026-30 Five-Year Plan and in the FY 2025-26 Adopted Budget. Approval of Agreement A5443A does not change the overall total Project cost reflected in the CIP’s FY 2026-30 Five-Year Plan. There are adequate funds in the Project’s FY 2025-26 Adopted Budget to encumber the total fee of $3,650,000.
The Project is forecasted to receive up to $54.1 million from the renewed Safe, Clean Water & Natural Flood Protection Program (Fund 26), with the remainder of the total project cost funded by the Water Utility Enterprise Fund (Fund 61), with 81.7% of the costs allocated to North County Zone W-2, 7.5% to South County Zone W-5 and 10.8% to South County Zone W-7.
A portion of the ADSRP project cost is expected to be financed by the Water Infrastructure Finance and Innovation Act (WIFIA) pursuant to the United States Environmental Protection Agency WIFIA Master Agreement with Valley Water entered into through its Santa Clara Valley Water District Public Facilities Financing Corporation, for the SCVWD Master Program for Water Reliability Program (WIFIA Agreement) dated February 14, 2023.
CEQA:
The recommended action does not constitute a project under the California Environmental Quality Act (CEQA) because it does not have potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment A: Gov. Code 84308
Attachment 1: Agreement
UNCLASSIFIED MANAGER: Manager
Carlos Orellana, 408-630-2755