BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT:
Title
Consider the September 16, 2024, Capital Improvement Program Committee Recommendation to Approve Implementing the Best Value Construction Contractor Selection Method for the Anderson Dam Seismic Retrofit Project, Project No. 91864005, and Receive Information on Staff’s Recommended Procurement Plan to Select the Anderson Dam Seismic Retrofit Project Construction Contractor (Morgan Hill, District 1).
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RECOMMENDATION:
Recommendation
Consider recommendations resulting from the September 16, 2024, Capital Improvement Committee to:
A. Approve implementing the best value construction contractor selection method for the Anderson Dam Seismic Retrofit Project (ADSRP); and
B. Receive information on staff’s recommended procurement plan to select the ADSRP construction contractor.
Body
SUMMARY:
The Anderson Dam Seismic Retrofit Project (ADSRP) will correct dam seismic deficiencies and otherwise meet all current Federal Energy Regulatory Commission (FERC) and California Department of Water Resources, Division of Safety of Dams (DSOD) dam safety design standards. The full reservoir capacity will be restored upon completion of ADSRP.
ADSRP is a uniquely complex project and estimated to take approximately seven years to build. The scale and complexity of its seasonal construction schedule necessitate using an alternative procurement process that will help ensure the selection of a qualified construction contractor, best positioned to successfully deliver the ADSRP on time and on budget.
Implementing a best value selection method has been identified by the FERC-mandated Independent Board of Consultants (BOC) as a highly desirable risk reduction measure to ensure that a highly qualified contractor is selected for the ADSRP. The objective is to use the best value selection process to obtain the most prepared and equipped contractor that can successfully manage the risks and schedule constraints to complete the ADSRP.
The purpose of this agenda item is for staff to explain the best value procurement process authorized by statute and recommend the Board approve its implementation to choose the ADSRP construction contractor. Using the best value method to select the contractor for award of the ADSRP construction contract was discussed at the Capital Improvement Program (CIP) Committee meeting held on September 16, 2024. The CIP members unanimously supported staff’s recommendation that the full Board approve the best value construction contractor selection method.
Statutory Authority for Best Value Method
In general, pursuant to a statutory requirement (Public Contract Code §21161) (PCC), Santa Clara Valley Water District (Valley Water) public works construction contracts must be awarded pursuant to a formal competitive bidding process, to the responsible bidder submitting the lowest responsive bid. However, effective January 1, 2022, a specific statute (PCC §21163) was enacted authorizing an alternative method based on “best value” (discussed below) just for the Anderson Dam Project and projects relating to the ADSRP, as defined in this PCC section.
PCC §21163(a)(2) defines this method as follows: “Best value” means a procurement process whereby the selected bidder may be selected on the basis of objective criteria for evaluating the qualifications of bidders with the resulting selection representing the best combination of price and qualifications.” PCC §21163(b) provides: “(b) Upon the approval of the board, the district may award contracts on a best value basis for any work for the Anderson Dam Project.” For the reasons explained in this Memorandum, staff recommends the best value method be approved for selecting the ADSRP construction contractor.
Best Value Construction Contractor Selection Method
Instead of selecting the responsible contractor submitting the lowest bid to construct ADSRP, a “best value” approach would be implemented in a competitively bid process. Staff will establish a “value” for each bid submitted, determined by evaluation of established criteria such as price, competency, capability, capacity to complete a project of similar size, proposed staff and equipment, recently performed similar projects and references to verify past performance, project execution plans, plans for regulatory compliance, bonding capacity, quality of service, and risk management. A best value determination involves selection of a proposal based not only on cost but also on other specified factors collectively meeting the interests and objectives of Valley Water.
Best value procurement can offer advantages over a traditional low bid competitive process where the construction services require particular qualifications such as experience or expertise, because the degree of a contractor’s qualifications is likely to affect the outcome of the project. Staff recommends a best value procurement method for the ADSRP because the selection of a contractor with the ability and resources to complete the ADSRP is a critical matter of public risk and safety; there are many challenges presented by the complex design, delivery, and physical construction elements of the ADSRP; the time-sensitive nature of the ADRP construction milestones and scheduling; and the oversight and jurisdiction of multiple entities (local, state, and federal).
Information explaining how the best value selection method works and the criteria used to evaluate bidders is provided in the power point slides (Attachment 1).
As a point of historical reference, an agenda item was previously considered by this Board on August 25, 2020, to discuss using this best value construction contractor selection method for the Anderson Dam Tunnel Project. There was no statutory authority yet, but both the CIP committee (at its meeting conducted on July 31, 2020), and subsequently the full Board of Directors, supported staff’s recommendation to implement this alternative method and it was successfully accomplished.
Procurement Plan to Select the ADSRP Construction Contractor
Staff is developing a procurement plan to select the ADSRP construction contractor using the best value method, as authorized by PCC §21163.
There will be two separate, sequential steps. First, potential bidders will be pre-qualified and deemed eligible to submit a bid based on scores attained in response to a Prequalification Application. These preliminary questions may relate to objective information, such as contractor’s license status, business entity type and location, bonding capacity, ability to meet all insurance requirements, previous projects with relevant features or challenges, etc. Only those firms determined prequalified will be eligible to participate in the second step of this process.
The second step will implement the best value criteria and include scoring the contractors’ specific technical proposals (price and non-price factors) to successfully meet the challenges presented to build this Project. A specific formula (subject to prior approval by the Board) will be applied to determine which firm presents the best combination of price and technical approach. The weight of the bid price in the total evaluation score will be determined with the intent to prioritize the selection of a highly qualified contractor capable of managing the size and complexity of the ADSRP construction.
If the Board approves the best value procurement method for selecting the construction contractor for ADSRP, staff will finalize development of the procurement plan and proceed with the first step, which is to prequalify potential bidders.
During development of solicitation documents to implement the second step, which will be to evaluate prequalified bidder’s technical proposals and price, staff will schedule future agenda items for Board direction and approval, as necessary and appropriate.
ENVIRONMENTAL JUSTICE AND EQUITY IMPACT:
There are no environmental justice and equity impacts associated with this item. This action is unlikely to or will not result in adverse impacts and is not associated with an equity opportunity.
FINANCIAL IMPACT:
There is no financial impact associated with this item.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have a potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment 1: PowerPoint
UNCLASSIFIED MANAGER:
Manager
Ryan McCarter, 408-630-2983