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, Approve the Contingency Fund, and Award the Construction Contract to J.F. Shea Construction, Inc., for the Almaden Valley Pipeline Replacement Project - Phase 1, Project No. 92304001, Contract No. C0714, in the Sum of $77,875,209 (San Jose, Unincorporated Santa Clara County; Districts 1, and 7).
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RECOMMENDATION: Recommendation
A. Ratify Addenda No(s). 1, 2, 3, 4, 5, and 6 to the Contract Documents for the Almaden Valley Pipeline Replacement Project - Phase 1;
B. Award the Construction Contract to J.F. Shea Construction, Inc., located in Walnut, CA, in the sum of $77,875,209; and
C. Approve a contingency sum of $11,681,281 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 Almaden Valley Pipeline Replacement Project - Phase 1 (Project) is to increase the reliability and useful life of the pipeline.
The project scope includes completely draining and removing all water from the Almaden Valley Pipeline (AVP) between Coleman Line Valve and Calero Line Valve, relining 19,000 linear feet of AVP with steel pipe, replacing line valves, installing a new line valve, providing support for pipeline replacement activities, procuring long-lead material, installing supervisory control and data acquisition (SCADA) system components, and installing corrosion protection systems.
Project Background
The Almaden Valley Pipeline (AVP) is included in the Santa Clara Valley Water District’s (Valley Water) Pipeline Maintenance Program (PMP). The PMP defines the activities associated with maintenance and replacement of water supply conveyance systems including pipelines, appurtenances, electrical systems, control systems, and structures, throughout Valley Water’s jurisdiction.
The Almaden Valley Pipeline (AVP) is comprised of three (3) pipeline segments: Segment 1, which begins at the Vasona Pump Station in Los Gatos and ends at the Coleman Line Valve in San Jose; Segment 2, which begins at the Coleman Line Valve and ends at the Santa Teresa Force Main in San Jose; and Segment 3, which begins at the Santa Teresa Force Main and ends at the Calero Valve yard in Santa Clara County.
Segment 1 is made up of 4.4 miles of Prestressed Concrete Cylinder Pipe (PCCP), while Segment 2 is made up of 3.6 miles of Welded Steel Pipe (WSP), and Segment 3 is made up of 3.5 miles of PCCP.
The Project (Phase 1) will replace Segment 3 of the pipeline because this segment has become embrittled, continues to degrade, and poses a significant risk to the water source availability of the San Luis Reservoir, Anderson Reservoir, and Calero Reservoir. The degradation of Segment 3 is unpredictable and can trigger costly emergency action if unaddressed. The Project will shut down AVP to install a new steel pipeline within the existing AVP alignment. The new steel pipeline will replace AVP from within by using the existing AVP as a pathway to install a slightly smaller, new steel pipeline.
Addenda Ratification
Six [6] addenda were issued during the bid advertisement period to clarify the Project Contract Documents and answer bidder’s questions. To formally incorporate the Addenda into the Project Contract Documents, staff recommends that the Board ratify the addenda.
To protect sensitive information related to the project, all parties interested in accessing the Plans and 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 Project’s 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. 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.
Contract Award
A report of bids received at the bid opening for the Project on December 17, 2025, is summarized in Table 1, including the Engineer’s Estimate for Project budgeting purposes (refer to the Financial Impact section).
The lowest responsible bid was submitted by J.F. Shea Construction, Inc., of Walnut, CA. The bid submitted by J.F. Shea Construction, Inc. is 30% higher than the Engineer’s estimate of $60,000,000. Past project and industry publication cost data that design engineers use to develop the Engineer’s Estimate is based on stable economic conditions, but the Post-COVID-19 environment, escalation in gas prices, and fluctuating tariffs made estimating the Project very challenging. Additionally, rapidly escalating costs due to supply chain disruptions, raw material cost inflation, and the upsurge in new construction affecting labor availability are all contributing factors to the elevated prices reflected in the bids received.
Staff reviewed the bid proposals and recommends the Board award the Construction Contract to J.F. Shea Construction, Inc., as the responsible bidder, submitting the lowest responsive bid.
Table 1: Bid Summary
|
Contractor, Location |
Bid Price |
Award Amount |
|
J.F Shea Construction, Inc. |
$77,875,209 |
$77,875,209 |
|
Mountain Cascade, Inc. |
$93,217,174 |
|
|
Ranger Pipelines Incorporated |
$95,142,575 |
|
|
Steve P. Rados, Inc. |
$95,726,012 |
|
|
Engineer’s Estimate: $60,000,000 |
Contingency Funds
The Contract award sum for the Project is $77,875,209. 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 a contingency amount of $11,681,281, 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. Coordination issues and risks associated with weather conditions; and
4. Coordination issues with operations and maintenance activities.
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
Chief Operating Officer: $750,000
Assistant CEO: $1,000,000
CEO: Up to $5,000,000
Relevant Prior Board Actions
On April 8, 2025, the Board adopted Resolution 2025-22 Setting the Time and Date for a Public Hearing on the Final Program Environmental Impact Statement and Engineer’s Report for the Pipeline Maintenance Program (PMP).
On April 22, 2025, the Board held a public hearing and adopted Resolution 2025-25 and Resolution 2025-26 certifying the final Program EIR for the PMP and Adopting CEQA findings of fact, statement of overriding considerations, and mitigation monitoring and reporting program and approving the Engineer’s Report for the PMP.
On October 28, 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
Valley Water has all the necessary right-of-way needed for the construction of the Project.
Permits
Valley Water received a Lake Stream Alteration Agreement (LSAA) from the California Department of Fish and Wildlife in December 2025.
Staff has obtained conditional right-of-way letters from the City of San Jose and County of Santa Clara. The final approved encroachment permits from these cities will be completed by the contractor after the construction contract is awarded and issued prior to construction commencement.
Public Outreach
During construction, appropriate measures will be taken to minimize impacts associated with the Project, such as traffic, noise, and dust. Residents and businesses in the Project area will be informed of construction impacts through multiple outreach strategies including social media such as Nextdoor and Facebook, mailers, and signs, and coordinated with the City of San Jose and County of Santa Clara. The construction Contract Documents include requirements and mitigations to minimize impacts to the public during construction.
Next Steps
If the Board approves the recommendations, staff will proceed with administering Project construction, which is anticipated to begin in March 2026 and be completed by April 2029.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with the Project. This action is unlikely to or will not result in disproportionate impacts on any specific communities relative to the general population from the implementation of this project. However, this project will enhance the reliability and operational flexibility of the pipeline and address existing system vulnerabilities. Upgrades to the Almaden Valley Pipeline will allow Valley Water to better service communities during times of emergency and future maintenance projects.
FINANCIAL IMPACT:
The Almaden Valley Pipeline Replacement Project (Project) is included in the Capital Improvement Program (CIP) Fiscal Years (FY) 2026-30 Five-Year Plan and in the FY 2025-26 Adopted Budget. Based on estimated construction contract costs, the Project’s FY 2025-26 Adopted Budget contains sufficient funds to encumber the construction expenditures planned for this fiscal year. The total cost for the recommended construction contract, including the change order contingency of $11,681,281, is $89,556,490, which increases the overall Total Project Cost (TPC) reflected in the CIP 2026-30 Five-Year Plan. The increase to the TPC is approximately $30 million and will be incorporated into the CIP Draft FY 2027-31 Five-Year Plan.
Funds to cover the anticipated construction costs will be incorporated into the biennial budget and recommended by staff through the annual fiscal year budget process or, if necessary, through budget adjustments. The Project (Project No. 92304001) is funded by the Water Utility Enterprise Fund (Fund 61), with 100% of project costs allocated to Zone W-2 (North County).
CEQA:
On April 22, 2025, the Board certified an Environmental Impact Report for the Pipeline Maintenance Program (PMP EIR) (accessible via <<https://fta.valleywater.org/dl/qRvvY7YPH2>>). The PMP provides for the routine inspection, rehabilitation, and maintenance of Valley Water’s raw and treated water pipelines and evaluates the environmental impacts of the PMP activities. All proposed activities for the AVP Project, including the construction of underground valves and vaults, are adequately analyzed in the PMP EIR. During Project construction, Valley Water and its contractor will comply with all applicable BMPs and mitigation measures from the PMP EIR and permit conditions.
ATTACHMENTS:
Attachment 1: Project Delivery Process Chart
Attachment 2: Project Overview Map
UNCLASSIFIED MANAGER: Manager
Emmanuel Aryee, 408-630-3074