BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☒ No ☐
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Find that Formal Competitive Bidding Would be Competitively Unavailing and Approve the Contingency Fund and Award the Construction Contract to Gordon N. Ball, Inc., for the Coyote Creek Flood Protection Project, Project No. 26174043, Contract No. C0724 in the Sum of $125,649,597 (San Jose, Districts 2, 3, and 6).
End
RECOMMENDATION: Recommendation
A. Find that formal competitive bidding would be competitively unavailing;
B. Award the Construction Contract to Gordon N. Ball, Inc., located in Alamo, California, in the sum of $125,649,597; and
C. Approve a contingency sum of up to $18,847,440 and authorize the Chief Executive Officer or designee to approve individual change orders up to the designated amount.
Body
SUMMARY:
The Santa Clara Valley Water District (Valley Water) is undertaking the Coyote Creek Flood Protection Project (CCFPP or Project) to provide flood risk reduction measures against a flood event equivalent to the February 2017 flood event or approximately a 20-year flood event. The CCFPP is approximately nine (9) miles long and located within the city of San Jose. The Project is part of the Safe, Clean Water Program that voters renewed in November 2020.
Project Background
The CCFPP’s primary objective is to provide protection from floods up to the level that occurred on February 21, 2017, equivalent to a flood level with a 5% risk of occurring in any given year (also referred to as a 20-year event), along Coyote Creek, between Montague Expressway and Tully Road, in San Jose. The CCFPP involves construction of multiple floodwalls, passive barriers and earthen berms along a nine (9) mile stretch of Coyote Creek.
Following a February 2020 order from the Federal Energy Regulatory Commission (FERC) regarding Anderson Dam, the original Coyote Creek Flood Protection Project was split into two projects to accommodate construction of a new outlet tunnel at Anderson Dam. As a result, Valley Water accelerated the design and construction of an initial project, the Coyote Creek Flood Management Measures Project (CCFMMP), representing 40% of the original Coyote Creek Flood Protection Project, so the creek can handle the potential release of higher flows from the larger outlet tunnel from the Anderson Dam Tunnel Project. The Board awarded the CCFMMP construction contract in May 2023 and accepted the work as completed in June 2025.
The remaining components of the original CCFPP are scheduled for completion before the Anderson Dam Seismic Retrofit Project (ADSRP) Stage 2 Diversion becomes operational, which is estimated to be in 2028. In total, the Project includes constructing approximately 17,000 feet of improvements along the 9-mile stretch of Coyote Creek from Montague Expressway to Tully Road. The Project will result in flood risk reduction benefits to homes, businesses, schools, and transportation infrastructure, including disadvantaged communities along Coyote Creek.
Initial Contract Award
Staff conducted a competitive bidding process that included extensive industry outreach, public advertisement, and pre-qualification of six contractors based on demonstrated experience completing projects of similar size and scope. Five contractors submitted bids, which were opened on June 24, 2026. Following review of the bids, on July 24, 2026, Board awarded Construction Contract No. C0724 to Shimmick Construction Company, Inc (Shimmick) the lowest bidder (Attachment 1). Valley Water and Shimmick have come to a mutual agreement to end the contract.
Current Contract Award
California Public Contract Code section 21161 would ordinarily require that the Project’s construction contract be awarded after a formal competitive procurement. There is, however, a judicial exception to the formal competitive procurement requirements of the Public Contract Code where competition would be “unavailing or would not produce an advantage, …be undesirable, impractical, or impossible.” Graydon v. Pasadena Redevelopment Agency (1980) 104 Cal.App.3d 631. These circumstances are present here and support awarding a replacement construction contract to Gordon N. Ball, Inc. (“GNB”) without a second competitive process.
First, competitively rebidding the construction contract would delay the Project and could result in significant and undesirable consequences. Staff estimates that a second competitive rebidding process would delay the start of construction by at least three months or more. The Project is scheduled for completion by October 2028, before the ADSRP Stage 2 Diversion becomes operational. Rebidding would jeopardize completion of the flood protection improvements before those operations begin. Releases associated with Stage 2 Diversion could exceed the capacity of unimproved portions of Coyote Creek. If the improvements are not completed in time, these releases would increase the risk of the creek overtopping its banks, damaging homes, businesses, schools, and transportation infrastructure, and endangering the health and safety of residents, including disadvantaged communities. Preserving the construction schedule is critical in realizing the Project’s public safety benefits.
Second, Valley Water has already conducted a transparent, objective, and open competitive bidding process. GNB prequalified in that process and was the responsible bidder with the second lowest bid of $125,649,597, which was approximately 17% lower than the Engineer’s estimate. GNB has committed to honoring that bid at the same price and under the same terms. A new competitive process is unlikely to provide any advantages. Moreover, it would likely result in a higher bids due to evolving economic factors such as inflation. Awarding the replacement construction contract to GNB would retain the benefit of the competition already conducted.
For the reasons above, staff recommend that the Board find that formal competitive bidding of the replacement construction contract would be competitively unavailing. Staff recommend that the Board award Construction Contract No. C0724 to GNB in the amount of $125,649,597 under the terms of its prior bid.
Contingency Funds
The Contract award sum for the Project is $125,649,597. 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 up to $18,847,440 (15% of the contract amount) for the subject Project.
The above-contingency amount was estimated due to known and unknown risks, such as:
1. Unforeseen or differing site conditions, field conditions that may be different from the baseline and as-built information used in the 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 related to right-of-way acquisitions and any changes needed as a result; and
4. Risks associated with weather conditions.
5. Accelerating the construction due to the delay in award of Contract.
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 Chief Executive Officer: $1,000,000
Chief Executive Officer: Up to the total contingency amount
Relevant Prior Board Actions
On April 14, 2026, the Board adopted the Project plans and specifications, authorized the advertisement for construction bids, and authorized the Designated Engineer to issue addenda during the bidding process. The Board also considered the First Addendum to the Final EIR for the CCFPP.
On July 24, 2026, the Board received reports of bids, ratified addenda, waived minor irregularities, approved the contingency fund, and awarded Construction Contract No. C0724 to Shimmick Construction Company, Inc.
Small Business Program
The initial contract was advertised, incorporating the Small Business Enterprise (SBE) Outreach Program that requires non-SBE bidders who have not achieved a 30% subcontracting goal and have submitted one of the three apparent low bids to demonstrate Good Faith Efforts (GFE) made to solicit SBE participation. GNB is not a SBE. However, GNB provided GFE documentation that satisfied the GFE requirement of the SBE Outreach Program Policy and its bid subcontracts out the project scope in the amount of $5,925,125 to the Department of General Services Certified Small Businesses, which is equivalent to 4.7 percent of the total bid amount.
Rights-Of-Way
A. Phased Notices to Proceed. Right-of-way transactions are still pending, which will impact the contractor’s access to certain geographic areas of the Project. Consequently, to commence Project construction with minimal delay, staff will utilize phased Notice to Proceed (NTP) approvals to authorize the contractor to proceed with building the Project in a certain sequence, as real property rights are secured. The planned phased NTP dates and required construction milestone dates are stated in the Contract Documents.
B. Right-of-Way Status. CCFPP will be built in five reaches of Coyote Creek, Reaches 4, 5, 6, 7, and 8. The first phase of NTP approval (first phase) is to authorize the contractor to proceed with construction in portions of Reaches 4, 6, 7, and 8, which consist of approximately two-thirds of the proposed CCFPP improvements. All rights-of-way necessary for issuing approval to proceed with construction of the first phase have been secured prior to the issuance of the applicable NTP.
Through the phasing of the NTP dates staff has additional time to acquire the necessary rights of way. Where the necessary rights of way have not successfully been granted or voluntarily obtained, Valley Water has initiated litigation and that litigation remains in progress. Should continued efforts to legally obtain the necessary rights of way be obstructed, Project schedule may be delayed. Staff will seek input and direction from the Board in such cases, as needed.
Regulatory Permits and Jurisdictional Approvals
All necessary regulatory permits have been obtained for the Project's construction.
The Project has secured the approval of the plans from the City of San Jose (City) for improvement in the City’s public right-of-way, except for backflow prevention for City’s storm drain system. It is anticipated that the City approval for backflow prevention for City’s storm drain system will be obtained once the operations and maintenance agreement is finalized by the end of this year. The operations and maintenance agreement outlines roles and responsibilities of the proposed improvements within City’s owned property, public right-of-way and storm drain network.
The Project also requires approval of Division of State Architect (DSA) for improvements within the school property. Staff expects the DSA approvals to be secured prior to construction of these elements. Staff intends to give an administrative NTP to the Contractor as soon as Valley Water secures the property rights, so that the Contractor has sufficient time to procure the passive barriers that have a long lead time. Should DSA review need modifications to the design, staff will evaluate those modifications and impact to the Project and update the Board, as needed.
Public Outreach
Valley Water will use a variety of outreach strategies to keep the community informed of the Project’s progress and important milestones. During the Project’s design phase, numerous public meetings were held, both virtual and in-person, within the adjacent neighborhoods. Valley Water also utilized physical mailers and Nextdoor social media posts to inform the community.
During construction, public outreach will be targeted to the surrounding neighborhoods and include construction update public meetings. In addition to the outreach tactics used during the design phase, construction phase outreach will include regular email updates and construction site signage.
Next Steps
If the Board approves the recommendations, staff will proceed with administering construction of the Project, which is anticipated to begin in November 2026 and be completed by October 2028, followed by a three (3) year plant establishment period, in compliance with the regulatory permits.
ENVIRONMENTAL JUSTICE IMPACT:
This action is unlikely to or will not result in disproportionate impacts on any specific community(ies) relative to the general population from the implementation of this project. However, CCFPP will have beneficial Environmental Justice impacts. The intent of the CCFPP is to protect the public, including disadvantaged communities from dangers associated with flooding similar to the flooding event that occurred in February 2017. Construction of the Project does not disproportionately impact undeserved or disadvantaged communities.
FINANCIAL IMPACT:
The CCFPP is included in the Capital Improvement Program (CIP) Fiscal Year (FY) 2027-31 Five-Year Plan and in the FY 2026-27 Adopted Budget. The total cost for the recommended construction contract, including the change order contingency sum of $18,847,440 is $144,497,037, which does not change the overall total Project cost reflected in the CIP FY 2027-31 Five-Year Plan.
Based upon current estimates, there are adequate funds in the Project’s Board -adopted FY 2026-27 budget to encumber the planned expenditures for construction to be incurred during this fiscal year. 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 through the Safe, Clean Water Program Fund (Fund 26).
The Department of Water Resources (DWR) has awarded Valley Water $3.8 million in Integrated Regional Water Management Program (IRWMP) grant funding for a portion of CCFPP construction work. In addition, California State Legislature made a $2.5 million direct appropriation for the Project in the 2026 Budget Act as part of AB 113 (Gabriel, Chapter 248, Statutes of 2026).
On February 14, 2023, Valley Water and the U.S. Environmental Protection Agency (EPA) entered into a master loan agreement pursuant to EPA’s Water Infrastructure Finance and Innovation Act (WIFIA) loan program to fund CCFFP and the Sunnyvale East and West Channels flood control project. The agreement provides for the execution of loans totaling $146.6 million to partially fund the projects. An initial loan for $41.3 million, which provides funding for CCFPP design and planning costs, was entered into on February 14, 2023. Staff is working on executing a second loan for $105.3 million for CCFPP construction costs.
CEQA:
Valley Water is the lead agency under the CEQA for the implementation of the Project. On March 11, 2025, the Board adopted a Resolution (Resolution No. 2025-16) certifying the Final Environmental Impact Report (EIR), adopting the Mitigation Monitoring and Reporting Program and approved the CCFPP.
On April 14, 2026, the Board Considered the First Addendum to the Final EIR.
ATTACHMENTS:
Attachment A: Gov. Code 84308
Attachment 1: 07242026 Board Agenda Memorandum
Attachment 2: Location Map
Attachment 3: Project Delivery Process Chart
UNCLASSIFIED MANAGER: Manager
Bhavani Yerrapotu, 408-630-2735