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 Con-Quest Contractors Inc. for the Penitencia Delivery and Force Main Inspection and Rehabilitation Project, Project No.95084005, Contract No. C0727 in the Sum of $6,591,000 (San Jose, District 3).
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RECOMMENDATION: Recommendation
A. Ratify Addenda No(s). 1 and 2 to the Contract Documents for Penitencia Delivery and Force Main Inspection and Rehabilitation Project;
B. Award the Construction Contract to Con-Quest Contractors Inc, located in Burlingame, CA, in the sum of $6,591,000; and
C. Approve a contingency sum of $988,650 and authorize the Chief Executive Officer or designee to approve individual change orders up to the designated amount.
Body
SUMMARY:
The objective of the Penitencia Delivery and Force Main Inspection and Rehabilitation Project (Project) is to increase the reliability and useful life of the pipelines.
The Project scope includes completely draining and removing all water from the Penitencia Delivery Main and Penitencia Force Main, performing repairs on pipeline appurtenances, replacing line valves, providing support for an internal pipeline inspection, updating electrical and controls systems, and performing internal pipeline repair work as identified during the inspections.
Project Background
The Penitencia Delivery and Force Main Inspection and Rehabilitation Project is included in the Santa Clara Valley Water District’s (Valley Water) Pipeline Maintenance Program (PMP) and is identified as a capital effort in the PMP. The PMP defines the activities associated with maintenance and repair of water supply conveyance systems including pipelines, appurtenances, electrical systems, control systems, and structures, throughout Valley Water’s jurisdiction.
The Penitencia Delivery and Force Main pipelines were originally constructed in 1964 and consist of approximately 3,500 linear feet of prestressed concrete cylinder pipe (PCCP), Ductile Iron Pipe (DIP), and welded steel pipe (WSP). The pipeline diameters vary from 42-inches at the connection to the Penitencia Water Treatment Plant (PWTP) to 66-inches at the Overflow Bypass Structure. The pipelines are located in the easterly portion of San Jose, and are part of the North County System. The Penitencia Delivery Main and Penitencia Force Main pipelines start at PWTP and end at the Milpitas Pipeline, the East Pipeline, and the Central Pipeline connections at the intersection of Piedmont Road and Maxey Drive in San Jose. The construction of the Project is expected to be completed in April 2028.
Addenda Ratification
Two (2) addenda were issued during the bid advertisement period to clarify the Project Contract Documents and answer bidders’ 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 communications to the 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 May 6, 2026, 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 Con-Quest Contractors Inc. The bid submitted by Con-Quest Contractors Inc is 1.2% above the Engineer’s estimate of $6,510,000.
The bid submitted by Con-Quest Contractors, Inc. was substantially lower than the other bid received. This can be attributed to Con-Quest Contractors, Inc.’s experience on prior Valley Water pipeline inspection and rehabilitation projects and established relationships with manufacturers for pipeline construction materials. Furthermore, Conquest Contractors, Inc. is currently contracted with Valley Water to work on the West Pipeline Inspection and Rehabilitation Phase 1 Project (WPL I&R Phase 1 Project), which is in Santa Clara County and in proximity to the Project. This allows Con-Quest Contractors, Inc. to efficiently transition resources from the WPL I&R Phase 1 Project to this project and contribute to additional cost savings.
Staff reviewed the bid proposals and recommends the Board award the Construction Contract to Con-Quest Contractors, Inc as the responsible bidder, submitting the lowest responsive bid.
Table 1:
Contingency Funds
The Contract award sum for the Project is $6,591,000. 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 $988,650 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.
The shutdown-required work requires extensive coordination with a Valley Water third-party contractor to complete internal pipeline inspections and identify repairs. The full scope of the internal pipeline repairs that will be performed by the Project contractor is not known until a comprehensive internal inspection of the pipelines is completed and the results of the inspections have been analyzed.
Approval of individual change orders for the Project will be subject to approval at the following designated amount:
Engineering Unit Manager: $100,000
Deputy Operating Officer: $300,000
Chief Operating Officer: $400,000
Assistant CEO: $500,000
CEO: Up to the Total Amount of the Contingency
Relevant Prior Board Actions
On April 8, 2025, the Board adopted Resolution 2025-22 Setting the Time and Date of a Public Hearing on the Final Program Environmental Impact Report 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 March 24, 2026, the Board found the Project substantially complex, requiring a construction contract retention of ten percent (10%); designated certain components to use specific brand or trade-name products; adopted the Plans and Specifications; authorized the 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
All work will be done within Valley Water’s existing easements and within public right-of-way.
Permits
Staff received the Project’s Lake Stream Alteration Agreement (LSAA) from the California Department of Fish and Wildlife in May 2026.
Staff received a conditional encroachment permit from the City of San Jose. The final approved encroachment permit from the City of San Jose will be obtained 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 potential temporary construction impacts through multiple outreach strategies including social media, informational mailers and signs, and coordination with the City of San Jose. 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 June 2026 and completed by March 2028.
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 community(ies) relative to the general population from the implementation of this project/program. However, the Project will enhance the reliability and operational flexibility of the pipelines and address existing system vulnerabilities. Upgrades to the Penitencia Delivery Main and Penitencia Force Main will allow Valley Water to better service communities during times of emergency and future maintenance projects.
FINANCIAL IMPACT:
The Project is being funded through Project No. 95084005. Also contributing to the Project are 10-YR Pipeline Inspection and Rehabilitation, Project No. 95084002 and Pipeline Maintenance Program, Project No. 95084003. All contributing project numbers are included in the Capital Improvement Program (CIP) Fiscal Year (FY) 2026-30 Five-Year Plan and in the FY2026-27 Adopted Budget. Based on estimated construction contract costs, there are adequate funds in the Project’s FY2026 Adopted Budget to encumber the planned expenditures for construction to be incurred during this fiscal year. The total cost for the recommended construction contract, including change order contingency of $988,650 is $7,579,650.
The Project is funded by the Water Utility Enterprise Fund (Fund 61) with 100% of the project costs allocated to Zone W2 (North County).
CEQA:
On April 22, 2025, the Board certified the Environmental Impact Report for the Environmental Impact Report for the Pipeline Maintenance Program (PMP EIR) (access via <https://fta.valleywater.org/fl/THxBMxRmhWXk>). 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 Project 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