COMMITTEE AGENDA MEMORANDUM
Capital Improvement Program Committee
Government Code § 84308 Applies: Yes ☒ No ☐
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: title
Receive Information on Change Orders to Anderson Dam Tunnel Project Construction Contract.
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RECOMMENDATION: Recommendation
Receive information on change orders to Anderson Dam Tunnel Project Construction Contract.
Body
SUMMARY:
During the May 17, 2021, Capital Improvement Program (CIP) Committee meeting, staff provided an update on the Anderson Dam Tunnel Project (ADTP) No. 91864006. The Committee requested staff provide monthly change order status updates after construction of the ADTP commences on July 7, 2021.
Project Background
Santa Clara Valley Water District (Valley Water) is undertaking the Anderson Dam Federal Energy Regulatory Commission Order Compliance Project (FOCP) as a result of the February 20, 2020, directive from the Federal Energy Regulatory Commission (FERC) to implement interim risk reduction measures at Anderson Dam. One of those measures is the ADTP.
On April 27, 2021, Valley Water’s Board of Directors awarded the construction contract for the ADTP to the top-ranked, best-value proposer, Flatiron Dragados West, Inc. (FDW), in the sum of $161,140,321 and approved a contingency amount of $40,000,000 (25% of the contract price). The Board directed staff to discuss delegating authority for contingency expenditures with the CIP Committee. On January 28, 2025, the Board of Directors approved an increase of $40,000,000 to the construction contract contingency sum, bringing the total construction contract contingency to $80,000,000.
By unanimous roll call vote at its May 17, 2021, meeting, the Committee approved recommending to the full Board that it consider delegating authority to staff to approve change orders for the ADTP at the amounts stated below and that the CIP Committee receive regular monthly reports with information regarding approved change orders, pending change orders, and the cumulative amounts. Valley Water’s Board of Directors accepted the CIP Committee recommendations at its regular meeting on May 25, 2021.
Delegated Approval Authority
Unit Manager: Up to $100,000
Assistant Operating Officer: Up to $250,000
Deputy Operating Officer: Up to $500,000
Assistant Chief Executive Officer: Up to $2.5 million
Chief Executive Officer: Up to $5 million
Board of Directors: $5 million and above
Construction Contract Change Orders Status
There are three new Contract Change Orders (CCO No. 68, No. 69, and No. 70) to present to the CIP Committee. CCO No. 68 is estimated at $880,279.13, CCO No. 69 is estimated at $972,000, and CCO No. 70 is estimated to be a credit in the amount of $1,000,000. Two attachments providing information on construction contract change orders (Attachment 1) and construction contract financials (Attachment 2) are included for reference.
Contract Change Order #68
1. Increase to Bid Items 2h, 2i, and 2k - CCO No. 56 previously extended these time-dependent bid items associated with Time Impact Analysis (TIA) 006 through April 2026. This change provides an additional three months of compensation for Bid Items No. 2h, 2i, and 2k for the portion of the remaining construction period determined to be Valley Water’s responsibility. Costs for these bid items beyond this period through completion of construction remain the contractor’s responsibility.
a. Bid Item No. 2h, Compliance with National Pollutant Discharge Elimination System (NPDES) General Permit, will be increased by three months at the original bid rate of $50,000 per month, for a total of $150,000.
b. Bid Item No. 2i, Migratory Birds, will be increased by three months at the renegotiated unit rate established under CCO No. 42 of $16,111.59 per month, for a total of $48,334.77.
c. Bid Item No. 2k, Dust Control and Air Monitoring, will be increased by three months at the original bid rate of $14,000 per month, for a total of $42,000.
This portion of the change order is estimated to be valued at $240,334.77.
2. Builder’s Risk Policy Extension - Builder’s Risk insurance is required by the Contract and must remain in place for the duration of construction. Previous Time-Related Overhead (TRO) payments and change orders included estimated amounts for additional Builder’s Risk premiums associated with contract time extensions and increases in contract value.
FDW’s actual Builder’s Risk premium was higher than the amounts previously estimated and compensated through prior TRO payments and change orders. This change covers the difference between the amounts previously compensated and the actual Builder’s Risk premium for the extended construction period, spanning from the original construction completion date in March 2024 through final construction completion in December 2026. This portion of the change order is estimated to be valued at $639,944.36.
Contract Change Order #69
1. Global Settlement of Outstanding Change Order Requests and Contract Credits - This change provides for a negotiated global settlement between Valley Water and Flatiron Dragados West (FDW) of certain outstanding change order requests, potential change orders, and contract credits accrued during construction that remain unresolved as the Project approaches completion. The global settlement serves to resolve the disparity in compensation between FDW and Valley Water by packaging the changes and agreeing upon a settlement value.
The settlement includes contractor requests associated with construction modifications and field conditions, extended safety and field support, material handling, waterproofing and concrete work, electrical and Control Building modifications, equipment replacement, testing, and other miscellaneous construction items. The settlement also includes credits due to Valley Water for work that was reduced, deleted, or performed differently than originally specified, including portions of field testing, changes in specified materials, removal of landscape establishment requirements, site improvements, utility invoices, valve inspection travel costs, and other miscellaneous work.
Throughout negotiations, both parties held differing positions regarding contractual responsibility, entitlement, and cost, on which concurrence was not reached through the normal change order process. In order to mitigate the risk of formal dispute resolution proceedings as the Project approaches completion, Valley Water and FDW have elected to negotiate these outstanding requests and credits collectively as a single settlement package. The settlement reflects compromises by both parties and is intended to provide cost certainty, reduce the additional time and effort required to resolve each item individually, and support the Project’s progression toward contract closeout. Upon execution, the items included in this settlement will be considered fully resolved and closed under a full and final release.
This portion of CCO No. 69 is currently estimated to be valued at $972,000, subject to completion of negotiations with FDW.
Contract Change Order #70
1. Bid Item and Time & Material Balancing - This change balances various contract bid items and remaining Time and Material (T&M) allowance balances on previously executed change orders as the Project approaches completion. Final quantities for certain bid items differ from the estimated quantities in the original contract. This change adjusts those bid items to reflect the quantities actually performed. This is an accounting mechanism to credit back the remaining balance, and no changes to scope of work are made by this item. In addition, previously executed change orders authorized work on a T&M allowance basis using estimated not-to-exceed amounts. Similarly, this item balances those change orders at their final values and returns the unused balances. This change order is estimated to be a credit to Valley Water in the amount of $1,000,000, subject to final reconciliation with FDW.
Other Changes from Previous Month Contract Change Order Status
1. CCO No. 65, Diversion Tunnel Steel Liner and Concrete Backfill - Additional Scope and Escalation, was originally presented at the May 2026 CIP Committee meeting as CCO No. 64 and then updated at the August 2026 CIP Committee meeting to revise the administrative numbering to CCO No. 65. After additional rounds of reviews and negotiations, the proposal was revised from $1,200,000 to $886,000, a reduction of $314,000.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with this item.
ATTACHMENTS:
Attachment A - Gov. Code § 84308: Flatiron Dragados West
Attachment 1: Construction Contract Change Orders Status
Attachment 2: Construction Contract Financial Status
UNCLASSIFIED MANAGER:
Manager
Ryan McCarter, 408-630-2983