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, Waive Minor Irregularities, Approve the Contingency Fund, and Award the Construction Contract to Flatiron Dragados Sukut ADSRP Joint Venture for the Anderson Dam Seismic Retrofit Project, Project No. 91864005, Contract No. C0702 in the Sum of $1,883,542,190 (Morgan Hill, District 1).
End
RECOMMENDATION: Recommendation
A. Ratify Addenda Nos. 1 through 20 to the Contract Documents for the Anderson Dam Seismic Retrofit Project;
B. Waive minor irregularities in Flatiron Dragados Sukut ADSRP Joint Venture and Barnard Construction Company, Inc. bids;
C. Award the Construction Contract to Flatiron Dragados Sukut ADSRP Joint Venture, located in Concord, CA, in the sum of $1,883,542,190; and
D. Approve a contingency sum of $50,000,000 and authorize the Chief Executive Officer or designee to approve individual change orders up to the designated amount.
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SUMMARY:
The Anderson Dam Seismic Retrofit Project (ADSRP or Project) is a critical infrastructure project that will address seismic deficiencies at Anderson Dam and bring the facility into compliance with current Federal Energy Regulatory Commission (FERC) and California Department of Water Resources, Division of Safety of Dams (DSOD) dam safety requirements.
The Project will result in a seismically resilient dam, restore Anderson Dam to its full operational storage capacity, improve water supply reliability and groundwater recharge options, and enhance operational flexibility, including minimizing the risk of reservoir spills, providing in-stream environmental flows consistent with regulatory requirements, and restoring recreational opportunities at Anderson Reservoir and along the Coyote Creek corridor.
ADSRP is one of the largest and most complex capital projects undertaken by Santa Clara Valley Water District (Valley Water) with a seven-year construction duration (2027 to 2033), followed by a two-year plant establishment period. Approval of the recommended actions will authorize the award of the construction contract and allow construction of ADSRP.
Project Background
Anderson Reservoir has been operated under restriction, and the ADSRP was initiated based on preliminary findings from a seismic stability evaluation. Planning for the ADSRP commenced in 2012 and was completed in 2013. On August 27, 2013, the Board approved Agreement No. A3676A with URS Corporation for design services for the ADSRP. The Planning Study Report was provided to the Board in a Non-Agenda Memo dated August 29, 2013.
Numerous factors, primarily driven by new geological discoveries, heightened regulatory standards, and environmental requirements, have significantly expanded the ADSRP scope since the Planning Study Report was completed in 2013. Initially, ADSRP aimed for seismic stabilization of Anderson Dam by adding materials to the existing dam embankment. However, during the design phase in 2016, additional geotechnical studies and investigations revealed active faulting directly beneath the dam's foundation. This discovery was significant because it indicated that the existing dam embankment could liquify and potentially fail during a large earthquake. This fundamentally changed staff’s understanding of the dam's stability and led to a complete redesign from simply retrofitting the existing dam to fully removing and replacing it with a new dam.
As modified, the ADSRP will remove and replace most of the existing dam with a well-compacted, zoned embankment dam; construct a new low-level outlet and a new high-level outlet to meet DSOD requirements for emergency drawdown of the reservoir; remove, replace, and extend the existing concrete spillway to safely pass the probable maximum flood; and make other improvements to Anderson Dam. Upon completion of the ADSRP, Anderson Reservoir will return to its original storage capacity.
On February 20, 2020, the Federal Energy Regulatory Commission (FERC) directed Valley Water to: (i) immediately maintain Anderson Reservoir below elevation 565 feet; (ii) begin to further lower Anderson Reservoir to dead pool (elevation 490 feet) no later than October 1, 2020, and maintain Anderson Reservoir at dead pool (elevation 490 feet) thereafter; and (iii) design and construct a new low-level outlet as soon as possible. The Anderson Dam Tunnel Project (ADTP) was initiated in 2020, and its design was completed in 2021. Construction for the ADTP is ongoing and is currently scheduled to be completed in November 2026.
Liquidated Damages and Incentive Structure
To promote on-time completion of critical construction milestones and minimize flood risk associated with schedule delays, the Contract Documents include a structured liquidated damages and incentive framework for ADSRP.
Failure to achieve the two critical milestones, Contract Milestone 9 (Completion of the Upstream Diversion Tunnel) and Contract Milestone 12 (Completion of Stage 1B Interim Dam), by the deadlines specified in the Contract Documents will subject the Contractor to liquidated damages of $25 million each. These milestones are highly schedule-sensitive, and failure to meet the deadlines would result in a one-year delay due to seasonal constraints. The $25 million figure reflects anticipated environmental mitigation and monitoring costs incurred during an additional year of dewatering and site impacts.
The Contract Documents also include a $25 million incentive for early completion of Contract Milestone 13 (Completion of Stage 2B Interim Dam). The purpose of this incentive is to encourage early completion of this critical milestone for public safety and flood risk reduction. The incentive is structured to drive contractor performance and ensure this milestone is prioritized without triggering adversarial claims. If earned, the incentive would be paid out of the contingency fund and issued as a Contract Change Order, which would be presented to the Board for approval, as it exceeds the delegated authority levels described below.
Addenda Ratification
Twenty (20) 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 recommend that the Board ratify the addenda.
To protect sensitive information related to the project, all parties interested in accessing the Plans, 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 to the Board in a separate communication 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.
The Plans and Specifications released at the time of advertisement were at 100 percent, except for the intake tower design, which was at 90 percent design. The intake tower design was finalized and released to the bidders through addenda. FERC and DSOD provided review comments on the Plans and Specifications, which were addressed and released to the bidders through addenda.
Waiver of Minor Irregularities in Bids from Barnard and FDS
Barnard Construction Company, Inc. (Barnard) and Flatiron Dragados Sukut ADSRP Joint Venture (FDS) each submitted timely Technical Submittal Certifications signed by authorized representatives; however, evidence of legal authority for the first signatory was not provided by either firm. On June 6, 2026, Valley Water issued a clarification request for evidence of legal authority. Barnard and FDS provided the requested documentation on June 8, 2026.
Valley Water noted that portions of Attachment 1.2.A (Quality Control Plan) were not included in the original submission package from FDS. Valley Water issued a clarification request on May 22, 2026, seeking confirmation and submission of the missing information. FDS immediately provided the requested information in response to the clarification request. The omission was the result of an inadvertent failure to upload the existing document. It did not provide a competitive advantage, did not alter the Technical Submittal, and was adequately resolved through the clarification process.
These errors are not material and do not affect the Bidders’ ability to fulfill the contract or give the firms an unfair advantage in the competitive bidding process for the Project. The bids substantially complied with the bidding requirements. Staff recommends that the Board waive these minor irregularities.
Best Value Procurement Process
To support a balanced contractor selection process for the ADSRP and given the Project's complexity and public safety significance, the Project was procured using a two-step Best Value procurement process that emphasized technical qualifications, risk management, and price competitiveness.
Prior to issuing an Invitation to Bid, Valley Water completed the first step of the process by prequalifying contractors eligible to compete for the Project. The Request for Prequalification Application was published through PlanetBids, and applications were evaluated on a pass/fail basis for financial capacity and key technical qualifications, including major dam construction, tunnel construction, and management of large public infrastructure projects. Following technical and financial review, reference checks, and internal approvals, Valley Water identified three contractors as Prequalified Bidders, eligible to proceed to the bidding phase.
On September 23, 2025, an Invitation to Bid was published on Valley Water’s procurement portal on PlanetBids, formally initiating the competitive procurement process and inviting the Prequalified Bidders to participate.
On October 16, 2025, a pre-bid meeting was held to provide the Prequalified Bidders with information about the project, procurement requirements, and contract expectations. Valley Water also held in-person and hybrid one-on-one meetings with the prequalified bidders beginning November 2025 and continuing throughout the procurement process to provide an opportunity for prequalified bidders to ask questions and better understand the Project.
On May 20, 2026, Valley Water received Technical Submittals from two Prequalified Bidders, for review and evaluation. An evaluation committee of four internal and one external reviewer rated the submittals and ranked the Bidders.
On June 10, 2026, the evaluation committee conducted Bidder interviews as part of the evaluation process to further assess each Bidder’s technical approach, qualifications, and understanding of the Project requirements.
Independent reviews of the technical submittals were also performed by a Technical Review Panel, Responsiveness Committee, and District Legal Counsel to confirm technical quality, verify responsiveness to procurement requirements, ensure consistency with the solicitation and applicable legal requirements, and support a fair, transparent, and defensible evaluation process.
On June 24, 2026, Valley Water received Price Submittals from two Prequalified Bidders.
On June 26, 2026, Valley Water issued Addendum No. 19 requesting Best and Final Offers (BAFOs) from the Prequalified Bidders. The BAFO process provided bidders an opportunity to submit updated final pricing following the technical evaluation and pricing clarification process, helping improve price competitiveness and clarify Bidder assumptions. Addendum No. 19 also established a $2,000,000,000 (Two Billion Dollars) Upset Limit and provided for one-on-one pricing clarification meetings with each Prequalified Bidder.
On July 10, 2026, Valley Water received updated Pricing Submittals from two prequalified bidders as part of the BAFO evaluation process. Valley Water evaluated the updated pricing in accordance with the Instructions to Proposers and determined the recommended award based on the highest-ranked responsive and responsible Bidder whose final bid price did not exceed the established upset limit.
Contract Award
In accordance with the evaluation process and award criteria established in the solicitation documents, including Addendum No. 19, Flatiron Dragados Sukut ADSRP Joint Venture was identified as the highest-ranked responsive and responsible bidder whose final bid price did not exceed the established upset limit.
The bid submitted by Flatiron Dragados Sukut ADSRP Joint Venture is $1,883,542,190, which is 4.5% below the Engineer’s Estimate of $1,971,666,135.
Staff reviewed the bid proposals and recommends the Board award the Construction Contract to Flatiron Dragados Sukut ADSRP Joint Venture as the responsible bidder, submitting the highest-scoring responsive Best Value Bid.
Contingency Funds
The Contract award sum for the Project is $1,883,542,190. 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 that the Board approve encumbering a contingency amount of $50,000,000, which is 2.65% of the contract amount for the subject Project.
Valley Water typically approves a 10% contingency on complex construction contracts. Applying this approach to ADSRP would result in a contingency of $188 million at the time of award. Given the magnitude of the Project, staff recommend a lower initial contingency amount to avoid over-encumbering funds.
The recommended contingency amount is based on an estimate of known and unknown risks, such as:
1. Unanticipated variances in quantities and cost of various lump sum and allowance items estimated in the Bid Submittal;
2. Differing site conditions;
3. Concealed conditions and/or field conditions that may be different from the baseline or as-built information used in the preparation of Project Contract Documents; and
4. Mandatory coordination processes and consultation with regulatory agencies having oversight over the Project.
In addition to the risks mentioned above, construction costs could exceed the contingency amount approved by the Board, based on additional circumstances, including:
1. Design changes required by regulatory agencies (FERC and DSOD);
2. Permit compliance changes from the environmental regulatory agencies;
3. Changes due to unforeseen conditions and impacts during construction requiring resequencing and acceleration of work to maintain the Project schedule;
4. The Contract includes a $25 million incentive if Contract Milestone 13 (Completion of Stage 2B Interim Dam) is achieved early.
Given the scale, construction duration, and regulatory oversight of ADSRP, it may be necessary to add additional contingency in the future. Any additional funding would be brought to the Board for consideration at the appropriate time.
Approval of individual change orders for the Project will be subject to approval at the following designated amounts:
Unit Manager: Up to $500,000
Assistant Operating Officer: Up to $1,000,000
Deputy Operating Officer: Up to $1,500,000
Assistant Chief Executive Officer: Up to $5,000,000
Chief Executive Officer: Up to $10,000,000
The recommended delegated authority levels reflect the scale, schedule sensitivity, complexity, and regulatory environment of ADSRP and are intended to support timely decision-making. The proposed contingency and delegated authority approach were presented to the Capital Improvement Program Committee on May 18, 2026; responding to Committee discussion of cost-control protocols and reporting, a quarterly report on change order status, including potential future change orders, and on construction contract financials will be presented to the Committee. Additionally, the Board retains control by approving the overall contingency amount, and any additional contingency would require Board approval.
Relevant Prior Board Action(s)
On January 25, 2011, the Board approved a budget adjustment to fund staff labor to begin ADSRP.
On January 24, 2012, the Board approved Agreement No. A3555A with Black & Veatch for Project Management Services.
On August 27, 2013, the Board approved Agreement No. A3676A with URS Corporation for Design Services.
On June 23, 2020, the Board approved the Engineer’s Report for the FOCP and ADSRP and declared an emergency for permitting purposes for the project.
On October 8, 2024, the Board approved the use of the Best Value Selection Method to award the ADSRP construction contract.
On February 11, 2025, the Board adopted a resolution setting the time and date for the Public Hearing on the Final EIR and Engineer’s Report to take place on February 25, 2025, for the Project.
On February 25, 2025, the Board certified the Final Environmental Impact Report and adopted the Mitigation Monitoring and Reporting Program, Findings of Fact and Statement of Overriding Considerations, approved the Engineer’s Report for the ADSRP and approved ADSRP as described in the Final Environmental Impact Report’s Fish and Aquatic Habitat Collaborative Effort-plus modified Alternative as the Project for Implementation.
On August 12, 2025, the Board approved Agreement No. A5464A with GEI Consultants, Inc. for Construction Management Services.
On September 23, 2025, the Board of Directors adopted the Plans and Specifications and authorized advertisement for bids for the construction of ADSRP, including authorization for the Designated Engineer to issue addenda during the bidding process. The Board also approved designating the Extreme Performance Erosion Control (EPEC) revetment systems for temporary spillway construction as a sole source product.
On October 28, 2025, the Board approved Agreement No. A5443 with Aon Risk Insurance for Owner Controlled Insurance Program for ADSRP.
Public Outreach
Valley Water will utilize a variety of outreach strategies to keep the community informed of the Project's progress and important milestones. The Project’s design phase, outreach strategies included numerous public meetings and mailed notices to collect input, a Project website (https://www.valleywater.org/project-updates/c1-anderson-dam-seismic-retrofit), Project fact sheets, Nextdoor posts, social media updates, public tours, and media relations. Valley Water coordinated and engaged with numerous agencies and stakeholders as outlined below:
• Technical Working Group (TWG) which includes federal, state, and local agencies
• Board of Consultants (BOC) Meetings, which include FERC, DSOD, consultants, and subject matter experts
• Meetings with community members
• Meetings with tribal representatives
During construction, outreach will be targeted to the surrounding neighborhoods and include pre-construction and post-construction public meetings. In addition to the outreach tactics used during the design phase, construction phase outreach will include dedicated Valley Water communications staff supporting neighborhood outreach, signage, email, and social media updates.
Outreach to Bidders
On December 2, 2024, the Request for Prequalification Applications (RFPA) was advertised in PlanetBids. Valley Water did extensive industry outreach through PlanetBids to ensure broad awareness and participation, with the RFPA outreach going out to 2,014 entities, including the following:
• 822 small and disadvantaged businesses
• 271 local and regional firms
• 26 plan rooms and chambers of commerce
The RFPA was also distributed to the Santa Clara and San Benito Counties Building and Construction Trades Council, reaching an additional 500 contractors and 70 union representatives. In addition, the RFPA was advertised through publications affiliated with the American Society of Civil Engineers, the American Water Works Association, and the Beavers, an organization managed by heavy engineering construction companies.
Three applications were received on February 19, 2025. Following technical and financial review, reference checks, and internal approvals, Valley Water finalized and published the list of prequalified contractors on May 29, 2025. The applicants meeting the established criteria were the following three firms, which were invited to participate in the procurement:
• Barnard Construction Company (Bozeman, MT)
• Flatiron West Inc. - Sukut Construction, LLC Joint Venture (Concord, CA)
• Kiewit Infrastructure West Company (Fairfield, CA)
Small Business Program
The Valley Water Small Business Enterprise (SBE) Outreach Program Policy establishes an evaluation preference for DGS-certified small business bidders. The Policy 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.
FDS and Barnard Construction Company, Inc. both complied with the SBE Outreach Program Policy by submitting GFE documentation. Neither bidder is a DGS-certified small business, and neither achieved the minimum 30% SBE subcontracting threshold.
FDS and Barnard Construction Company, Inc., provided GFE documentation that satisfied the GFE requirement of the SBE Outreach Program Policy.
Rights of Way
Valley Water is still negotiating four property rights on two parcels: two temporary easements, an easement, and a fee acquisition. Rights of Way are not needed until January 2028. The contract may be awarded prior to securing final rights of way.
All other rights-of-way have been secured.
Permits
Valley Water has obtained the following necessary regulatory permits for the construction of ADSRP:
• U.S. Fish and Wildlife Service Final Biological Opinion
• National Marine Fisheries Service Final Biological Opinion
• State Water Resources Control Board 401 Water Quality Certification/Waste Discharge Requirements
• State Water Resources Control Board NPDES General Permit
• California Division of Occupational Safety and Health Underground Classification.
• U.S. Army Corps of Engineers 404 Permit
• Section 106 National Historic Preservation Act Compliance
• California Department of Fish and Wildlife (CDFW) Lake and Streambed Alteration Agreement (LSAA)
• Valley Habitat Plan Certificate of Compliance
• San Francisco Bay Conservation and Development Commission (BCDC) Consistency Certification
• Bay Area Air Quality Management District (BAAQMD) Asbestos Dust Mitigation Plan (ADMP) Permit
• Conditional Approval of Encroachment permits from County of Santa Clara Department of Roads and Airport and City of Morgan Hill
Valley Water submitted the draft petition to FERC for the surrender and decommissioning of the Anderson Hydroelectric Facility Exemption on September 28, 2023, followed by a final petition on February 20, 2024. The Final Surrender Order was issued by FERC on May 5, 2026. Upon completion of the requirements of the Final Surrender Order and decommissioning of the hydroelectric facility, Anderson Dam will no longer be operated under FERC jurisdiction.
FERC and DSOD are reviewing addenda issued during the bidding process. Work authorization will be granted following review of the addenda, prior to construction mobilization on January 1, 2027.
Next Steps
If the Board approves the recommendations, staff will proceed with contract administration managed by Valley Water staff to facilitate construction of the Project.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with the Anderson Dam Seismic Retrofit Project. Valley Water provides flood preparedness information by mail to properties located within the Federal Emergency Management Agency (FEMA) floodplain. To help ensure information is broadly accessible, these materials are available in multiple languages. In addition, the Valley Water website offers translation into the top 20 languages spoken in Santa Clara County.
FINANCIAL IMPACT:
The Anderson Dam Seismic Retrofit Project (Project No. 91864005) is included in the Capital Improvement Program (CIP) Fiscal Years (FY) 2027-31 Five-Year Plan and in the FY 2026-27 (FY 27) Adopted Budget. Based on estimated construction contract costs, the Project’s FY 2026-27 Adopted Budget contains sufficient funds to encumber the construction expenditures planned for this fiscal year. The total cost for the recommended construction contract, including change order contingency of $50,000,000 is $1,933,542,190. The impact of awarding this construction contract would be an increase to the overall Total Project Cost reflected in the CIP’s 2027-31 Five-Year Plan by over $700 million. The increase in the Total Project Cost will be incorporated into the CIP FY Draft 2028-32 Five-Year Plan.
The Project may receive up to $54.1 million from the renewed Safe, Clean Water and Natural Flood Protection Program (Fund 26), with the remainder of the total project cost funded by the Water Utility Enterprise Fund (Fund 61), with 81.7% of the costs allocated to North County Zone W-2, 7.5% to South County Zone W-5 and 10.8% to South County Zone W-7.
The Project will be partially financed through Water Infrastructure Finance and Innovation Act (WIFIA) loan agreements with the United States Environmental Protection Agency. Pursuant to a master agreement dated February 14, 2023, Valley Water may enter into loans totaling $580 million to finance the planning, design, and construction of the project. $74 million of the loan commitment has been utilized for planning and design costs, leaving $506 million to fund construction costs. The federal requirements set forth by the WIFIA program were incorporated into the ADSRP Plans and Specifications.
CEQA:
Certification of the EIR
The Board of Directors certified the Final Environmental Impact Report (EIR) for ADSRP on February 25, 2025. The Final EIR can be found on Valley Water’s website at www.valleywater.org <http://www.valleywater.org>.
Adoption of the Final EIS
FERC and the USACE San Francisco Regulatory Division adopted and released the Project’s Final Environmental Impact Statement (EIS) on February 2, 2026. The Record of Decision was issued on May 5, 2026.
ATTACHMENTS:
Attachment 1: Map
Attachment 2: Project Delivery Process Chart
Attachment 3: PowerPoint
UNCLASSIFIED MANAGER: Manager
Ryan McCarter, 408-630-2983