PREPARED BY: RONALYN NONATO DATE OF MEETING: 10/02/17
SUBJECT:
TITLE
A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO AMENDING THE FY 2017/18 CIP BUDGET TO INCLUDE RANDY LANE DRAINAGE AS A PROJECT FUNDED BY SB 1: THE ROAD REPAIR AND ACCOUNTABILITY ACT; AND
B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO (1) REJECTING THE BID PROTEST OF TRINET CONSTRUCTION, INC; 2) WAIVING A BIDDING DEVIATION AS IMMATERIAL AND INCONSEQUENTIAL AND AWARDING THE RANDY LANE DRAINAGE IMPROVEMENT PROJECT TO, THE LOW BIDDER, MAGGIORA & GHILOTTI, INC, OF SAN RAFAEL, CALIFORNIA; (3) AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH MAGGIORA & GHILOTTI, INC. IN THE AMOUNT OF $442,442 WITH A 15% CONTINGENCY OF APPROXIMATELY $66,366, FOR A TOTAL AUTHORIZATION OF $508,808; (4) RECEIVING REVENUES OF APPROXIMATELY $174,187 FROM SB1 ROAD REPAIR AND ACCOUNTABILITY ACT FUNDS AND APPROPRIATING SAID FUNDS TO THE RANDY LANE DRAINAGE PROJECT (RLN-DRN); (5) APPROPRIATING $150,000 FROM GENERAL FUND DESIGNATED RESERVE FOR DRAINAGE TO RLN-DRN; AND, (6) REALLOCATING $84,813 OF UNOBLIGATED FUNDS FROM SPC-GAV BRIDGE PROJECT AND $81,000 FROM THE POSTPONED MARKET STREET PROJECT (MAR-STR) TO THE RANDY LANE DRAINAGE IMPROVEMENT PROJECT (320-3202-43600-RLN-DRN)
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolutions
Body
Compliance statements
FY 2015-2017 Council Priority Workplan
Randy Lane Drainage Relocation (RNL-DRN) under the Infrastructure section is an adopted policy item under the FY 2015-17 City Council Priority Workplan, effective October 1, 2016.
CEQA Compliance Statement
On June 19, 2017, pursuant to City Council Resolution 2017-119, the City Council adopted the California Environmental Quality Act (CEQA) Initial Study / Mitigated Negative Declaration (IS/MND), technical studies, and regulatory permit applications for the Randy Lane Drainage Relocation project. A Notice of Determination was file with the Contra Costa County Clerk’s Office June 20, 2017.
BACKGROUND
SB1 The Road Repair and Accountability Act
On April 28, 2017 the Governor signed Senate Bill (SB) 1, which is known as the Road Repair and Accountability Act of 2017. SB1 was passed by the Legislature as a means of providing additional funding for basic road maintenance, rehabilitation and critical safety needs on both state highways and the local streets and roads system. SB1 increases per gallon fuel excise taxes; diesel fuel excise taxes and vehicle registration fees and provides for adjustments for inflation in future years.
Prior to receiving Road Maintenance and Rehabilitation Account (RMRA) funds for this fiscal year, the City of San Pablo must submit to the California Transportation Commission (CTC) a list of projects proposed to be funded with the RMRA funds. The CTC has set October 16, 2017 as the deadline for cities to submit their initial list of projects to be funded with RMRA funds for FY 2017/18. The Randy Lane Drainage Project, as described below, is the only San Pablo project to be submitted.
The Randy Lane Drainage Project (RLN-DRN) consists of the construction of a new 570-foot long storm drain line from Randy Lane and along Giant Road to an outfall adjacent to the bridge over San Pablo Creek. Repeated flooding in this area has resulted in not only safety and health concerns on both public and private property, but the condition of the roadway has continued to deteriorate with the repeated inundations. With removal of the ongoing flooding, and replacement of the deteriorated pavement, the pipeline life should be extended 50 years and the pavement should have a useful life of 12-15 years.
RMRA funding is expected to be released in January 2018. The City of San Pablo anticipates receiving $174,187 in FY 2017/18 RMRA funds to be applied towards Randy Lane. To receive the RMRA apportionments, cities must meet a maintenance-of-effort (MOE) requirement established in Streets and Highways Code section 2036. The MOE amount for the City of San Pablo is $464,941. That amount is met by completing the 2017/18 Pavement Repair Project (PAV-018) with a requested appropriation of $486,517 in General Fund revenues.
Project Design, Awarding Contract and Appropriating Funds
The City’s drainage is conveyed to San Pablo Bay along San Pablo, Wildcat, and Rheem Creeks. Historically, the City has experienced minor to severe flooding issues from San Pablo Creek near the Randy Lane area. The area floods a minimum of eight times a year during the rainy season.
To prevent future flooding along Randy Lane, the City hired Water Works Engineers to design a new storm drain system and then process the necessary permits for the new storm drain system. Once the design was completed, the City decided to put the project out to bid in advance of receiving all permit approvals with the caveat that contracts could not be awarded until all necessary permits were secured. The hope was that all permits would be issued prior to this City Council meeting. The intent was to award a contract early enough in the fall for the construction contractor to complete work in the creek channel prior to the rainy season. All permits have been issued so the project is cleared to start construction.
Other costs incurred to date on the project include: design and environmental work, potholing to verify the design alignment, an archaeologist to monitor the excavation per the CEQA report requirement, a biologist to observe the existing pipe abandonment per the California Fish and Wildlife requirement, inspections every Friday to cover the construction work outside normal business hours, permit fees, and other administrative costs. See the table below for a cost breakdown.
|
Contractor/Consultant |
Tasks |
Cost |
|
Maggiora & Ghilotti, Inc. |
Project Construction |
$442,442 |
|
|
15% contingency |
$66,366 |
|
Water Works Engineers |
Design and Environmental tasks |
$187,592 |
|
Potholing |
Design alignment verification |
$7,336 |
|
Archaeological Monitoring |
Per CEQA requirement |
$20,944 |
|
Biologist pipe abandonment monitoring |
Per the California Fish and Wildlife permit requirement |
$800 |
|
Friday Inspections |
Inspections beyond normal business hours |
$20,571 |
|
Permit Fees |
Section 408, 404, 401, 1602 permits and CEQA filing fees |
$18,177 |
|
Approximate Admin. Costs |
Bid costs, etc. |
$772 |
|
|
TOTAL |
$765,000 |
Currently $285,000 is appropriated for the project. Additional revenues to fund this project are available from SB1 the Road Repair and Accountability Act Road Maintenance and Rehabilitation Account, General Fund Designated Reserve for Drainage, and savings from other CIP projects where the scope was decreased or the grant funding was postponed to a future year.
On August 11, 2017 the project was advertised in conformance with Section 3.16.070 of the Municipal Code. Seven bids, ranging from $442,442 to $802,570, were opened on September 18, 2017. The results are shown in the following table:
|
Contractor |
Bid Amount |
|
Maggiora & Ghilotti, Inc. |
$442,442 |
|
Trinet Construction, Inc. |
$445,050 |
|
D & D Pipelines, Inc. |
$493,450 |
|
Empire Engineering, Inc. |
$558,650 |
|
Kerex Engineering, Inc. |
$589,030 |
|
CF Contracting, Inc. |
$765,250 |
|
W.R. Forde Associates, Inc. |
$802,570 |
On September 19, 2017, the City of San Pablo received a bid protest from Trinet Construction Inc., the second lowest bidder on the project. The basis of the protest was that the apparent low bidder, Maggiora & Ghilotti, Inc., did not submit insurance documentation with their bid as required in Addendum No. 4, but on the following day. The bid protest is discussed in more detail below, but staff recommends that the bid protest be rejected; the deviation by Maggiora & Ghilotti, Inc. be waived as immaterial and inconsequential as it did not affect the bid amounts nor give Maggiora & Ghilotti, Inc. an undue bidding advantage; and that the contract be awarded to Maggiora & Ghilotti, Inc. Construction, Inc. for $442,442 with a 15% construction contingency for a total of $508,808.
Bid Protest
The City of San Pablo undertakes competitive bidding for public works projects pursuant to Chapter 3.16, “Purchasing System,” of the San Pablo Municipal Code and the Uniform Public Construction Cost Accounting Act (Cal. Pub. Con. Code sections 22000 et seq.). “The purposes of competitive bidding requirements are to guard against favoritism, improvidence, extravagance, fraud and corruption; to prevent the waste of public funds; and to obtain the best economic result for the public.” (Graydon v. Pasadena Redevelopment Agency (1980) 104 Cal. App. 631,636 referencing 10 McQuillin, Municipal Corporations (3d ed.) § 29.29.) The importance of maintaining integrity in in the competitive bidding process by requiring bids to conform to specifications is highlighted in cases over the years. A bid that does not conform to the specifications may not be accepted regardless of whether favoritism, extravagance, fraud or corruption are implicated. (MCM Construction Inc. v. City and County of San Francisco (1998) 66 Cal. App. 4th 359, 369; see also Konica Business Machines U.S.A. v. Regents of University of California (1988) 206 Cal. App 3d 449, 454; 47 Ops. Cal. Att’y Gen 129, 130.)
However, the courts have also emphasized that the “competitive bid requirement is to be construed fairly and reasonably with sole reference to the public interest and in light of the purposes to be accomplished.” (Graydon v. Pasadena Redevelopment Agency (1980) 104 Cal. App. 631,636; see also City of Inglewood-L.A. County Civic Center Auth. v. Superior Court (1972) 7 Cal.3d 861 <https://advance.lexis.com/search/?pdmfid=1000516&crid=e59eb275-7659-443b-8e06-02b29bc5de1b&pdsearchterms=Graydon+v.+Pasadena+Redevelopment+Agency%2C+104+Cal.+App.+3d+631&pdstartin=hlct%3A1%3A1&pdtypeofsearch=searchboxclick&pdsearchtype=SearchBox&pdqttype=and&pdpsf=&ecomp=d555k&earg=pdpsf&prid=ad9366b1-cf34-4e5d-8bdf-e7ed9cf31d1a>; Cyr v. White (1947) 83 Cal.App.2d 22 <https://advance.lexis.com/search/?pdmfid=1000516&crid=e59eb275-7659-443b-8e06-02b29bc5de1b&pdsearchterms=Graydon+v.+Pasadena+Redevelopment+Agency%2C+104+Cal.+App.+3d+631&pdstartin=hlct%3A1%3A1&pdtypeofsearch=searchboxclick&pdsearchtype=SearchBox&pdqttype=and&pdpsf=&ecomp=d555k&earg=pdpsf&prid=ad9366b1-cf34-4e5d-8bdf-e7ed9cf31d1a>; 47 Ops. Cal. Att’y Gen 129; 10 McQuillin, Municipal Corporations (3d ed.) § 29.29). The Court in Ghilotti Construction Co. v. City of Richmond (1996) 45 Cal. App. 4th 897, 908 took that analysis a step further stating that the purposes of competitive bidding requirements must be evaluated “from a practical rather than a hypothetical standpoint” and in view of the “public interest, rather than the private interest of a disappointed bidder” to avoid a losing bidding combing through the low bidder in an attempt to cancel the low bid on a technicality. (See Judson Pacific-Murphy Corp. v. Durkee (1956) 144 Cal. App. 2d 377.)
Accordingly, public agencies with competitive bidding requirements are permitted to exercise their discretion to waive inconsequential deviations from the bidding process as long as such deviations do not: 1) affect the bid price; nor 2) give a bidder an unfair advantage to withdraw its bid without forfeiting its bid bond (typographical or arithmetical errors under Public Contract Code section 5103). (Menefee v. County of Fresno (1985) 163 Cal. App. 3d 1175, 1181 (public agency did not abuse discretion in determining that failure to sign bid proposal but submitting other signed bid documents was inconsequential deviation); Taylor Bus Services v. San Diego Board of Education (1987) 195 Cal. App. 3d 1331 (public agency did not abuse discretion in determining that self-insurance trust did not meet insurance requirements in the bidding documents); Konica Business Machines U.S.A. v. Regents of University of California (1988) 206 Cal. App 3d 449 (public agency did abuse discretion in awarding a contract to a bidder whose copy machines did not meet the precise specifications in the bid documents because that was a substantial deviation that gave a competitive advantage); Valley Crest Landscape, Inc. v. City Council (1996) 41 Cal. App. 4th 1432 (city abused its discretion in allowing low bidder to change bid showing 83% of work subcontracted instead of less than 50% because the bidder had a competitive advantage in that it could withdraw its mistaken bid due to a clerical error under Public Contract Code section 5103); Ghilotti Construction Co. v. City of Richmond (1996) 45 Cal. App. 4th 897 (city did not abuse its discretion in waiving as an inconsequential deviation the low bid showing 55.7% of work subcontracted instead of less than 50%); MCM Construction Inc. v. City and County of San Francisco (1998) 66 Cal. App. 4th 359 (city did not abuse its discretion in refusing to waive low bidder’s failure to include the dollar amounts of subcontracts in its bid); Bay Cities Paving & Grading, Inc. v. City of San Leandro (2014) 223 Cal. App. 4th 1181 (city did not abuse its discretion in waiving as inconsequential the low bidder’s failure to include first page of standard bid bond).)
This discretion to waive inconsequential deviations by bidders is confirmed the bid specifications for this project in the Instruction to Bidders, Section 12: “City reserves the right, acting in its sole discretion, to waive immaterial bid irregularities, the right to accept or reject any and all bids, or to abandon the Project entirely.”.]
The key issue here is that public agencies, like the City of San Pablo, have discretion to make decisions that affect the use of public funds and affect the public health, safety and welfare of their communities. The point of discretion is that a public agency can choose whether to exercise it or not based on the factual circumstances. The decision will not be second-guessed by the courts unless there is an abuse of discretion because there is no substantial evidence to support the agency’s decision. “An agency has discretion to waive immaterial deviations from bid specifications and may accept the bid under certain conditions. The point of discretion is that the agency may properly act in either direction. It may waive or refuse to waive such deviations.” (MCM Construction Inc. v. City and County of San Francisco (1998) 66 Cal. App. 4th 359, 374; see also Taylor Bus Services v. San Diego Board of Education (1987) 195 Cal. App. 3d 1331; Konica Business Machines U.S.A. v. Regents of University of California (1988) 206 Cal. App 3d 449; Ghilotti Construction Co. v. City of Richmond (1996) 45 Cal. App. 4th 897; Bay Cities Paving & Grading, Inc. v. City of San Leandro (2014) 223 Cal. App. 4th 1181).)
With this project, the City has SB1 funding that must be allocated by October 16, 2017 or risk losing those critical funds that will allow the project to go forward. In addition, the project must be commenced so that all creek work is completed by October 31, 2017. As discussed above, this area of the City has been prone to flooding during the winter months and this project will alleviate that condition if completed before the winter rains this year. Otherwise, this neighborhood will likely endure another winter of repeated flooding.
The City solicited bids on August 11, 2017 with a bid opening date of September 18, 2017. On September 13, 2017, the City issued an Addendum to the bid specifications because of concerns in meeting the deadline to obtain the required Section 408 permit from the Contra Costa Flood Control District by October 2, 2017 in order to construct the new bridge culvert outfall at Randy Lane. The Addendum stated that the insurance required by the Flood Control District to obtain the Section 408 permit was to be submitted with the bid and then all other insurance documentation the day after the City Council awarded the project. The purpose of this Addendum was to avoid delays in obtaining the permit from the Flood Control District given the short deadline for the allocation of funds and the approaching winter rainy season. These deadlines also mean that there is no time to rebid the project.
The apparent low bidder, Maggiora & Ghilotti, Inc., did not submit the insurance documentation required by the Addendum with their bid, but submitted it on the following day, September 19, 2017. On September 19, 2017, the second lowest bidder, Trinet Construction Inc., submitted a bid protest (attached). Attorneys for both Maggiora & Ghilotti and Trinet have submitted extensive arguments to support their clients’ positions, which are also attached. Staff has carefully considered these arguments and the issues raised given the circumstances of this project and the bidding process.
Trinet’s attorney cites to Taylor Bus Services v. San Diego Board of Education (1987) 195 Cal. App. 3d 1331 for justification that the City must determine that M&G’s bid is non-responsive. In that case, Taylor Bus refused to provide the required insurance policy claiming that their self-insurance trust provided equivalent coverage. The court found that the public agency did not abuse its discretion in determining that the coverage offered by Taylor did not meet the specifications and thus its bid was nonresponsive. The current situation facing San Pablo is not whether Maggiora & Ghilotti’s insurance meets the contract specifications, but rather whether the failure of Maggiora & Ghilotti to submit the insurance documentation with its bid on September 18, 2017 but on the following date can be waived as a nonconsequential deviation to the bidding process. The submission of insurance to obtain the necessary Section 408 permit was important to the City as evidenced by the issuance of the Addendum. If Maggiora & Ghilotti had refused to submit the insurance at all or did not have sufficient insurance, the outcome of this bid process would have likely been different. However, the one-day delay in submitting the required information has not affected the project timeline or the 408 permit, so it can appropriately be deemed as inconsequential.
Trinet’s attorney also argues that waiving Maggiora & Ghilotti’s failure to submit the insurance information with its bid but on the next day creates some kind of competitive disadvantage like the one posed in Konica Business Machines U.S.A. v. Regents of University of California (1988) 206 Cal. App 3d 449. However, the situation at hand is different from the one in Konica. The City is not waiving the requirement to provide the insurance, but rather is determining that the one-day difference in submitting the information was inconsequential and unsubstantial. The City was not held up in applying for the permit because the permit need not be completed until the City was ready to award the contract. Further, the City was aware that Maggiora & Ghilotti had insurance from prior work that it had done for the City. The issue in this situation was timing not substance.
As to the request from Trinet’s attorney that the City conduct a hearing, take evidence and produce findings regarding the determination of whether Maggiora & Ghilotti ’s bid is responsive or not, the law does not require such a hearing and staff does not recommend holding one. (See Taylor Bus Services v. San Diego Board of Education (1987) 195 Cal. App. 3d 1331, 1343). The parties have had ample opportunity to present their arguments as shown by the extensive letters from their attorneys attached to this staff report and the City does not have time to schedule a hearing and still meet the funding and permitting requirements of this project.
There is no suggestion (and none brought forward by either of the bidders) that the City’s exercise of discretion in determining whether to waive this bid irregularity is based on any favoritism, extravagance, fraud or corruption or any other such evils, but rather is based on obtaining the best economic result for the City. Accordingly, City staff recommends that the City Council find that the low bid submitted by Maggiora & Ghilotti on September 18, 2017 was a valid and enforceable bid and that the submission of the required insurance information on the following day was an inconsequential, immaterial and insubstantial deviation that did not affect the bid price and did not give M&G an unfair advantage to withdraw its bid without forfeiting its bid bond. M&G and its bid bond surety were bound by the bid as submitted on September 18, 2017. The purpose of requiring the insurance with the bid was to avoid delays in seeking the required 408 permit from the Contra Costa County Flood Control District given the deadlines for the permit and grant funding. There have been no delays in seeking that permit caused by the one-day delay in Maggiora & Ghilotti submitting its insurance documentation. Thus the deviation in when the insurance information was submitted should be waived by the City Council as an inconsequential and unsubstantial deviation in the bidding process and the contract awarded to the low bidder, Maggiora & Ghilotti.
FISCAL IMPACT
The total cost of the project is $765,000. Currently, $275,000 is appropriated for the project under (320-3200-43600-RLN-DRN). Staff recommends an additional appropriation of $490,000 to the Randy Lane Drainage Improvement project (320-3200-43600-RLN-DRN) to cover the bid cost for construction work and other project expenses as follows:
• Receive revenues of $174,187 from the FY 2017/18 SB1 Road Repair and Accountability Act into the CIP Project Fund for Randy Lane Drainage (320-3202-33403-RLN-DRN) and appropriate funds in the same amount for expenditure to the project (320-3202-43600-RLN-DRN);
• Appropriate $150,000 to the project from the FY 2017/18 General Fund Designated Reserve for drainage (100-0000-00000);
• Reallocate $84,813 to the project from the bridge repair project over San Pablo Creek on Giant Avenue (SPC-GAV) due to a reduction in Federal funding which consequently requires a smaller match;
• Reallocate $81,000 to the project from the Market Street resurfacing project (MAR-STR) match due to postponement of OBAG funding to FY 2019/20.
|
Transaction |
Source/Use |
Account Code |
Task Code |
Amount |
|
Receive |
SB1 Revenues |
320-3202-33403 |
RLN-DRN |
$174,187 |
|
Appropriate |
SB1 Funding |
320-3200-43600 |
RLN-DRN |
$174,187 |
|
Appropriate |
GFDR Drainage |
100-0000-00000 |
RLN-DRN |
$150,000 |
|
Reallocate funds |
SPC-GAV FY15/16 General Fund |
320-3200-43600-SPC-GAV |
RLN-DRN |
$84,813 |
|
Transfer Funds |
MAR-STR FY17/18 General Fund |
320-3200-43600-MAR-STR |
RLN-DRN |
$81,000 |
|
Available Funding |
General Fund |
320-3200-43600-RLN-DRN |
RLN-DRN |
$275,000 |
ATTACHMENTS
1. RESO 2017-### amending the 2017-2018 Budget to Include Randy Lane Drainage as a project funded by SB1: The Road Repair and Accountability Act
2. RESO 2017-3## (1) rejecting the bid protest of Trinet Construction, Inc.; (2) waiving a bidding deviation as inconsequential and awarding the Randy Lane Drainage Improvement Project to the low bidder, Maggiora & Ghilotti, Inc. of San Rafael, CA; (3) Authorizing the City Manager to execute an agreement with Maggiora & Ghilotti, Inc in the amount of $442,442 with a 15% contingency of approximately $66,366, for a total authorization of $50,808; (4) appropriating $174,187 from SB1 Road Repair and Accountability Act Funds; (5) appropriating $150,000 from General Fund Designated Reserve for Drainage; and (6) Re-appropriating $74,813 of unobligated funds from SPC-GAV bridge project, and re-appropriate $81,000 from postponed project MAR-STR; to Randy Lane Drainage Improvement Project (320-3200-43600-RLN-DRN)
3. Local Streets and Roads-Projected FY2017-18 Revenues
4. Maggiora & Ghilotti, Inc. Construction Inc. bid proposal for the Randy Lane Drainage Improvement Project
5. Randy Lane Drainage Improvement Project bid contract, plans, specifications and addendums
6. Bid Protest of Trinet Construction dated September 19, 2017
7. Response of Mark Rice on behalf of Maggiora & Ghilotti, Inc. dated September 21, 2017
8. Letter from A. Robert Rosen on behalf of Trinet Construction dated September 25, 2017