Upland Council Approves $1.2M No-Bid Reservoir Construction Management Contract

The Upland City Council this week approved a no-bid $1.19 million contract with a company to carry out construction management on a major public works project.
The council did so based on the acting public works director vouching for the company, which he said would do an adequate job on the task.
In October 2016, the Upland City Council then composed of Mayor Ray Musser and councilmembers Debbie Stone, Gino Filippi, Glenn Bozar and Carol Timm, signed off on then-Public Works Director Rosemary Hoerning’s recommendation that the city declare an emergency with regard to the conditions of the city’s Water Reservoir 15 facility, located near 17th Street and Benson Avenue. The council at that time approved the first phase of a not-fully-identified undertaking, but which was intended to eventually entail the preparation of construction documents to replace the reservoir. In August 2018, the city council, then comprised of Mayor Debbie Stone and councilmembers Gino Filippi, Carol Timm, Janice Elliott and Sid Robinson, adopted resolutions relating to replacing the 7.5 million gallon capacity reservoir. Those resolutions called for making an application for, and executing an agreement relating to, financial assistance from the State of California Water Resources Control Board to defray the cost of the city’s planning, design and construction of the replacement reservoir in an amount not to exceed $16.5 million. In doing so, the council pledged net revenues from the city’s sale of water to city residents gained through its water enterprise fund to repay the State of California for that assistance. The State of California has agreed to loan the city up to $16.5 million to complete the project.
This week, the city council, now including Mayor Stone and councilmembers Elliott, Rudy Zuniga and Bill Velto, awarded a construction contract to Gateway Pacific Contractors, Inc. in the amount of $13,465,074 to complete the replacement of the reservoir. That contract award was made based upon a staff recommendation from Hoerning, who is now serving in the capacity of city manager, as well as Steven Nix, the city’s interim public works director, and Bob Critchfield, the city’s engineering manager.
The city had solicited bids on the reservoir replacement/construction project, and four entities had responded. Environmental Construction, Inc. offered to complete the project at a cost of $18,702,102; Myers & Sons Construction, LLC submitted a bid of $13,888,000; Pacific Hydrotech responded with a $13,885,200 proposal; and Gateway Pacific said it was prepared to complete the work for $13,465,0734.
“The city has reviewed the bid information and DBE [design, building and engineering data] submitted, and confirmed that Gateway Pacific Contractors of Sacramento is the lowest responsible and responsive bidder,” a report to the city council from Hoerning, Nix and Critchfield states.
The city did not seek bids on the project’s construction management work. Instead, according to the report from Hoerning, Nix and Critchfield, it sought to engage the firm that had designed the new reservoir, Richard Brady and Associates, to serve in that capacity. Richard Brady and Associates said it would act as construction manager on the project for $1,446,295. Ultimately, Nix, Critchfield and Hoerning were able to get Richard Brady and Associates to agree to carry out the construction management assignment on the project for $1,197,735.
Hoerning, Nix and Critchfield recommended to the city council that it award the construction management contract to Richard Brady and Associates.
Under California law, public works contracts may be awarded only after the governmental entity carrying out the project engage in a competitive bidding process. Statutory exceptions to competitive bidding requirements are generally available only if the dollar value of the work involved is relatively small or where the nature of the work is not suited to competitive bidding. In the case of the $1,197,735 construction management contract awarded to Richard Brady and Associates, those statutory exceptions do not apply. In this way, without competition, Richard Brady and Associates was not subjected to any pressure to lower its bid.
In their report, Hoerning, Nix and Critchfield sought to justify awarding the contract to Richard Brady and Associates without competitive bidding.
“Due to the specialty nature of large concrete reservoir construction, the most qualified candidate to perform the construction management portion of the project is the design engineer, since they are working with their own design and can immediately clarify contractor questions as the project progresses,” the report states. “In addition, should any part of the project not meet specifications, the design engineer can correct the contractor right away and prevent expensive rework. The option of using an outside third party instead of the design engineer for the construction management portion of the project generally leads to higher cost for the owner, in this case the city, since the third party must invest time/money to study the design documents in detail to become familiar with all facets of the scope of work in order to effectively manage the project. Input from the design engineer will be needed, regardless, to resolve technical questions and clarifications. For these reasons, the city engaged the design engineer, Richard Brady and Associates, Inc., for a cost proposal to perform construction management services. The city and Brady were able to agree to a scope of services for the construction management portion of the project, and went through a few iterations that reduced the construction management cost proposal by $248,560.”
-Mark Gutglueck

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