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Finance Committee
Meeting Date: 09/12/2023  
FROM: Bill Gallardo

Rejection of Bids for the Walnut Way Sewer and Alley Improvements, CIP Project No. 7326 ("Project")
Reject all bids and direct the City Clerk to return all Bid Bonds to bidders.
The Walnut Way Sewer and Alley Improvements, CIP 7326 (“Project”), is programmed in the FY 2023-24 Capital Improvement Program (“CIP”) with a  budget of $449,831.  The Project is located along the Walnut Way Alley, which intersects Brea Blvd. See attachment A.  The Project generally consists of, but is not limited to, mobilization of the contractor; rehabilitation of the alley; overlay of asphalt pavement (AC); installation of a concrete valley gutter for drainage purposes; and the reconstruction and coating of the sanitary sewer manhole. Other details for the project include the adjustment of sewer manholes, water meters, water boxes, and utility vaults to finish grade; striping; best management practices to prevent pollutants into the storm drains; potholing for utilities; conducting a video analysis of the sewer line; and all other incidentals and requirements according to the plans and specifications for the project.

On June 15, 2023, the Final Plans and Specifications (“Bid Documents”) were accepted by staff, and the Project was advertised for bids on the website and subsequently published in the Star Progress paper before bid opening. A hard copy of the Bid Documents is available at the City Clerk’s office for review (Attachment B). Two addenda were issued during the bid period, which updated the bid date and revised the plans.

On July 20, 2023, staff received only two (2) bid proposals with an apparent low bid amount of $408,370 from All American Asphalt (“AAA”) of Corona, CA, with second lowest bidder Palp, Inc. Dba Excel Paving with a bid amount of $548,776. The Engineer’s Estimate was $300,000.  The minimal bids received and current bid amounts reflect the continuous challenges and shortage of material, equipment, and labor, which resulted in cost increases to the proposed improvements that exceeded the engineer’s estimate.  Additionally, staff evaluated the Plans and Specifications to determine any cost-saving measures that could reduce the overall construction costs and has determined that certain design specifications and improvements could be modified to potentially reduce the cost of construction, which would require re-bidding the Project. Therefore, staff recommends the City Council reject all bids and return the Bid Bonds to the two bidders.  If approved, staff will revise the Plans and Specifications to reflect various cost-saving measures, update the engineer’s estimate to reflect current construction costs, and re-bid the Project later.
Bidder Name Bid Amount
All American Asphalt $408,370
Palp, Inc. Dba Excel Paving $548,776
Engineers Estimate $300,000
The approved FY 2023-2024 CIP Project budget for Construction and Construction Engineering is $449,831. The total cost for Construction and Construction Engineering is $489,207, which includes the apparent low bid amount ($408,370), a 10% contingency ($40,837), and Construction Engineering costs ($40,000). The sources of funds within the approved budget are Gas Tax (Fund 220) and Sewer Fund (Fund 430). Therefore, there are insufficient funds to complete the Project construction.  See the budget table below:
Description Amount
AAA low apparent bid amount $408,370
Construction Contingency (10%) $40,837
Construction Engineering $40,000
Total Construction Cost $489,207
Approved FY 23-24 Construction Budget $449,831

Based on the minimal number of bidders and high bid amounts, staff recommends the City Council reject all bids and return the Bid Bonds to the two bidders.  If approved, staff will update the Plans, Specifications, and Engineer’s Estimate to reflect various cost-saving measures and re-advertise the Project later.    
William Gallardo, City Manager
Prepared by:  Ryan Chapman, PE, Assistant City Engineer
Concurrence:  Michael Ho, PE, Public Works Director
Attachment A - Location Map
Attachment B - Bid Documents

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