March 28, 2006

SUBJECT: Award of Bid No. F0501-45 for the Application of Slurry Seal on Streets Throughout the City 

REPORT IN BRIEF

Approval is requested for the award of a contract to Graham Contractors, Inc., of San Jose to apply slurry seal on selected Sunnyvale streets for the Department of Public Works Project Administration Section (Project No. ST-05/02-06).  Staff recommends approval of the full contract amount of $261,470, including the Base Bid and two Additive Alternates, and a 10% project contingency.  Funding for this contract is available in the Department of Public Works Pavement Operations Program budget.

BACKGROUND

Each year, streets are selected within the boundaries of the City of Sunnyvale to be coated with slurry seal as a regularly scheduled maintenance project.  This year's project includes applying slurry seal to more than one hundred streets.  Residents will be notified in advance of the date and time work will be performed on each street.  Historically, this work has been procured through a competitive bidding process.

DISCUSSION

Bid specifications were prepared by Public Works and Purchasing staff. Because of concerns about the large increase in oil costs and its effect on the amount of slurry seal that could be accommodated within the program budget, the bid was structured in three parts:  a Base Bid which included 2.74 million square feet of slurry seal and two Additive Alternates of approximately 300,000 square feet each.  The Notice Inviting Bids was published in The Sun on February 1, 2006.  The bid package was distributed to Bay Area Builders Exchanges and broadcast to potential contractors through the Onvia DemandStar public procurement network.  Ten contractors requested bid documents. 

Sealed bids were publicly opened on February 22, 2006.  Six responsive bids were received.

Staff recommends acceptance of the bid from Graham Contractors, Inc., the lowest responsive and responsible bidder (Base Bid). The recommended award includes the Base Bid (2,743,312 square feet), all of Additive Alternate A (386,339 square feet) and all of Additive Alternate B (335,365 square feet). The total recommended quantity is 3,465,016 square feet which is 100% of the budgeted service level for the program.

Staff’s recommendation is based upon that fact that failure to deliver all of the scheduled preventive maintenance work has a long-term detrimental effect on the street infrastructure and the overall street ratings.  Sunnyvale has a very high Pavement Condition Index (PCI) - 84 as of 2004 with the next survey scheduled for Fall 2006.  This is the third best PCI in Santa Clara County, behind only Los Altos and the City of Santa Clara.  The PCI of a street deteriorates over time and can only increase by taking preventive or corrective action.  Sunnyvale’s high PCI is attributable to three things:

• A large scale reconstruction effort that took place twenty years ago which repaired failing streets;
• Regular preventive maintenance (including approximately 5 million square feet of slurry seal); and
• Recent reconstruction (corrective repair) of streets that were in poor condition (Wolfe Road and Sunnyvale Avenue). 

Due to the increasing cost of oil and oil products, the plan for slurry sealing of streets has been reduced over the last few years from 5 million square feet annually to approximately 3.5 million square feet.  Further reduction in the amount of annual slurry seal slowly erodes the PCI over time and eventually requires more expensive corrective measures, such as chip seal, street overlay or full reconstruction to recover the street condition.  The cost of slurry seal is  6.86 cents per square foot; when chip seal becomes necessary, the cost increases to about 25 cents per square foot; and if a street requires an overlay, the cost is about $1.60 per square foot.  Full reconstruction, as will be done to Mary Avenue in 2006, costs over $6.00 per square foot.  To avoid the high cost of deferred street maintenance, staff recommends approval of the full bid amount to the low bidder.  The total cost of the contract, including Base Bid and both Additive Alternates, plus a 10% project contingency is $261,470.  This is $45,128 higher than the current budget of $216,342 for construction services in the Slurry Seal activity of the Pavement Operations Program.  Staff has reviewed the year-to-date expenditure pattern of the program and has determined that the full cost of this contract, including staff overtime required to oversee weekend construction, can be absorbed within the Pavement Operations Program budget.

Should Council wish to reduce the work schedule and maintain the current budget for construction services for Slurry Seal, staff has prepared an Alternative award of contract (Contract Draft 2 attached) for Council consideration.  This alternative would include the Base Bid and selected streets from Additive Alternate A for a total of 2,866,377 square feet at a cost of $196,633.  With a 10% project contingency, the full commitment would be $216,296.

A determination was made that this project will have no significant impact on the environment in accordance with CEQA guidelines for categorically exempt projects.

FISCAL IMPACT

The total amount of the contract, including the Base Bid and both Additive Alternates, plus a 10% contingency is $261,470.  This is $45,128 higher than the current budget of $216,342 for construction services in the Slurry Seal activity of the Pavement Operations Program.  Staff has reviewed the year-to-date expenditure pattern of the program and has determined that the full cost of this contract, including staff overtime required to oversee weekend construction, can be absorbed within the Pavement Operations Program budget.

ALTERNATIVES

1. Award a contract, in substantially the same form as the attached Contract Draft No. 1 and in the amount of $237,700, to Graham Contractors, Inc., for the application of slurry seal on various Sunnyvale streets and approve a project contingency in the amount of $23,770, making a total contract not to exceed amount of $261,470.

2. Award a contract, in substantially the same form as the attached Contract Draft No. 2 and in the amount of $196,633, to Graham Contractors, Inc., for the application of slurry seal on various Sunnyvale streets and approve a project contingency in the amount of $19,663, making a total contract not-to-exceed amount of $216,296.