HomeMy WebLinkAboutItem 5g. Authorization to award Islay Street Sewer Replacement, Specification No. 2000170 Item 5g
Department: Public Works
Cost Center: 6102
For Agenda of: 6/2/2026
Placement: Consent
Estimated Time: N/A
FROM: Aaron Floyd, Public Works & Utilities Director
Prepared By: Hai Nguyen, Senior Civil Engineer
Miguel Barcenas, Utilities Deputy Director / Engineering and Planning
SUBJECT: AUTHORIZATION TO AWARD ISLAY STREET SEWER REPLACEMENT,
SPECIFICATION NO. 2000170
RECOMMENDATION
1. Approve the project plans and special provisions for the Islay Street Sewer
Replacement, Specification No. 2000170; and,
2. Award a construction contract (Attachment A) to Souza Construction in the amount of
$1,512,539 for the Islay Street Sewer Replacement, Specification No. 2000170; and ,
3. Authorize the Finance Director to transfer $250,000 from the Storm Drains Annual
Asset Maintenance Account (2090742) to the Islay Street Sewer Replacement
Account (2000170); and,
4. Authorize the City Engineer to issue Contract Change Orders up to the available
project budget, and up to any amended budget subsequently approved by the City
Manager per City Purchasing Policy approval thresholds.
5. Find the action exempt from the California Environmental Quality Act.
POLICY CONTEXT
The City Council initially approved the Wastewater Collection System Infrastructure
Renewal Strategy in January 2016 and approved the updated Renewal Strategy in
August 2025. These plans identify a strategy for prioritizing pipeline replacement in the
wastewater collection system to serve existing customers an d future development in the
City. The 2025 Renewal Strategy took into consideration previously planned capital
projects, including the Islay Street Sewer Replacement project.
On May 17, 2022, Council approved a Purchasing Policy Update to the Financial
Management Manual (Resolution No. 11328), requiring Council authorization to award
Public Works contracts exceeding $200,000.
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Item 5g
DISCUSSION
Background
Replacement and rehabilitation of wastewater collection (sewer) pipes is part of an
ongoing program to maintain aging and deteriorating infrastructure. This program has
several objectives: 1) ensure reliable removal of wastewater, 2) reduce the need for
emergency repairs, 3) reduce the need for preventative maintenance , and 4) ensure
uninterrupted wastewater flow without health or environmental hazards from wastewater
leakage. This project will accomplish these objectives for a por tion of the City’s
wastewater collection system.
Project
The project plans and specifications include the replacement of 2,741 linear feet of sewer
mains on Chorro Street, Islay Street, Santa Rosa Street, and Leff Street. As part of this
work, the sewer mains on Islay Street and Santa Rosa Street will be upsized from 8 inch
to 12 inch diameter to reduce the risk of sewer backups and localized overflows and
improve overall system reliability and hydraulic capacity.
The project also includes 363 linear feet of storm drain replacement, consisting of failing
corrugated metal pipe (CMP) on Morro Street and deteriorated concrete storm drain pipe
on Santa Rosa Street. The failing 8-inch concrete storm drain pipe on Santa Rosa Street
will also be upsized to 12-inch diameter to improve hydraulic capacity and reduce the
potential for capacity related failures during storm events. The pipelines identified for
replacement have been video inspected and confirmed to be at the end of their service
life.
The Islay Street Sewer Replacement (Project), Specification No. 2000170, was
advertised on March 26, 2026, with bids opened on April 23, 2026. Two bids were
received and opened. Souza Engineering Contracting, Inc. (Souza) was the apparent low
bidder with a bid of $1,512,539 which is $719,461 below the Engineer’s Estimate of
$2,232,000. The Contractor’s references, license, and registration with the Department
of Industrial Relations have been verified. Staff recommends that the project be awarded
to Souza as the lowest responsive and responsible bidder (Attachment A).
Bid Summary Bid Total
1 Engineer’s Estimate $2,232,000
2 Souza Engineering Contracting, Inc. $1,512,539
3 Specialty Construction, Inc. $1,909,475
Previous Council or Advisory Body Action
This Project was identified in the 2025-27 Financial Plan that was approved by Council
with a budget of $2,100,000.
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Item 5g
Public Engagement
Public engagement was conducted during the initial identification of this project to be
included in the 2025-27 Financial Plan. During construction, staff will proactively
coordinate with and inform the public about traffic control changes, access
considerations, and other temporary impacts to help minimize disruptions. The project will
also be featured on the SLO in Motion Website to keep the community informed about
the project, including construction updates, anticipated impacts, and responses to
frequently asked questions.
To ensure direct communication, affected residents within the limits of work will be notified
of upcoming construction via door hangers. These notices, designed in accordance with
City standards, will be distributed to all properties adjacent to the work area and will clearly
outline the project's start and end dates. Additionally, in areas where parking must be
restricted, "No Parking" signs will be clearly posted at least 24 hours in advance of the
work.
CONCURRENCE
The Public Works Branch coordinated with the Utilities Branch to develop the project
plans and specifications, and the Utilities Branch concurs with the recommended action.
ENVIRONMENTAL REVIEW
The project is categorically exempt from environmental review under Section 15303 (New
Construction or Conversion of Small Structures) and 15304 (Minor Alterations to Land) of
the California Environmental Quality Act (CEQA) Guidelines. The proposed project
consists of the replacement and upsizing of existing sewer mains and storm drains within
existing roadways, including trenching, backfilling, and road repair, and would not result
in any significant impacts to the environment.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2025-26
Funding Identified: Yes
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
LRM (2090742
- Storm Drains)
$530,819 $250,000 $280,819
State
Federal
Sewer Fund $2,080,197 $1,723,039 $357,158 N/A
Total $2,611,016 $1,973,039 $637,977 N/A
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Item 5g
Islay Street Sewer Replacement (2000170)
Project Account
(2000170)
Storm Account
(2090742)
Project Total
Costs
602 Sewer Fund General Fund
Construction Bid Total $1,312,539 $200,000 $1,512,539
Contingencies $400,000 $50,000 $450,000
Material Testing $10,000 $0 $10,000
Printing $500 $0 $500
Total Cost of Project $1,723,039 $250,000 $1,973,039
Current Project Balance $2,080,197 $530,819 Remaining Balance $357,158 $280,819
Sewer line improvements contained within this project are included in the 2025–27
Financial Plan. Funding is available in Project Account (2000170), which currently has a
balance of $2,080,197 which is sufficient to cover the sewer replacement costs.
The project also includes storm drain replacement work on Morro Street and Santa Rosa
Street. This portion of the work will require a budget transfer of $250,000 from the Storm
Drains Annual Asset Maintenance Account (2090742).
Utility improvement projects are generally associated with a higher level of construction
cost uncertainty due to unknown subsurface conditions. Past sewer line replacement
projects have shown that unforeseen utility conflicts and unexpected soil or groundwater
conditions are commonly encountered during excavation, which can increase
construction costs. These conditions can require additional excavation, trench
stabilization or shoring, dewatering, potholing and hand excavation around existing
utilities, and other field adjustments that are difficult to fully quantify during design.
Based on past experience and typical change orders encountered during similar utility
projects, an additional $450,000 contingency has been included in the project budget.
This amount represents roughly 30% of the estimated construction cost, within the 20 –
30% range typically applied to utility projects of this nature, which has historically been
sufficient. Following project completion, any remaining sewer funds will be transferred to
the Sewer Fund’s Undesignated Capital Account and remaining LRM funds returned to
Account 2090742 for future infrastructure improvements and maintenance work.
ALTERNATIVES
Reject all bids and readvertise the project. The City Council may choose to reject all
bids and readvertise this project. This option would increase the potential for unplanned
costs, as the sewer mains are at the end of their useful life and more susceptible to failure.
ATTACHMENTS
A – Draft Agreement, Specification No. 2000170
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AGREEMENT
THIS AGREEMENT, made on _____________, by and between the City of San Luis
Obispo, a municipal corporation and charter city, San Luis Obispo County, California
(hereinafter called the City) and SOUZA ENGINEERING CONTRACTING, INC.
(hereinafter called the Contractor).
WITNESSETH:
That the City and the Contractor for the consideration stated herein agree as follows:
ARTICLE 1, SCOPE OF WORK: The Contractor shall perform everything required to be
performed, shall provide and furnish all of the labor, materials, necessary tools,
expendable equipment, and all utility and transportation services required to complete all
the work of construction of
ISLAY STREET SEWER REPLACEMENT, SPECIFICATION NO. 2000170
in strict compliance with the plans and specifications therefor, including any and all
Addenda, adopted by the City, in strict compliance with the Contract Documents hereinafter
enumerated.
It is agreed that said labor, materials, tools, equipment, and services shall be furnished and
said work performed and completed under the direction and supervision and subject to the
approval of the City or its authorized representatives.
ARTICLE II, CONTRACT PRICE: The City shall pay the Contractor as full consideration
for the faithful performance of this Contract, subject to any additions or deductions as
provided in the Contract Documents, the contract prices as follows:
Item Item Unit of Estimated Item Price Total
No. SS(1) Description Measure Quantity (in figures) (in figures)
1 7 TRAFFIC CONTROL PLAN AND
IMPLEMENTATION LS 1 $50,740.00 $50,740.00
2 77 POTHOLING LS 1 $35,060.00 $35,060.00
3 84 REPLACE TRAFFIC STRIPING &
MARKERS LS 1 $19,450.00 $19,450.00
4 7 COMPLY WITH OSHA LS 1 $7,503.00 $7,503.00
5 77 ABANDON SEWERLINE,
MANHOLES AND FACILITIES LS 1 $7,320.00 $7,320.00
6 77 SEWER BYPASS PUMPING LS 1 $23,810.00 $23,810.00
7 77 TREE PROTECTION LS 1 $760.00 $760.00
8* 19 ROCK EXCAVATION CY 100 $99.00 $9,900.00
9 5,15 REPLACE MONUMENT AND
WELL EA 2 $2,388.00 $4,776.00
Docusign Envelope ID: 09A05CD6-2BD6-8E10-81D6-2682B7137DEA
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Item Item Unit of Estimated Item Price Total
No. SS(1) Description Measure Quantity (in figures) (in figures)
10 77
REMOVE EXISTING SEWERLINE
AND INSTALL NEW 8" HDPE
SEWERLINE BY OPEN
TRENCHING
LF 888 $229.00 $203,352.00
11 77
REMOVE EXISTING SEWERLINE
AND INSTALL NEW 12" HDPE
SEWERLINE BY OPEN
TRENCHING
LF 1853 $314.00 $581,842.00
12 77 INSTALL NEW SEWER MANHOLE EA 7 $16,894.00 $118,258.00
13 77
INSTALL NEW STORMDRAIN
MANHOLE EA 1 $13,367.00 $13,367.00
14 77
INSTALL COATING ON NEW
SSMH MANHOLE EA 7 $5,320.00 $37,240.00
15 77 REMOVE EXISTING MANHOLE EA 10 $1,308.00 $13,080.00
16 77 INSTALL NEW CLEANOUT EA 3 $4,765.00 $14,295.00
17 77
CONNECT EXISTING SEWER
LATERAL TO SEWER MAIN EA 71 $2,418.00 $171,678.00
18 77
CONNECT TO (E) SEWER
MANHOLE PER ENG. STD. 6610 EA 1 $1,308.00 $1,308.00
19* 73
REPLACE CURB AND GUTTER
PER ENG. STD. 4030 LF 75 $190.00 $14,250.00
20* 73
REPLACE SIDEWALK PER ENG.
STD. 4110 SQFT 325 $36.00 $11,700.00
21 73
REPLACE SPEED HUMP PER
ENG. STD. 7321 SQFT 250 $25.00 $6,250.00
22 73
REPLACE CROSS GUTTER PER
ENG. STD. 4310 SQFT 30 $202.00 $6,060.00
23 77
REPLACE WATER WELL AND
COVER PER ENG. STD. 6340 EA 1 $1,600.00 $1,600.00
24 77
REMOVE EXISTING AND INSTALL
NEW 12" DIP STORMDRAIN LF 112 $357.00 $39,984.00
25 77
REMOVE EXISTING AND INSTALL
NEW 12" PVC STORMDRAIN LF 251 $330.00 $82,830.00
26* 77
CULVERT LID REPAIR PER
DETAIL B, SHEET 6 SQFT 30 $679.00 $20,370.00
27 77 CONNECT TO (E) SD CULVERT
PER DETAIL A, SHEET 6 EA 2 $1,992.00 $3,984.00
28 77
CONNECT TO (E) STORMDRAIN
STRUCTURE PER ENG. STD.
3540
EA 1 $944.00 $944.00
29 77 PIPE PENETRATION REPAIR PER
DETAIL C, SHEET 6 EA 1 $2,173.00 $2,173.00
30 15 RE‐SET (E) PAVERS (ISLAY AND
CHORRO) SQFT 75 $41.00 $3,075.00
Docusign Envelope ID: 09A05CD6-2BD6-8E10-81D6-2682B7137DEA
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Item Item Unit of Estimated Item Price Total
No. SS(1) Description Measure Quantity (in figures) (in figures)
31 82 REPLACE SIGN POST PER ENG.
STD. 7210 EA 1 $580.00 $580.00
32* 77 RE‐GRADE SEWER LATERAL
BEYOND 5 FEET LF 100 $50.00 $5,000.00
(1) refers to section in the Standard Specifications, with modifications in the Special Provisions, that describe required
work.
* Bid item exempt from Section 9-1.06B and 9-1.06C of the Standard Specifications. The unit price will not be adjusted
regardless of the final bid item quantity.
BID TOTAL: $1,512,539.00
Payments are to be made to the Contractor in compliance with and subject to the provisions
embodied in the documents made a part of this Contract.
If any dispute arises regarding the work or contract price, Contractor must follow the
procedures in the contract documents, including the requirements on change order
requests and dispute resolution.
ARTICLE III, COMPONENT PARTS OF THIS CONTRACT: The Contract consists of the
following documents, all of which are as fully a part thereof as if herein set out in full, and if
not attached, as if hereto attached:
1. Notice to Bidders and Information for Bidders
2. Standard Specifications and Engineering Standards
3. Special Provisions, any Addenda, Plans and Contract Change Orders
4. Caltrans Standard Specifications and Standard Plans 2024
5. Accepted Bid and Bid Bond
6. List of Subcontractors
7. Labor Code Section 1725.5 Statements
8. Bidder Acknowledgements
9. Qualifications
10. Noncollusion Declaration
11. Agreement and Bonds
12. Insurance Requirements and Forms
ARTICLE IV INDEMNIFICATION: The Contractor shall indemnify, defend with legal
counsel approved by City, and hold harmless City, its officers, officials, employees and
volunteers from and against all liability, loss, damage, expense, cost (including without
limitation reasonable legal counsel fees, expert fees and all other costs and fees of
litigation) of every nature arising out of or in connection with the acts or omissions of
Contractor, its employees, subcontractors, representatives, or agents, in bidding or
performing the work or in failing to comply with any obligation of Contractor under this
Agreement, except such loss or damage which is caused by the sole or active negligence
or willful misconduct of the City. Should conflict of interest principles preclude a single legal
counsel from representing both the City and the Contractor, or should the City otherwise
find the Contractor’s legal counsel unacceptable, then the Contractor shall reimburse the
City its costs of defense, including without limitation reasonable legal counsel fees, expert
Docusign Envelope ID: 09A05CD6-2BD6-8E10-81D6-2682B7137DEA
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fees and all other costs and fees of litigation. The Contractor shall promptly pay any final
judgment rendered against the City (and its officers, officials, employees and volunteers)
with respect to claims determined by a trier of fact to have been the result of the Contractor’s
acts or omissions in bidding or performing the work or in failing to comply with any obligation
of Contractor under this Agreement. It is expressly understood and agreed that the
foregoing provisions are intended to be as broad and inclusive as is permitted by the law
of the State of California and will survive termination of this Agreement.
The Contractor obligations under this section apply regardless of whether such claim,
charge, damage, demand, action, proceeding, loss, stop notice, cost, expense, judgment,
civil fine or penalty, or liability was caused in part or contributed to by an Indemnitee.
However, without affecting the rights of the City under any provision of this agreement, the
Contractor shall not be required to indemnify and hold harmless the City for liability
attributable to the active negligence of City, provided such active negligence is determined
by agreement between the parties or by the findings of a court of competent jurisdiction. In
instances where the City is shown to have been actively negligent and where the City’s
active negligence accounts for only a percentage of the liability involved, the obligation of
the Contractor will be for that entire portion or percentage of liability not attributable to the
active negligence of the City.
ARTICLE V: It is further expressly agreed by and between the parties hereto that should
there be any conflict between the terms of this instrument and the bid of said Contractor,
then this instrument shall control and nothing herein shall be considered as an acceptance
of the said terms of said bid conflicting herewith.
ARTICLE VI LABOR CODE COMPLIANCE: This Agreement is subject to all applicable
requirements of Chapter 1 of Part 7 of Division 2 of the Labor Code, including requirements
pertaining to wages, working hours and workers’ compensation insurance, as further
specified in the contract documents.
The project is subject to the prevailing wage requirements applicable to the locality in which
the work is to be performed for each craft, classification or type of worker needed to perform
the work, including employer payments for health and welfare, pension, vacation,
apprenticeship and similar purposes. Copies of these prevailing rates are on file with the
City and are available online at http://www.dir.ca.gov/DLSR.
City may not enter into the Agreement with a bidder without proof that the bidder and its
subcontractors are registered with the DIR to perform public work pursuant to Labor Code
section 1725.5, subject to limited legal exceptions.
Pursuant to Labor Code § 1861, by signing this Agreement, Contractor certifies as follows:
“I am aware of the provisions of Labor Code § 3700 which require every employer to be
insured against liability for workers’ compensation or to undertake self-insurance in
accordance with the provisions of that code, and I will comply with such provisions before
commencing the performance of the work on this contract.”
Docusign Envelope ID: 09A05CD6-2BD6-8E10-81D6-2682B7137DEA
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IN WITNESS WHEREOF, the parties to these presents have hereunto set their hands this
year and date first above written.
APPROVED AS TO FORM CONTRACTOR:
Souza Engineering Contracting, Inc
dba Souza Construction
______________________________
J. Christine Dietrick
City Attorney
_______________________________
Steve A. Souza
President
CITY OF SAN LUIS OBISPO
A Municipal Corporation
______________________________
Whitney McDonald, City Manager
________________________________
Nickie Zepeda
Secretary
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