Report Prepared by: Ian Sather, E.I.T Assistant Engineer, Engineering Department
Title
SUBJECT: Approval to Reject All Bids Received for Project No. CP240040 IT Generator Replacement
REPORT IN BRIEF
Considers approving to reject all bids received for CP240040 IT Generator Replacement to update the Information Technology Department’s emergency generator at the Merced Civic Center due to insufficient project funding.
RECOMMENDATION
City Council - Adopt a motion:
A. Rejecting all bids received for Project No. CP240040 IT Generator Replacement due to insufficient funding; and,
B. Directing staff to re-evaluate the project design and re-bid the project.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, subject to conditions as specified by the City Council; or,
3. Deny the request; or,
4. Refer back to staff for reconsideration of specific items as requested by City Council.
AUTHORITY
Charter of the City of Merced, Article II, Section 200 - Powers, City of Merced and Article XI, Section 1109 - Contracts on Public Works.
Merced Municipal Code, Chapter 3.04, Article IV - Public Works Contracts.
The City Council, in its discretion, when it is in the best interests of the city to do so, may waive any informalities or minor irregularities in any bid process, may reject any or all bids, or may accept the bid that best serves the public purpose even though it may not be the lowest. The City Council may readvertise for bids or, except as otherwise provided in this chapter, proceed with the purchase of the materials, supplies, equipment or contractual services by negotiation in the open market.
CITY COUNCIL PRIORITIES
As provided for in the FY 2025/2026 Adopted Budget.
DISCUSSION
The purpose of the project is to update the Information Technology (IT) Department’s emergency generator to cover increased loads from additional server equipment as well as covering the Finance Department operations in an emergency power outage.
This project was approved as a CIP project withing the FY23-24 Budget as a necessary improvement due to the increased electrical loads needed by the IT servers, as well as expanding emergency coverage to the Finance Department. The original budget was set at $300,000 to include design and construction costs.
On May 08, 2025, the project was advertised for 4 weeks in the Merced County Times, the Builder’s Exchange, and Subscribe Merced.
On June 05, 2025, City staff received four (4) bids for the project with the following results:
|
1 |
Layman Electric, Inc. |
$ 423,205.00 |
|
2 |
Strategic Mechanical, Inc. |
$ 473,000.00 |
|
3 |
Day’s Generator |
$ 513,546.00 |
|
4 |
Burke Diversified dba Burke Construction Co. |
$ 584,475.00 |
The current available project budget is $286,445 which comprises of $243,730 from the Support Services - Information Technology Fund, and $42,715 from the Fleet Replacement Fund.
The total project budget after adjusting for contingency and engineering, testing, and inspections, was calculated to be:
|
Construction |
$ 423,205.00 |
|
Contingency (10%) |
$ 42,320.00 |
|
Engineering, Testing & Inspection |
$ 42,320.00 |
|
TOTAL: |
$ 507,845.00 |
With contingency and engineering charges accounted for, the project would fall approximately $221,400 short. City staff reviewed the bids and are evaluating additional funding possibilities. City staff also considered what portions of the project could be redesigned to reduce costs.
On July 07, 2025, City staff sent a letter notifying all contractors who bid on the project that staff will recommend to City Council that all bids be rejected.
Staff recommends all bids be rejected to allow time to perform redesign and allow staff to explore additional funding opportunities.
IMPACT ON CITY RESOURCES
Project CP240040 was established as a Capital Improvement Project funded by Fund 7008-Support Service - Information Technology and Fund 7006-Fleet Replacement Funds. Currently, there is insufficient budget available within Project CP240040 for bids received.
ATTACHMENTS
1. Bid Results
2. Bid Rejection Letter