Decision on Northeast surface water treatment plant on Fresno City Council docket

Brand administration recommends W.M. Lyles Co. bid for NE water treatment plant, but low bidder, Mountain Cascade, Inc. had issues with the bid process and may threaten litigation.

The ever-growing Recharge Fresno project seemed to be proceeding with no major headaches.

Then we hit something as simple as a bid. The City Council on Thursday is now looking at a migraine.


The issue is a new reservoir for the Northeast surface water treatment plant. The plant’s current reservoir holds 1.5 million gallons. Officials in the Department of Public Utilities want a reservoir that can hold 6 million gallons.

This expansion is vital to the plant’s optimum operation, DPU says. In essence, the bigger reservoir gives DPU greater operational flexibility. It’s no simple matter to receive millions of gallons of San Joaquin River water, treat it to the highest standards, then get the stuff to consumers spread over dozens of square miles – and do this 24/7/365.

A bigger reservoir helps advance this mission.

DPU has lined up a low-interest government loan. The ratepayers are ready to meet the debt payments. The only remaining hurdle – find someone to build the new reservoir.

City Hall does that through a competitive bidding process. DPU initially pegged the project’s cost at $12 million. Two bidders jumped at the chance. One bid came in at $11.76 million. The other came in at $11.32 million.

Anyone can do the math. The low bidder won by $440,000.

As Charlie Waters, my old boss at The Bee, used to say: Game, set, match.

Not this time.

The $11.32 million bid came from Mountain Cascade, Inc. in Livermore. The $11.76 million bid came from W.M. Lyles Co. in Fresno.

The administration of Mayor Lee Brand is recommending that the City Council on Thursday award the contract to Lyles. The city’s reasoning: The reservoir is to be built with a process called “design-build,” something that is old hat to big-time company such as Lyles. Mountain Cascade, on the other hand, is a plucky company that, sadly, is a rookie when it comes to being the bell cow on design-build projects.

The Administration doesn’t want Fresno to be the guinea pig for Mountain Cascade’s on-the-job training.

A committee of seven City Hall employees reviewed the two bids. Its recommendation to The Administration said in conclusion: “The proposal submitted by W.M. Lyles Co. has demonstrated, in the Committee’s opinion, that they can provide the expected level of quality and service, while providing a financial proposal that is a good value for the City of Fresno. The committee recommends award of the contract to W.M. Lyles Co.”

Mountain Cascade’s limited experience in design-build projects, the committee wrote, “was found to be inadequate for the scope and goals of this project (the first design-build project of this magnitude for the City of Fresno).”

The parenthetical comment is part of the committee’s report.

Lyles, it should be noted, is the lead contractor for the nearly finished $162 million Southeast surface water treatment plant.

Mountain Cascade is hotter than a drugstore pistol.

The company on Aug. 16 tangled with city officials in a protest hearing. Independent Administrative Hearing Officer Michael Flores on Sept. 5 delivered an 18-page opinion to City Manager Wilma Quan-Schecter.

There’s no putting Flores’ long judgment into a nutshell. Mountain Cascade, if I understand things correctly, is upset with City Hall’s handling of the bid process from start to finish. The allegedly subjective and pejorative nature of a “non-responsible” designation plays a major role in the company’s argument.

Flores in his analysis split the baby, finding that City Hall did some things right and some things not so right. Flores made three recommendations.

First, Flores said the City Council should deny Mountain Cascade’s request that the “non-responsible” designation be removed.

Second, Flores said the council should find that the bidding process complied with city bidding policies, but the city staff inadvertently violated those policies.

Third, Flores recommended: “[I]n light of the violations of the City’s Competitive Bidding Policies, and to avoid any perception of unlawful or unfair conduct regarding the City’s bidding process, the City Council reject all bids, and direct the appropriate City Department Manager or Director to reinitiate the bidding process for the NESWTF project.”

Thursday’s staff report from DPU Director Tommy Esqueda to the council charges full speed ahead: Give the deal to Lyles.

However, the council on Thursday also is scheduled to go into closed session to discuss the city’s exposure to possible a lawsuit from Mountain Cascade.

Finally, I find interesting a three-page memo included in the council’s packet. The memo is from Esqueda and Michael Carbajal, DPU’s planning manager. The memo is addressed to Quan-Schecter and Tim Orman, Brand’s chief of staff.

The first two pages are essentially a justification for this mess. The third page concludes with a section on “Lessons learned.” There are four, all dealing with nuances of the bidding process for design-build projects.

When it comes to City Hall’s learning curve, I’m guessing Mountain Cascade doesn’t like being the cadaver.

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