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6.F. - Page 4 of 32 After a careful review of all related facts and California Public Contract Code Sections 5100-5110 in particular, staff has determined that Disney Construction had in fact claimed a mistake under Public Contract Code Section 5103 in the original bid. Specifically, Disney Construction made a mistake in its bid by specifying an incorrect quantity for a specific line item, the result of which was a bid several hundred thousand dollars lower than what was intended. They notified City staff of this mistake by email on December 21, 2018, which was two days after bid opening on December 19, 2018. The mistake was materially different than what was intended, as noted above, and the mistake was made in filling out the bid, as Disney Construction indicated. There is no evidence that Disney Construction made an error in judgment or was careless in inspecting the work site or reading the plans and specifications. Pursuant to Public Contract Code Section 5105, Disney Construction is prohibited from participating in further bidding on the Project. Disney Construction's March 6, 2019 bid should therefore be disqualified. Accordingly, Anderson Pacific's bid is accordingly the lowest, responsive and responsible bid forthe March 6, 2019 re -bid of the Project. On March 28, 2019, City staff replied to Anderson Pacific and Disney Construction explaining what recommendation it would be making to the City Council, and inviting both bidders to submit letters to include with the agenda packet. A copy of this reply letter is included as Attachment 8, which itself includes a copy of the December 21, 2018 email from Disney Construction referenced above. Staff recommends that the City Council disqualify the bid of Disney Construction and awards the contract to Anderson Pacific Engineering Construction, Inc. for the Responsive and Responsible Low Bid of $10,512,160.00. Staff believes that this is the best and most economical option to complete this important water system improvement project that will support coverage of water demands for daily domestic use and storage for emergencies such as fire and earthquake; as well as system redundancy to better manage emergency and maintenance operations. FISCAL IMPACT Funds for this project were previously appropriated in the Fiscal Year 2018-2019 Division budget as Water Fund Capital Projects — California Water Tank and Pump Station project accounts. Their total budget has an available combined balance of $7,679,563.57 as of February 28, 2019. Supplemental funding will come from Water Fund Capital Projects - Distribution System Replacement Program which has $1,857,864.06 as of February 28, 2019. Furthermore, upon the approval of this project award, transfer $3,000,000.00 of fund reserves from the Water Operations Fund to the Water Capital Project Fund to fully cover the project construction costs as well as the construction management costs, testing costs, and unforeseen contingencies during the expected two years of project construction; increase revenue in budget to the Water Capital Projects Fund budget by $3,000,000.00; and increase expenditure budget to in the Water Capital Projects Fund budget also by $3,000,000.00. City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 111