That the City Council:
A. Reject all bids received for the Remodel/Tenant Improvements at two City owned buildings at 205 South Euclid Street and 106 East First Avenue, City Project No. 6-B-23;

B. Waive the competitive bidding process pursuant to Municipal Code Section 4.20.070(C), “Exceptions to bidding requirements for the purchase of goods and services”;

C. Authorize the use of competitively bid cooperative purchasing through Sourcewell for procurement of construction services;

D. Award a contract to MDJ Management, LLC in the amount of $2,859,234.21 for the Remodel/Tenant Improvements at both 205 South Euclid Street and 106 East First Avenue, City Project No. 6-B-23;

E. Authorize the City Manager to execute the contract with MDJ Management, LLC, and issue a purchase order in the amount of $3,145,157.63, which includes a 10 percent contingency; and,

F. Appropriate $250,000 of County of Orange Discretionary Grant Funds which were designated by the County of Orange for this project, as well as an appropriation of $149,589 from the available unencumbered City of La Habra General Capital Projects Fund balance to fully fund the Project.

Several years ago the City acquired two commercial buildings at 205 South Euclid Street and 106 East First Avenue for civic use purposes. The building at 106 E. First Avenue was acquired to be remodeled into a new location to host the La Habra Women's Club and the La Habra Art Association. Both of those local non-profit organizations currently occupy space in the Community Center annex building. The goal of moving these to non-profits is to situate their operations in the City's growing "Cultural Arts and Museum" district on Euclid Street and then remodel the space they are currently occupying at the annex building into an expanded, dedicated Senior Center and senior programming provided by the City's Community Services Department. The building at 205 S. Euclid was acquired for the purpose of relocating the City's Animal Control division, certain Community Services staff, and to provide a new, centrally located space for the La Habra Historical Society's museum. The proposed remodel and tenant improvement project consists of comprehensive improvements to the two City-owned buildings including, but not limited to, site demolition and interior wall removal, renovation of the building exteriors, installation of new electrical, mechanical, plumbing, fire/security alarm systems, replacement of doors, windows, and finishers. Additionally, there will be miscellaneous patching, repairing, replacing, and refinishing of all damaged areas within the buildings.

On November 6, 2023, the project was advertised for competitive bidding. The bid results were as follows:
 

The apparent low bid from Far Builders was deemed non-responsive due to the omission of Addendum No.1. In addition, both bids significantly exceeded the Project's approved budget. In an effort to reduce costs, staff undertook a value engineering process and reduced the Project's scope. 

The Project was re-advertised on May 28, 2024, and a mandatory job walk was held on June 18, 2024. The second bid opening occurred on July 10, 2024, with the following results:
 

Both submissions were again found non-responsive. Following the two unsuccessful bidding attempts, either due to responsiveness issues or excessive costs, staff explored alternative procurement options allowed under the City's municipal code and state law. The City is a member of Sourcewell, a cooperative purchasing agency formerly known as the National Joint Powers Alliance (NJPA). Sourcewell performs nationally competitive solicitations in compliance with California Government Code Section 6500, allowing public agencies to procure goods and services, including construction, without having to undertake a separate local bidding process.

On February 5, 2025, staff conducted an on-site walk through with MDJ Management, LLC ("MDJ"), a qualified contractor participating in Sourcewell’s cooperative construction program. After reviewing project plans and discussing scope expectations, MDJ submitted a proposal in May 2025 for a total cost of $2,859,234.21. Staff has reviewed MDJ's proposal and determined that it is consistent with Sourcewell’s pre-negotiated unit prices and represents a fair and reasonable cost for the required work. The City Attorney has confirmed that this procurement method complies with California public contracting laws and satisfies the City’s Municipal Code.

Therefore, due to the prior unsuccessful competitive bidding processes and the availability of a compliant, cost-effective competitively priced alternative through Sourcewell, staff recommend rejecting all previously received bids and awarding a contract to MDJ using the Sourcewell cooperative purchase agreement program. This approach will help ensure timely delivery of the Project at a competitive and reasonable price. It should be noted that MDJ has successfully completed several recent building improvement projects for the City, including the HVAC and roof improvements at the Children's Museum as well as building improvements to the Main Child Development Office building. Staff has observed that MDJ consistently delivered high-quality workmanship and demonstrated professionalism throughout those two recent projects.

The total project cost is estimated at $3,802,562, which includes previously expended costs for architectural design, design support, and future costs for project construction, construction management and inspection services. If approved by Council, there is sufficient funding in the Fiscal Year 2025-2026 budget to enter into an agreement with MDJ Management, LLC and issue a purchase order for construction in the amount of $3,145,157.63, which includes a 10% contingency. Additionally, the City was previously awarded $250,000 from the County of Orange Discretionary Fund for this project, and there is $149,589 of City of La Habra General Capital Funds available and unencumbered that is recommended for appropriation to complete the funding necessary for this project.