Seal Beach council rejects Lampson Well bids after steep price increases, directs staff to reassess

The Seal Beach City Council on Sept. 22 voted 5-0 to reject all bids for the Lampson Well treatment system after construction bids returned well above earlier estimates and staff said supplier and market volatility prevented bidders from holding prices.

The action keeps the project from moving forward immediately while staff reevaluates contract documents, the project delivery schedule and cost impacts and returns to the council with recommendations. The council directed staff to return at the next regular meeting, Oct. 13, with background on proposed professional services and a timeline for rebidding.

Deputy Director of Public Works and City Engineer Cho told the council that the lowest responsive construction bids officially expired on Sept. 14 because suppliers would not guarantee prices. “The short answer is, while our engineering staff is very capable, we simply don't have the people, enough people to manage a project of this size on a daily basis,” Cho said, explaining the staff recommendation to use external construction management for a project of this scope.

Cho summarized why the project cost estimates rose: a March 2022 engineer estimate and loan documents used an earlier figure of roughly $4.35 million to $4.45 million; staff said the construction estimate had increased to about $5.7 million and cited rising labor costs, steel tariffs and global supply pressures as drivers. Public speakers and loan documents cited still higher numbers: one public commenter said the project was cited at $7.3 million in recent paperwork. The council discussed those differing figures and the need for an updated cost review before rebidding.

Mark Butier of Butier Engineering Inc., who advised the council, described industry conditions: many contractors are busy, suppliers are passing through escalations, and firms are reluctant to underbid because of market volatility. He told the council that agencies typically retain construction managers for multi‑million‑dollar water projects to provide on‑site oversight, quality control and schedule management.

After a lengthy discussion about timing, contingency allowances and transparency, the council approved a motion that: (1) rejects all related construction bids as expired; (2) directs staff to reevaluate project parameters, including contract documents, delivery schedule and potential cost‑saving alternatives; and (3) return on Oct. 13 with the supplemental staff report and the proposed scopes and costs for the two professional services firms under consideration (Butier Engineering and Pacific Advanced Civil Engineering). The motion passed 5-0.

Council members emphasized two practical points raised in the debate: that delays can increase cost in a volatile market and that the Lampson Well project is a precursor to other pump‑station projects in the utility capital program. Several council members asked staff to present a comprehensive capital‑projects briefing at a planned strategic workshop in November so the public and council can see programwide costs, loan terms and prioritization.

Staff noted that rejecting the bids is a formal step: the bids received in July had expired and no contractor is being directed to proceed. Staff also offered an alternative to have the proposed construction manager and the engineer of record perform a third‑party value‑engineering review before rebidding, and the council asked for that option to be detailed in the Oct. 13 packet.

The council vote leaves the Lampson Well project paused but keeps it in the capital program; staff said the project remains necessary and recommended further work to identify feasible cost reductions without compromising system reliability.