Meeting_Body
CONSTRUCTION COMMITTEE
FEBRUARY 19, 2025
Subject
SUBJECT: SOUTHEAST GATEWAY LINE PROJECT - ADVANCED WORKS CONSTRUCTION MANAGER/GENERAL CONTRACTOR PHASE 1
Action
ACTION: AWARD CONTRACT
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer to:
A. AWARD Contract No. PS119518000 to Flatiron-Herzog, a SGL Joint Venture, for the Southeast Gateway Line Light Rail Transit (LRT) Project (Project) Advanced Works Construction Manager/General Contractor (CM/GC) Phase 1 in the amount of $10,543,240 for Preconstruction Services, subject to the resolution of properly submitted protest(s), if any;
B. ESTABLISH a Preconstruction Budget for the Project in an amount of $997,750,195; and
C. NEGOTIATE and EXECUTE all project-related agreements and modifications within the authorized Preconstruction Budget.
Issue
ISSUE
Staff is seeking the Board’s approval for three items: (1) award the Advanced Works CM/GC contract; (2) establish a Preconstruction Budget for the Project; and (3) negotiate and execute all project-related agreements and modifications within the authorized Preconstruction Budget. The Preconstruction Budget is inclusive of the CM/GC contract and all previously awarded contracts, incurred expenses to date, anticipated additional preconstruction activities performed by the CM/GC, and existing architectural and engineering (A&E) and professional services contracts for the Project, Right-of-Way (ROW) acquisitions, and unallocated contingency, all as summarized in the expenditure and funding plan for the Preconstruction Budget as shown in Attachment A.
Background
BACKGROUND
In April 2024, the Board certified the Final Environmental Impact Report (EIR) for the Project, a 14.5-mile LRT line with nine stations from a northern terminus at the Slauson/A Line Station located in the City of Los Angeles/Florence-Firestone unincorporated area of LA County to a southern terminus at the Pioneer Station located in the City of Artesia and includes a new C Line infill station at the I-105 Freeway. The Project also provides for the inclusion of five parking facilities and a Maintenance and Storage Facility (MSF) in the City of Bellflower. In August 2024, the Federal Transit Administration (FTA) approved the Final Environmental Impact Statement (EIS) and issued a Record of Decision (ROD), marking the completion of the environmental phase of the Project.
Parallel workstreams were implemented to advance high-risk project activities such as utilities and freight relocation, which included obtaining Board approval of the A&E and Program Management Support Services (PMSS) contracts in November 2023 and February 2024, respectively. These actions and the team’s early due diligence efforts enabled the Project to achieve a significant milestone of utility relocation by a private third-party, starting with the utility groundbreaking that was held in October 2024, shortly after FTA’s issuance of the ROD. In addition, Metro successfully submitted all deliverables required to complete the Project Development phase of the Federal New Starts Capital Investment Grants (CIG) program in August 2024. Furthermore, the FTA approved Metro’s request for a Letter of No Prejudice (LONP) on January 17, 2025. The LONP would allow Metro to incur costs in the amount of $985,093,626 prior to executing a Federal Funding Grant Agreement (FFGA) and retain eligibility for reimbursement after grant approval.
The Project will be delivered in two tranches starting with: (1) CM/GC for Advanced Works, including utility adjustments, hazardous soil abatement, freight relocation, and grade crossings construction; followed by (2) a later procurement phase, which will include construction of the LRT guideway, stations, and MSF. Utilizing CM/GC for Advanced Works provides the benefit of the construction contractor’s input, especially constructability reviews, during the design phase before the start of construction.
To move into preconstruction services, the Project will utilize this CM/GC contract and will continue to utilize support from Metro staff and previously awarded and existing contracts and agreements, as listed below.
Discussion
DISCUSSION
Findings
Staff recommends using CM/GC for the Advanced Works scope because it enables Metro to engage a General Contractor to act as the “Construction Manager” consultant and collaborate with Metro and the professional services consultants. The CM/GC process provides the ability to effectively integrate benefits from the collaborative process and the early engagement of construction experts that will enable Metro to make informed decisions during the design process and provide substantive benefits to the project. Further, the CM/GC delivery method for this project could also improve construction quality, provide higher certainty on the final construction cost and delivery schedule, and minimize risks related to construction change orders, disputes, and third-party delays during construction.
The CM/GC will deliver the Advanced Works scope in two distinct contract phases. The Preconstruction Budget not only establishes Phase 1, the Preconstruction Phase, which allows the contractor to work with the A&E consultants and Metro to provide constructability expertise, assess risks, provide cost estimates, and refine the project schedule, but also includes budget for professional services and ROW acquisitions. During Phase 1, Metro will work with the CM/GC Contractor to explore opportunities to accelerate the delivery schedule, as well as leverage their expertise to refine and develop the completed design in a direction that remains within approved project budgets. As the design approaches completion, the CM/GC Contractor and Metro negotiate the contract price for Phase 2, the Construction Phase. If both the CM/GC and Metro reach an agreement on the Construction Phase costs, then the second contract phase (Construction Phase) will begin, and Metro will execute a Contract Supplement and issue a Notice to Proceed (NTP) for Phase 2, pending future Board approval.
At any stage during the Preconstruction Phase, Metro can exercise an “off-ramp” and seek another contractor by procurement of the construction work based on the Project’s final design, while still benefitting from the previous work performed by the CM/GC Contractor. The CM/GC Phases are described in more detail below:
• Phase 1 Preconstruction Services expressly sets out the work that the Contractor will perform, such as design review and preparation, pricing, and negotiation of Early Works Packages.
• Upon issuance of NTP for Phase 1, the Contractor, A&E design consultant, and Metro will work side by side to review constructability, undertake value engineering, conduct site investigations, assess market conditions, and provide current contractor price estimates, risk assessments, and construction schedules at each successive prescribed design interval to finalize the design.
• Throughout Phase 1, the Contractor will provide Metro with Opinion of Probable Costs (OPCs), which are detailed cost estimates that will enable staff to evaluate the projected Project costs against the Project budget and make necessary adjustments to the scope or schedule.
• If, after review and negotiation of the final OPC, both parties agree to a final Guaranteed Maximum Price (GMP) or Lump Sum (LS) for Phase 2, staff will seek Board approval to award Phase 2 construction to the Contractor. If not, Metro has the option to off-ramp the remaining Work, and package the design documents into a separate bid package. This off-ramp will be available for Metro throughout any time of Phase 1 as staff evaluates each OPC.
• Throughout the negotiations of Phase 2, Metro will maintain the following parameters to mitigate discrepancies and to increase the likelihood of project success:
o Contractor’s Phase 2 lump sum management fee and Phase 2 Margin Percentage initially proposed will be retained in all OPCs;
o Phase 1 specification sets out the form and frequency of OPCs to provide for multiple checkpoints for Metro;
o CM/GC contract sets out the conditions of the price proposal for Phase 2 and the information that the Contractor is required to submit;
o CM/GC contract sets out a clear governance structure for managing Phase 1, including the establishment of working groups that include members from Metro, the contractor team, and any relevant third parties; and
o Process for establishing all OPCs will employ transparent open-book methods and the use of Independent Cost Estimates (ICE) to validate pricing.
By utilizing the CM/GC approach to deliver and construct the Advanced Works scope, the construction contractor will provide feedback during the design development phase before the start of construction. The design team will work collaboratively with the CM/GC staff and incorporate input in constructability, Project phasing, and value engineering ideas as the design progresses. Metro plans to issue several Early Works Packages to initiate critical activities during Phase I. This approach aims to expedite the project by including soils abatement and advanced utility relocations within the corridor cities. These activities are essential precursors to relocating the freight infrastructure.
Establishment of Preconstruction Budget
The Preconstruction Budget is comprised of the following estimated expenditures anticipated through FY 2027.
The FTA recently approved a LONP in the amount of $985,093,626 for critical early works activities that would be eligible for reimbursement after FFGA award. Expenditures for ROW acquisition and utility relocation are covered under pre-FFGA-award authority and are therefore not included in the LONP amount. The LONP allows reimbursement for expenditures on early critical activities including hazardous soils abatement, railroad relocation, and grade crossings.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
The Project is being planned and designed per Metro and all applicable regulatory and jurisdictional requirements. Approval of the Preconstruction Budget for the Project will have no impact on safety.
Financial_Impact
FINANCIAL IMPACT
The funds required in FY25 for the Phase 1 Preconstruction Services are included in the adopted budget under cost Center 8510 Project number 860201, under various accounts, including professional and technical services. Annual budgeting within the approved preconstruction budget for the future fiscal years will be the responsibility of the Project Manager, Cost Center Manager, and the Chief Program Management Officer.
Impact to Budget
The source of funds for Recommendation A of this action is Measure R 35%, which is not eligible for bus and rail operations.
The sources of funds for the Preconstruction Budget are as listed in Attachment A.
Equity_Platform
EQUITY PLATFORM
This Project will benefit communities through the addition of a new high-quality reliable light rail transit which will increase mobility and connectivity for the historically under-served and transit- dependent communities along the corridor. Approval of the contract will allow staff to advance the project and maintain the schedule to complete the line for service by 2035. The Diversity and Economic Opportunity Department (DEOD) established a 28% Disadvantaged Business Enterprise (DBE) goal for Phase 1 of the project. The recommended firm exceeded the goal by making a 29.43% DBE commitment. To ensure DBEs were informed of the contracting opportunity, Metro conducted a Virtual Outreach Event on November 1, 2023, with 280 attendees, as well as a pre-proposal conference, with 45 attendees, on May 7, 2024.
The Project will provide a much-needed transit connection, improving access to jobs by directly connecting to the Metro C Line (Green), Metro A Line (Blue), and LA County's broader regional transit network. The new contract will continue to work with stakeholders and communities to keep them informed of project updates.
In 2017 (the first year of environmental analysis), Black, Indigenous, and People of Color (BIPOC) residents comprised 65 percent of the total Study Area population, with Hispanic/Latino groups alone accounting for 51 percent of the total population. In addition, 44 percent of Study Area residents live below the poverty level, which is higher than the County average of 33 percent, and 18 percent of households do not own a car. The Project will serve a high-travel demand corridor with a significant population that relies on public transportation.
The entire LPA qualifies as an Environmental Justice (EJ) corridor and the corridor cities of Bellflower, Paramount, South Gate, Cudahy, Bell, and Huntington Park are also identified as LA Metro’s Equity Focus Communities. Since initiating the Project Study, staff has conducted extensive outreach efforts for corridor communities and has continued to engage project stakeholders through a variety of forums, platforms, languages, and access methods, including special outreach efforts to people of color, low-income populations, limited English proficiency populations, and persons with disabilities. Project development has been directly influenced by this engagement, as discussed above. Metro staff will continue to reengage communities as a part of the completion of the final environmental document, as well as the Slauson/A Line to LAUS Study, to help define the project, including alignment profile, station locations, and design.
Vehicle_Miles_Traveled_Outcome
VEHICLE MILES TRAVELED OUTCOME
VMT and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide, with these declining VMT trends due in part to Metro’s significant investment in rail and bus transit.* Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
Vehicle Miles Traveled (VMT) was analyzed for this item through the VMT analysis completed for the Southeast Gateway Line Final EIS/EIR. The analysis identified a reduction in VMT due to the implementation of the project compared to conditions without the project, which demonstrates a benefit from the project and a less than significant impact from an environmental standpoint. Specifically, the VMT analysis in the Final EIS/EIR identified a reduction in daily regional VMT of 130,900 miles compared to the Horizon Year (2042) No Build Alternative conditions. The VMT analysis for the Cycle 7 TIRCP application identified a reduction in regional VMT of 6.6 billion miles over the life of the project.
*Based on population estimates from the United States Census and VMT estimates from Caltrans’ Highway Performance Monitoring System (HPMS) data between 2001-2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The Project supports the following strategic plan goals identified in Vision 2028:
• Goal 1: Provide high- quality mobility options that enable people to spend less time traveling
• Goal 3: Enhance communities and lives through mobility and access to opportunity and
• Goal 5: Provide responsive, accountable, and trustworthy governance within the Metro organization.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The Board may choose not to move forward with awarding Phase 1 of the CM/GC Contract for the Project and establishing the Preconstruction Budget. Staff does not recommend this alternative because the project benefits of using CM/GC Preconstruction Services for the Project would not be realized, which include improved design quality, enhanced efficiencies, a guaranteed maximum budget principal, and lower risk for future construction change orders. Furthermore, Metro will incur undesirable schedule delays and cost increases.
Next_Steps
NEXT STEPS
Upon Board approval, staff will execute Contract No. PS119518000 with Flatiron-Herzog, a SGL Joint Venture. Metro staff will engage the CM/GC contractor to initiate Phase 1 Preconstruction Services in coordination with the A&E consultant and PMSS consultant to complete the final design. Staff will return to the Board to seek approval of the Phase 2 Construction Project Budget and funding for remaining ROW parcels by FY27. Staff will also keep the Board informed of our progress in securing additional funds as the Project moves forward.
Attachments
ATTACHMENTS
Attachment A - Southeast Gateway Line Funding and Expenditure Plan
Attachment B - Procurement Summary
Attachment C - DEOD Summary
Prepared_by
Prepared by: June Susilo, Deputy Executive Officer, (213) 925-2760
Mat Antonelli, Deputy Chief Program Management Officer, (213) 893-7114
Carolina Coppolo, Deputy Chief Vendor/Contract Management Officer (Interim), (213) 922-4471
Reviewed_By
Reviewed by: Tim Lindholm, Chief Program Management Officer, (213) 922-7297
