HomeMy WebLinkAbout09.a. Authorize entering into agreements with third parties for design and repair of cogeneration unitCentral Contra Costa Sanitary District Fa.
BOARD OF DIRECTORS
POSITION PAPER
Board Meeting Date: June 7, 2012
Subject: AUTHORIZE THE GENERAL MANAGER TO ENTER INTO AGREEMENTS
TO PROCURE PROFESSIONAL SERVICES FOR THE DESIGN AND REPAIR OF
THE COGENERATION UNIT
Submitted By: Initiating Dept. /Div.:
Craig Mizutani, Senior Engineer Plant Operations Department
REVIEWED AND R COMMEEEED F BOARD ACTION:
Miz a i T a K. Alm Ann E. Farrell,
a
�✓,,. General Manager
ISSUE: Board authorization is required for the General Manager to enter into
agreements beyond staff authority limits. In addition, while under normal circumstances
some of the work to be performed under the agreement would need to be competitively
bid, where competitive bidding is not in the public interest, the District may authorize
construction work without going through a formal competitive bidding process.
RECOMMENDATION: Adopt the attached resolution making findings and authorizing
the General Manager to enter into agreements with third parties to allow for the design
and repair of the cogeneration unit in amounts totaling up to approximately $300,000
without going through a formal competitive bidding process.
FINANCIAL IMPACTS: Preliminary investigative work completed to date indicates that
repair of the cogeneration unit and related equipment will cost approximately $650,000
including engineering, equipment repair and installation. The Board previously
authorized this work to be done through Carollo Engineers for an estimated cost at that
time of approximately $500,000. Recently some procurement difficulties have arisen
which may make it more expedient for the District to contract directly with some parties.
The amount of the Carollo contract would be reduced somewhat as a result of the
District contracting with other third parties.
ALTERNATIVES/CON SIDERATIONS: The District could elect to engineer, bid and
award contracts to repair the equipment. This is not recommended because of the time
required to go through this process. Delaying repair of the cogeneration system would
be costly. Each day the cogeneration system is off -line, the District stands to lose
$5,000 to $10,000 in utility costs (the net cost of imported electrical power, natural gas
use to make steam, reduction in landfill gas use, and related factors).
BACKGROUND: As reported at the Board meeting on April 5, 2012, there was an
explosion in the exhaust system of the cogeneration unit on March 29, 2012. The
District hired Carollo Engineers to perform investigation of the cogeneration system
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POSITION PAPER
Board Meeting Date: June 7, 2012
Subject'. AUTHORIZE THE GENERAL MANAGER TO ENTER INTO AGREEMENTS
TO PROCURE PROFESSIONAL SERVICES FOR THE DESIGN AND REPAIR OF
THE COGENERATION UNIT
components to determine what repairs are required to place the system back in
operating condition. This investigation occurred concurrently and in conjunction with
the root -cause analyses performed by Exponent, ArcSine Engineering, and others
during the week of April 30, 2012. The root -cause investigation is currently being
completed by the District's insurance carrier's technical consultant, Engineering, Design
& Testing Corp.
The work by Carollo was performed on a professional services agreement entered into
on April 16, 2012 in the amount of $98,000. The investigative work has been
completed and it appears that all components are repairable. As part of the repair
process, the following work is anticipated:
Repair of the turbine. Components that were damaged during the explosion and
components that cannot be reused will be replaced with new or remanufactured
units.
2. Repair of the damaged ducting and expansion joints connecting the turbine,
including new structural supports upgraded to meet current seismic code.
3. Repair of the diverter valve.
4. Repair of the waste heat steam generator and economizer. This includes sheet
metal work, repairing internal piping /tubes, and new supports.
5. Verification by Solar Turbines that the system (including control system) is fit for
service prior to startup.
6. Assisting the District in upgrading the cogeneration system programmable logic
controller (PLC) to a newer version.
Due to the complex nature of the equipment, staff recommends performing the repair
work and replacing the parts using suppliers who already have the necessary
proprietary engineering skills, knowledge and parts to expedite the repairs and to
restore the system so that it can operate safely.
Carollo Engineers has hired RF McDonald and EFFOX. RF McDonald is the factory-
authorized installer for the heat recovery equipment. EFFOX is the manufacturer of the
diverter valve. The repairs on this equipment are nearing completion.
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POSITION PAPER
Board Meeting Date: June 7, 2012
subject: AUTHORIZE THE GENERAL MANAGER TO ENTER INTO AGREEMENTS
TO PROCURE PROFESSIONAL SERVICES FOR THE DESIGN AND REPAIR OF
THE COGENERATION UNIT
Carollo has had difficulty agreeing to contract terms and conditions with Solar Turbines,
the manufacturer of the cogeneration unit, due to Solar Turbines' strict limitations of
liability. (Solar Turbine's liability is limited to the amount of the contract.) In order to
expedite the process of the turbine and other components repair, District staff
recommends having the District enter into a contract directly with Solar Turbine or other
third party suppliers for an amount up to $300,000. The District is incurring the cost of
purchasing electricity from the grid and therefore is the logical party to bear any liability
associated with the repair that Solar Turbines or other third party suppliers are unwilling
to bear. Current projections are for the cogeneration repair to be completed by the end
of July 2012.
Under normal circumstances, the District would use a competitive bid process to
contract for least a portion of the repair work described above. However, because of
the unusually high daily costs of delaying the completion of the work and the need for
specialized knowledge, skills, and equipment, staff believes that the public interest
would not be served by using a competitive bidding process in this situation. Under
California common law, a public agency is not required to employ a competitive bid
process where the public interest would not be served by the competitive process.
Staff has concluded that this action is exempt from the California Environmental Quality
Act (CEQA) under District CEQA Guidelines Section 15301 since it involves repairs to
an existing public facility involving no expansion of use. Approval of this action will
establish the Board of Directors' independent finding that this project is exempt from
CEQA.
RECOMMENDED BOARD ACTION: Adopt the attached resolution making findings
and authorizing the General Manager to enter into agreements with third parties to
allow for the design and repair of the cogeneration unit in amounts totaling up to
approximately $300,000.
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RESOLUTION NO. 2012 - 0 A/
A RESOLUTION OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT
DELEGATING AUTHORITY TO THE GENERAL MANAGER TO ENTER INTO
CONTRACTS FOR THE DESIGN AND REPAIR OF THE COGENERATION UNIT
WITHOUT THE SOLICITATION OF COMPETITIVE BIDS
WHEREAS, on March 29, 2012, there was an explosion in the exhaust system of the
Central Contra Costa Sanitary District's (the District) cogeneration unit that has
rendered the unit inoperable until repairs can be made; and
WHEREAS, each day that the cogeneration unit does not operate, the District must
spend up to $5,000 - $10,000 purchasing power from PG &E to replace the power that is
not being generated; and
WHEREAS, pursuant to a professional services agreement, the District retained Carollo
Engineers to investigate the damage caused to the District's facilities and equipment
from the explosion in conjunction with the root -cause analyses currently being
performed; and
WHEREAS, Carollo Engineers has completed its initial investigation and determined
that affected components of the cogeneration unit are repairable or replaceable; and
WHEREAS, to complete the needed repair work, the entities repairing the equipment
and facilities must have unique or highly specialized skills which are not generally
available to most licensed construction contractors; and
WHEREAS, the repairs are to be made to existing proprietary equipment and the
components required for completion of the repairs may need to be purchased on a sole
source basis from the original equipment suppliers or other specialty companies; and
WHEREAS, the District would, under normal circumstances, competitively bid some of
the repair work using a traditional design- bid -build process to ensure that it benefitted
from any opportunity for competitive advantage and to comply with the Public Contract
Code-land
WHEREAS, conducting a competitive bid process under these circumstances would
extend the timeline for completing the needed repairs by months; and
WHEREAS, under the current factual setting, any financial benefit that might
theoretically be realized from a publicly advertised design- bid -build process is
substantially outweighed by the high additional costs of each day of delay in getting the
cogeneration unit up and operating and using selected highly experienced and qualified
vendors, and
WHEREAS, California courts have determined that in certain limited circumstances,
competitive bidding is not required when it would be impossible or not in the public
interest, such that no competitive advantage can be gained by soliciting bids (Graydon
v. Pasadena Redev. Agency (1980) 104 Cal.App.3d 631).
Resolution 2012 -
Page 2 of 2
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Central Contra
Costa Sanitary District (the Board) as follows:
1. THAT the Board hereby adopts the recitals set forth above as the basis of its
findings.
2. THAT the Board finds there is substantial evidence that it is not in the public
interest to proceed with the repairs on the cogeneration unit using a formal design -
bid -build process and to do so would produce no competitive advantage.
3. THAT the Board authorizes the General Manager to enter into agreements
with third parties to provide for the repair of the cogeneration unit, including
the design, engineering, repair of the damaged facilities, purchase of
replacement and spare parts, engagement of subcontractors, and
management of the project as required.
PASSED AND ADOPTED this 7th day of June, 2012 by the Board of Directors of the
Central Contra Costa Sanitary District by the following vote:
AYES:
Members:
NOES:
Members:
ABSENT:
Members:
James A. Nejedly
President of the Board of directors
Central Contra Costa Sanitary District
County of Contra Costa, State of California
COUNTERSIGNED:
Elaine R. Boehme, CMC
Secretary of the District
Central Contra Costa Sanitary District
County of Contra Costa, State of California
Approved as to form:
Kenton L. Alm, Esq.
Counsel for the District