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HomeMy WebLinkAbout07.a. Authorize sole-source contract with Solar Turbines re cogen unitCentral Contra Costa Sanitary District BOARD OF DIRECTORS . Q. POSITION PAPER Board Meeting Date: September 5, 2013 subject: ADOPT A RESOLUTION MAKING FINDINGS AND AUTHORIZING THE GENERAL MANAGER TO EXECUTE A SOLE - SOURCE CONTRACT WITH SOLAR TURBINES, INC. FOR THE COGEN CONTROLS UPGRADE PROJECT, DISTRICT PROJECT NO. 7308, AND APPROVE A SUPPLEMENTAL AUTHORIZATION OF $800,000 TO THE TREATMENT PLANT PROGRAM OF THE 2013 -14 CAPITAL IMPROVEMENT BUDGET Submitted By. Craig Mizutani, Senior Engineer Edgar Lopez, Senior Engineer Initiating Dept. /Div.: Plant Operations / Operations Engineering /Capital Projects REVIEWED AND RECOMMENDED FOR BOARD ACTION: A Antkowiak, Capital Projects Division Manager D. Robbins, Provisional Plant Maintenance Division Mgr C. Swanson, Director of Operations K. Alm Counsel for the District R. Bailey General Manager ISSUE: Board approval is requested to enter into a sole- source contract with Solar Turbines, Inc., the original equipment manufacturer for the District's cogeneration gas turbine system. Board authorization is required for the addition of funds to the Fiscal Year (FY) 2013 -14 Capital Improvement Budget (CIB). RECOMMENDATION: Authorize the General Manager to execute a sole- source contract with Solar Turbines, Inc. for the installation of fuel and control system upgrades to the District's cogeneration system for an amount not to exceed $650,000; and approve a supplemental authorization of $800,000 to the Treatment Plant Program of the FY 2013 -14 CIB to cover this and other project elements. FINANCIAL IMPACTS: The total anticipated cost for the work under this contract is approximately $650,000. This project is included in the FY 2013 -14 CIB. The total project cost is estimated to be $1,300,000. However, this estimate exceeds the FY 2013 -14 project budget by $800,000. A supplemental authorization to the Treatment Plant Program is necessary to be able to complete the project in this fiscal year. ALTERNATIVES /CONSIDERATIONS: Sole- source requests bypass the competitive bidding process. The supply and installation of the upgrade does not lend itself to competitive bidding as the design of the equipment is proprietary and only the manufacturer has the unique product knowledge to safely and economically upgrade the system. The District recently experienced a catastrophic failure of the cogeneration system when maintenance was performed by an aftermarket service provider. BACKGROUND: The cogeneration system produces electricity and steam for the Treatment Plant and provides significant savings over purchasing power from a utility (PG &E). Page 1 of 4 POSITION PAPER Board Meeting Date: September 5, 2013 subject. ADOPT A RESOLUTION MAKING FINDINGS AND AUTHORIZING THE GENERAL MANAGER TO EXECUTE A SOLE - SOURCE CONTRACT WITH SOLAR TURBINES, INC. FOR THE COGEN CONTROLS UPGRADE PROJECT, DISTRICT PROJECT NO. 7308, AND APPROVE A SUPPLEMENTAL AUTHORIZATION OF $800,000 TO THE TREATMENT PLANT PROGRAM OF THE 2013 -14 CAPITAL IMPROVEMENT BUDGET Failure /Recommissioning of Cogeneration Unit: On March 29, 2012, the cogeneration unit suffered a catastrophic failure caused by an explosion in the exhaust system. The unit was recommissioned by Solar Turbines, the original equipment supplier, and was restored to service on October 3, 2012. The six -month outage resulted in an increase in utility expenses of approximately $960,000, for which the District has been fully reimbursed. The recommissioning of the unit was hampered by the age of the fuel valves and control system. In addition, the fuel valves and control system were suspected as contributing factors to the explosion. Replacement fuel valves had to be manufactured as they are no longer a stocked item by either Solar Turbines or the valve manufacturer. The control system is based on a controller manufactured by Modicon. While Modicon controls are common to District equipment, they are no longer supported by Solar Turbines. The cogeneration system was first placed into service in the early 1990s. From initial startup to 2011, the system was maintained under a long -term maintenance agreement with Solar Turbines. The agreement was all- inclusive, covered any repair, and guaranteed availability of the cogeneration system. In 2011, the District changed service providers to the Wood Group, which serviced the system until the explosion. Following the explosion, the District cancelled the service agreement with the Wood Group. Existing Short -Term Maintenance Agreement: Since being placed back into service, the cogeneration unit has been maintained under a short-term maintenance agreement with Solar Turbines. The short-term agreement is for routine maintenance only and does not cover unscheduled repairs. It provides only for labor and does not cover any parts or provide any guarantees for availability. The District is, at significant financial and operational risk without a long -term service agreement. Upgrades Needed Prior to Long -Term Maintenance Agreement - $650,000: At the October 4, 2012 Board Meeting, staff stated they would pursue a long -term service agreement with Solar Turbines. However, Solar Turbines will not enter into a long -term service agreement unless the fuel and control systems are upgraded. The obsolescence of the equipment makes it impossible for them to provide a reasonable response time for equipment repair /replacement and the Modicon based controls are no longer supported by Solar Turbines. Page 2 of 4 POSITION PAPER Board Meeting Date: September 5, 2013 Subject. ADOPT A RESOLUTION MAKING FINDINGS AND AUTHORIZING THE GENERAL MANAGER TO EXECUTE A SOLE - SOURCE CONTRACT WITH SOLAR TURBINES, INC. FOR THE COGEN CONTROLS UPGRADE PROJECT, DISTRICT PROJECT NO. 7308, AND APPROVE A SUPPLEMENTAL AUTHORIZATION OF $800,000 TO THE TREATMENT PLANT PROGRAM OF THE 2013 -14 CAPITAL IMPROVEMENT BUDGET Due to the complex nature of the cogeneration turbine, staff recommends performing the fuel and control system upgrades using Solar Turbines on a sole- source basis. Solar Turbines has the proprietary engineering skill, product information, knowledge and parts to safely perform the upgrade. The estimated Solar Turbines contract cost for the upgrade is $650,000. Supplemental Authorization for Other Project Elements - $800,000: The fuel and control system upgrades will be part of the Cogen Controls Upgrade Project, District Project 7308. Other project elements required are selecting an electrical designer and electrical contractor to install interconnecting wiring between the turbine, control console, and District equipment. These contracts have an estimated cost of $50,000 and $250,000, respectively. These contracts will be awarded based on a qualified evaluation process, in accordance with District purchasing guidelines. In addition, the electrical generator on the cogeneration unit is approximately 20 years old and needs to be evaluated for replacement. Depending on the outcome of the evaluation, this piece of equipment may need to be replaced during the planned shutdown of the cogeneration unit. The estimated cost to replace the generator is $200,000. District staff will perform contract administration, design and construction management, and inspection services for the new interconnect wiring not provided by Solar Turbines. This staff effort is estimated to be $150,000. The revised total project cost is estimated to be $1,300,000. This project is included in the FY 2013 -14 CIB on page TP -20. The estimated total project cost listed in the FY 2013 -14 CIB for the project is $800,000. An allocation of $100,000 was made in FY 2012 -13 and an estimated allocation of $400,000 to the project was planned for FY 2013 -14. To complete the project in FY 2013 -14, an allocation of $1,200,000 will be necessary, which exceeds the budgeted allocation by $800,000. There are insufficient unallocated funds in the FY 2013 -14 CIB Treatment Plant Program to make the necessary allocation to the project. An $800,000 supplemental authorization would increase the estimated expenditures of the Treatment Plant Program Budget to $9,840,000. The cogeneration system will be in operation for the foreseeable future. The fuel valves and control system should be upgraded to ensure continued safe and reliable operation of the cogeneration system and these upgrades are required to re -enter into a long -term service agreement. Page 3 of 4 POSITION PAPER Board Meeting Date: September 5, 2013 subject. ADOPT A RESOLUTION MAKING FINDINGS AND AUTHORIZING THE GENERAL MANAGER TO EXECUTE A SOLE - SOURCE CONTRACT WITH SOLAR TURBINES, INC. FOR THE COGEN CONTROLS UPGRADE PROJECT, DISTRICT PROJECT NO. 7308, AND APPROVE A SUPPLEMENTAL AUTHORIZATION OF $800,000 TO THE TREATMENT PLANT PROGRAM OF THE 2013 -14 CAPITAL IMPROVEMENT BUDGET 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. COMMITTEE RECOMMENDATION: This matter was reviewed by the Capital Projects Committee on August 30, 2013. RECOMMENDED BOARD ACTION: Take the following actions: Adopt a resolution authorizing the following action and making the following findings in connection with the Cogen Controls Upgrade Project, District Project 7308: A. Authorize the General Manager to enter into a sole- source contract in an amount not to exceed $650,000 with Solar Turbines for the installation of fuel and control system upgrades to the cogeneration system, pursuant to Public Contract Code Section 3400(c)(3) and District Purchasing Procedures Manual Section 5.3.15; and B. Find that: a. The public interest is best served by utilizing the unique technology and proprietary knowledge that Solar Turbines, Inc., the original equipment manufacturer, has developed to upgrade the gas turbine generator set, which is part of the cogeneration system. b. Under the circumstances, Solar Turbines is the only qualified supplier to install the upgrade equipment and that it is in the best interest of the District to proceed with a sole- source contract with Solar Turbines. C. The contract is exempt from CEQA. 2. Approve a supplemental authorization of $800,000 to the Treatment Plant Program of the Fiscal Year 2013 -14 Capital Improvement Budget. Attached Supportinq Document.' 1. Proposed Resolution Page 4 of 4 RESOLUTION NO. 2013- 03Z A RESOLUTION OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT APPROVING A SOLE - SOURCE CONTRACT WITH SOLAR TURBINES, INC. FOR FUEL AND CONTROL SYSTEM UPGRADES TO THE COGENERATION SYSTEM WHEREAS, the Central Contra Costa Sanitary District's (District) Purchasing Procedures Manual Section 5.3.15 provides that, in those cases involving a unique or novel product application required to be used in the best public interest, a governmental entity may specify such unique or novel product as an appropriate sole source; and WHEREAS, the District has a Solar Centaur 40 gas turbine generator set as part of its cogeneration system which is in need of a fuel and control system upgrade; and WHEREAS, Solar Turbines, Inc.'s proprietary technology can be utilized and incorporated to upgrade the District's gas turbine generator set, thereby extending the service life of the turbine and increasing reliability and maintainability; and WHEREAS, Section 3400(c) of the California Public Contract Code sets forth certain conditions under which a particular material or product or service may be purchased without the necessity of competitive bidding; and WHEREAS, in order to allow for future long -term maintenance, it is prudent to have the upgrade performed by Solar Turbines, Inc., the original equipment supplier. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Central Contra Costa Sanitary District (the Board) as follows: THAT the Board hereby adopts the recitals set forth above as the basis of its findings. 2. THAT the Board finds the public interest is best served by utilizing the unique technology and proprietary knowledge that Solar Turbines, Inc., the original equipment manufacturer, has developed to upgrade the gas turbine generator set, which is part of the cogeneration system. 3. THAT, in accordance with Section 3400(c) of the California Public Contract Code, the Board finds that the proprietary technology offered by Solar Turbines, Inc. shall be utilized in the District's treatment plant to repair, modify and upgrade the District's Solar Centaur 40 gas turbine generator set, and that a sole- source contract with Solar Turbines, Inc. meets the criteria set forth in that section. Central Contra Costa Sanitary District Resolution 2013 -�" Z Sole- Source Contract — Solar Turbines, Inc. Page 2 of 2 4. THAT that the contract 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. 5. THAT the Board authorizes the General Manager to enter into a sole- source contract with Solar Turbines, Inc. in an amount not to exceed $650,000 for the installation of fuel and control system upgrades to the cogeneration system, Cogen Controls Upgrade Project, District Project 7308. PASSED AND ADOPTED this 5th day of September, 2013, 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, CIVIC 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