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HomeMy WebLinkAbout03.b. Review draft Position Paper to (1) authorize the pre-selection of EnviroCare International, Inc. as the sole-source supplier for the wet scrubber air emission control equipment in the amount of $1,950,000 for the Solids Handling Facility Improvemen Page 1 of 9 Item 3.b. ,,eJkCENTRAL SAN CENTRAL SAN BOARD OF DIRECTORS POSITION PAPER CENTRAL CONTRA COSTA SANITARY DISTRICT DRAFT MEETING DATE: DECEMBER 10, 2018 SUBJECT: REVIEW DRAFT POSITION PAPER TO (1)AUTHORIZE THE PRE- SELECTION OF ENVIROCARE INTERNATIONAL, INCAS THE SOLE- SOURCE SUPPLIER FOR THE WET SCRUBBER AIR EMISSION CONTROL EQUIPMENT IN THE AMOUNT OF $1,950,000 FOR THE SOLIDS HANDLING FACILITYIMPROVEMENTS, DISTRICT PROJ ECT 7348; AND (2)ADOPT A RESOLUTION MAKING FINDINGS AND AUTHORIZING THE GENERAL MANAGER TO EXECUTE ASOLE-SOURCE CONTRACT WITH ENVI ROCARE I NTERNATI ONAL, I NC. I N AN AMOUNT NOT TO EXCEED $250,000 FOR SPECIALTY SERVICES RELATED TO FUTURE EQUIPMENT INSTALLATION FOR THE PROJECT SUBMITTED BY: INITIATING DEPARTMENT: NATHAN HODGES, SENIOR ENGINEER ENGINEERING AND TECHNICAL SERVICES- CAPITAL PROJECTS REVIEWED BY: EDGAR J. LOPEZ, CAPITAL PROJECTS DIVISION MANAGER JEAN-MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL SERVICES ISSUE Board of Directors (Board)approval is required for the General Manager to enter into a project contract in an amount that exceeds $175,000 and to determine that it is in the best interest of Central San to select a specialty equipment manufacturer. BACKGROUND The existing wet scrubber systems were installed in the 1980s and thus have been in operation for over 30 years. These systems are no longer supported by their manufacturer, parts have to be purchased from third-party vendors, and they are well beyond their useful life. Most importantly, the existing wet scrubber systems are unable to meet current and future anticipated emissions limits for multiple hearth furnaces (MHF) as imposed by the United States Environmental Protection Agency(EPA)and the BayArea Air Quality Management District (BAAQMD). This was recently demonstrated with the exceedance of the hydrogen chloride (HCI) emissions limit set under the Clean Air Act Section 129 Regulations (Section 129), which came into effect on March 21, 2016. The existing scrubbers were not designed to remove acid gases (HCI); therefore, a sodium hydroxide (caustic) injection system was recently added to control HCI. I n addition, the existing wet scrubber systems are unable to capture or treat MHF exhaust gases December 10, 2018 EOPS Regular Committee Meeting Agenda Packet- Page 14 of 57 Page 2 of 9 during emergency bypass conditions, resulting in untreated gas discharging directly into the atmosphere, which resulted in recent repeated air permit violations. Recently, it was discovered that the addition of caustic reacts with the calcium contained in lime and causes excess scale formation within the Furnace No. 2 wet scrubber system. Due to operational and maintenance issues and temporary shutdowns to remove the scale formation, the caustic system is not a sustainable long-term solution to meet the Section 129 wet scrubber effluent potential hydrogen (pH) limit and HCI emission limit.As such, a reliable wet scrubber system replacement is vital to meet near-term Section 129 operating limits and HCI emissions reduction. Central San hired Black& Veatch (B&V) in 2017 to perform a comprehensive evaluation of the wastewater treatment plant's (WWTP)solids handling and disposal processes under the Solids Handling Facility Improvements, District Project 7438 (Project), and to thereafter complete a preliminary design.As part of the evaluation process, B&V evaluated the existing MHF air pollution control equipment, reviewed available control technologies, included a summary of the wet scrubber pilot project, conducted an alternatives analysis, and provided three primary recommendations for future improvements to meet regulatory requirements and minimize emergency bypass events. First, the existing wet scrubber systems were recommended to be replaced with newer wet scrubber technology able to treat MHF exhaust gases during emergency bypass conditions (thus eliminating direct untreated discharge into the atmosphere)and meet current and future anticipated air pollutant control emissions limits, such as the Section 129 HCI emission limit. Secondly, it was recommended to replace the existing, currently unused MHF afterburners with newer technology afterburners to enhance control of the afterburners and nitrogen oxide (NOx) emissions. This request to approve a sole-source procurement and authorize execution of a contract for engineering services and purchase of a new wet scrubber system is driven by this recommendation. B&V solicited questionnaire responses from four air pollution control equipment manufacturers evaluated during pre-design (EnviroCare International Inc. (EnviroCare), Hitachi, Verantis, and MEGTEC). Responses were received from three manufacturers; MEGTEC declined to participate given their inability to meet the project's performance requirements without the addition of enhanced air pollution control equipment in the form of a wet electrostatic precipitator(WESP). B&V and Central San staff evaluated the remaining three (3) manufacturers' responses based on several cost and non-cost criteria, including comparative life-cycle cost(including chemical and electrical demands), experience in the sewage sludge incinerator(SSI) industry, equipment requirements, system size and arrangement, system performance, performance guarantees, and service center locations. Verantis was eliminated from further consideration given that the budgetary cost for their system was approximately five times greater than that of the EnviroCare and Hitachi systems. This notable disparity was primarily attributed to the additional W E S P equipment that Verantis needed in order to meet the project's performance requirements. The remaining two wet scrubber manufacturers were further evaluated by B&V based on above-cost and non-cost criteria in order to provide a recommended approach to select a wet scrubber system manufacturer.A summary memorandum was prepared by B&V in April 2018, which recommended EnviroCare as most likely to meet performance requirements at the best value to Central San. Staff concurred with the findings of this memorandum and offers the following justification in support of the recommendation to enter into a sole-source contract with EnviroCare for the design, shop drawing development, and the wet scrubber system manufacturer for the project. Life-Cycle Costs - B&V generated a comparative life-cycle cost estimate based on initial capital costs and estimated operations and maintenance (O&M)costs over 20 years for the EnviroCare and Hitachi wet scrubber systems. Expressed in 2018 net present value (NPV), the life-cycle cost for the EnviroCare systems is estimated at$1.78 million, while those for Hitachi were estimated at$3.30 million. While the initial equipment capital costs of the wet scrubber systems were similar, the Hitachi wet scrubber system's reliance on caustic addition to comply with the project's performance requirements significantly increased the O&M costs associated with the Hitachi system. Note that a caustic injection and recirculation system is December 10, 2018 EOPS Regular Committee Meeting Agenda Packet- Page 15 of 57 Page 3of9 not required with the EnviroCare wet scrubber system to meet the project's performance requirements, as demonstrated by recent pilot testing discussed below. Pilot Testing -As part of the project pre-design effort, staff approached both EnviroCare and Hitachi to conduct pilot testing of their wet scrubber systems. Staff identified pilot testing as a critical component of selection and demonstration that a wet scrubbing system would meet the performance requirements. Hitachi informed Central San that it does not offer a pilot system and thus would be unable to demonstrate its wet scrubber system performance within the Central San WWTP solids handling process. EnviroCare, on the other hand, did offer a wet scrubber system pilot that could be installed within the WWTP process using a side stream of the MHF exhaust gases.As a result, Central San contracted with EnviroCare to perform extensive pilot testing of its wet scrubber system over a number of operating conditions between June and July 2017. These conditions included differing furnace auxiliary fuel types (i.e. landfill gas vs. natural gas)and varying operating pressure and exhaust gas types (i.e. normal exhaust through the dry scrubber and waste heat boiler vs. MHF emergency bypass exhaust). The total cost of the pilot test was approximately$1 million. A summary of the pilot testing results is provided below. MACT 129 LIMITS @ Average Testing Results* Pollutant o 0 7/0 02 (/o of allowable) Cd 0.095 mg/dscm 4.8% CO 3,800 ppmvd 14.5% HCI 1.2 ppmvd 23% Hg 0.28 mg/dscm 11.4% NOx 220 ppmvd 82.1%** Pb 0.30 mg/dscm 5.5% PC D D/PCDF, 0.32 ng/dscm 0.88%*** TEQ PC D D/PCDF, 5.0 mg/dscm 0.56%*** TMB PM 80 mg/dscm 23.7% SO2 26 ppmvd 3.9% *Average of five pilot testing conditions (including emergency bypass condition) in J une — J my 2017. **The EnviroCare and Hitachi wet scrubber systems do not offer control of NOx.As such, B&V has recommended an alternative method to assist in achieving reliable NOx compliance under the project. *** SSI MACT 129 only requires PCDD/PCDF, TEQ or PCDD/PCDF, TMB to be tested (not both). Central San's significant investment in pilot testing of the EnviroCare system over a number of operating conditions (including the bypass condition), and the highly successful results of the testing as demonstrated above, support the recommendation to enter into a sole-source agreement with EnviroCare. Conversely, the inability to demonstrate the Hitachi wet scrubber system performance within the Central San WWTP operating conditions, especially MHF emergency bypass conditions, presents regulatory compliance uncertainty and operational risks with a Hitachi wet scrubber system. As demonstrated by the scrubber pilot, the EnviroCare system will ensure compliance with existing and anticipated future Title V and Section 129 emissions limits, and the new particulate matter limit under BAAQMD Regulation 6, Rule 1 (Rule 6-1), which will become applicable in 2025.Additionally, the December 10, 2018 EOPS Regular Committee Meeting Agenda Packet- Page 16 of 57 Page 4 of 9 EnviroCare scrubber is expected to reduce toxic air contaminants emissions and associated cancer risk to meet the recently adopted BAAQMD Regulation 11, Rule 18 (Rule 11-18) requirements, as predicted by an internal health risk assessment study. Experience in Sewage Sludge Incinerator Industry - EnviroCare offers installations in over 35 municipalities operating SS I s, for a total of 69 SS I s (fluidized bed and multiple hearth incinerators). This includes over 20 municipalities operating MHFs, for a total of 46 MHF installations. I n comparison, Hitachi offers installations of their wet scrubber system at seven (7) municipalities operating SS I s, for a total of 12 SS I s (fluidized bed and multiple hearth incinerators). This includes five (5) municipalities operating MHFs, for a total of eight(8) MHFs. Given this disparity, EnviroCare is considered to be the technology leader for wet scrubber systems in municipal SSI and MHF installations. Central San's operational familiarity and experience with EnviroCare through the pilot is also an important consideration. EnviroCare has been able to definitively demonstrate the ability of their wet scrubber system to meet the specified performance requirements for project performance requirements. Lastly, it is worth stating that the use of a waste heat recovery boiler is atypical of other SS I systems.Although bypass events due strictly to waste heat boiler issues have largely been resolved because of the complexity and reliance on our steam system, Central San's furnaces are more susceptible to bypass events, which adds additional performance risk to this installation. System Arrangement and Expandability -The EnviroCare wet scrubber system, similar to systems offered by other manufacturers, is comprised of proprietary components which cannot be replicated by any other supplier in the industry.As a result, EnviroCare is able to offer a wet scrubber system which does not require ancillary components to meet the project performance requirements.As noted previously, MEGTEC and Verantis each require a WESP to meet the performance requirements, while Hitachi requires a caustic injection and recirculation system. Based on the general arrangement drawings received for the EnviroCare and Hitachi wet scrubber systems, both systems will fit within an open bay of the Solids Conditioning Building (SCB). However, the EnviroCare system offers greater compatibility with the potential future addition of supplementary air pollution control devices, such as a W ES P or a sorbent polymer composite (SPC) mercury removal system, should more stringent air pollutant emissions limits be imposed in the future beyond the performance requirements for the current project. EnviroCare offers Central San a single-source supplier for both of these technologies, while Hitachi can only directly supply a W ES P. The SPC mercury removal system is a proprietary technology offered only by EnviroCare in partnership with W.L. Gore. Given this arrangement, EnviroCare is able to offer space for the potential addition of future SPC mercury removal modules into their wet scrubber systems (integrated within the scrubber shell), meaning that no additional space would need to be allocated for a future mercury removal system. Hitachi cannot offer this capability, which in turn would present a challenge to install a stand alone mercury removal system within the limited open building space should supplemental mercury removal be needed. I n fact, it is expected that a Hitachi mercury removal system would be constructed outside the SCB. Manufacturer Support EnviroCare's headquarters, engineering and manufacturing facilities, and service center are located approximately 25 miles from Central San in American Canyon, CA. Hitachi, on the other hand, maintains its U.S. engineering and service facilities in Georgia and Ohio. Given EnviroCare's extremely close proximity, EnviroCare is able to offer unmatched responsiveness, especially for issues requiring immediate onsite visits. December 10, 2018 EOPS Regular Committee Meeting Agenda Packet- Page 17 of 57 Page 5of9 ALT ERNAT IVES/CONSIDERATIONS Earlier this year, staff presented for approval the final design agreement revision for the project. This was presented to the Engineering and Operations Committee on March 13, 2018, and to the full Board on April 26, 2018, where project delivery options were presented. Equipment pre-selection was presented to the Engineering and Operations Committee on June 20, 2018.At that time, the reasons for pre-selection were presented and key pieces of equipment included the wet scrubbers. B&V and staff developed the pre- selection process as an optimal approach to achieve the following advantages, namely: • Efficient design based on known equipment • Contractor savings based on well developed installation details • Reduced risk of change orders • Ability to quickly release equipment for fabrication The wet scrubbers are recommended to be procured through a sole-source due to the specialty nature and complexity of the system as stated previously, and EnviroCare provides the best-fit system that will meet current and planned future needs. Staff also worked closely with an outside contract consultant, who has a background of general contracting and working with entities in the development of contract documents. This consultant added valuable insight of a general contractor's perspective so that this equipment contract effectively balanced risk between the parties. Alternative 1 -The Board may elect to not approve the sole-source procurement of the wet scrubber, which is not recommended. This equipment directly addresses one of the most important regulatory issues facing Central San - namely compliance with air emissions regulations. The wet scrubber pilot demonstrated that the EnviroCare wet scrubber would meet our existing regulatory requirements and anticipated, upcoming regulations. This was demonstrated under a variety of operating conditions.Among other reasons, not being able to pilot test a wet scrubber presents significant risk to Central San for violating air emissions regulations. Alternative 2 -The contract includes provisions to allow Central San to purchase the equipment directly from the manufacturers. This is not recommended at this time since the current plan is to continue final design of the project and reassign the purchase of the equipment to the installing contractor. However, if complications occur during the bid of the Project, staff will have the ability to purchase this equipment at the specified costs and install under a separate contract. FINANCIAL IMPACTS The contract for the wet scrubbers has been structured into two phases and costs for the procurement of the equipment is as follows: Phase 1 is for obtaining equipment engineering with detailed design, and shop drawings (mechanical, structural, electrical, and controls)to be developed by EnviroCare. These detailed drawings will be used by B&V in preparing the final drawings and will be incorporated and coordinated in the project bid documents. This effort will not exceed $250,000. Phase 1 will be contracted and paid directly by Central San. Phase 2 consists of the procurement of the equipment including fabrication and installation of the wet scrubbers. This Phase 2 of the contract will be assigned to the awarding general contractor. Payment terms to EnviroCare are established in this procurement document and will be incorporated in the general contractor's contract and payment terms. The value of Phase 2 is $1,700,000. This amount will be assigned and included in the general contractor's bid price and paid during the construction phase of the December 10, 2018 EOPS Regular Committee Meeting Agenda Packet- Page 18 of 57 Page 6 of 9 work. Additionally, pricing was submitted for maintenance service work after installation and acceptance of the wet scrubbers. This cost will not be included in the construction costs; however, it will be provided to Plant Maintenance staff to be used in establishing future service agreements, if needed. The total cost for the wet scrubbers, including Phases 1 and 2, is $1,950,000. The Engineer's estimate for the equipment was $2,000,000. COMMITTEE RECOMMENDATION The Engineering and Operations Committee reviewed this matter at its meeting on December 10, 2018, and recommended RECOMMENDED BOARD ACTION Staff recommends the following for the Solids Handling Facility Improvements, District Project 7348: 1. Authorize the pre-selection of EnviroCare I nternational, I nc. as the sole-source supplier for the wet scrubber air emission control equipment in the amount of$1,950,000; and 2. Adopt a resolution making findings and authorizing the General Manager to execute a sole-source contract with EnviroCare I nternational, I nc. in an amount not to exceed $250,000 for specialty services related to future equipment installation. Strategic Plan Tie-In GOAL TWO: Strive to Meet Regulatory Requirements Strategy 1 - Strive to achieve 100%permit compliance in air, water, land, and other regulations GOAL FOUR: Develop and retain a highly trained and innovative workforce Strategy 3- Meet or exceed industry safety standards GOAL FIVE:Maintain a Reliable Infrastructure Strategy 1 - Manage assets optimally throughout their lifecycle, Strategy 2- Facilitate long-term capital renewal and replacement GOAL SIX:Embrace Technology, Innovation and Environmental Sustainability Strategy 3- Encourage the Review and Testing of Promising and Leading Technology ATTACHMENTS: 1. Proposed Resolution December 10, 2018 EOPS Regular Committee Meeting Agenda Packet- Page 19 of 57 Page 7of9 RESOLUTION NO. 2018- A RESOLUTION OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT APPROVING A SOLE-SOURCE CONTRACT WITH ENVIROCARE INTERNATIONAL, INC. FOR WET SCRUBBER EQUIPMENT AS PART OF THE SOLIDS HANDLING FACILITY IMPROVEMENTS, DISTRICT PROJECT 7348 WHEREAS, the Central Contra Costa Sanitary District's (Central San) Purchasing Procedures Manual Section 12.7.c provides that, in exceptional factual circumstances where competitive pricing does not produce an advantage, the Board of Directors (Board) may determine that the best interests of Central San are served by approving a sole-source procurement; and WHEREAS, Central San has violated acid gas air emissions limits under the new Clean Air Act Section 129 Regulations (Section 129), during certain air emission bypass events that occur for the protection of downstream steam equipment result i deviations; and WHEREAS, the existing air emissions wet scrubber does not comply with Bay Area Air Quality Management District Regulation 6, Rule 1 (Rule 6-1), which will become applicable in the year 2025; and XqN 1% WHEREAS, Central San recognizes the it is critical to move forward expeditiously with the acquisition and installation of new wet scrubber equipment that will allow Central San to comply with both the new Clean Air Act 129 Regulations and the pending Air District Regulation 6, Rule 1; and 1W 1AMEENINUMM., , % WHEREAS, EnviroCare International, Inc. (EnviroCare), is a proprietary and specialized manufactur r of a Venturi section wet scrubber and pilot sized system; and WHEREAS, Central San conducted a field pilot of the EnviroCare wet scrubber system over varying operating conditions, which validated that an EnviroCare wet scrubber system will enable Central San to meet existing and anticipated future Section 129 emissions limits, and the limits under Rule 6-1; and WHEREAS, EnviroCare was the only company that had the ability to provide a field pilot test at the Central San facility; and WHEREAS, the EnviroCare wet scrubber does not require ancillary components to meet performance requirements, and EnviroCare is a single source supplier for additional air emissions equipment that may be required in the future, should more stringent emissions limits be imposed; and December 10, 2018 EOPS Regular Committee Meeting Agenda Packet- Page 20 of 57 Page 8 of 9 Central Contra Costa Sanitary District Resolution 2018- Page 2 of 3 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. NOW, THEREFORE, BE IT RESOLVED by the Board of Central San as follows: THAT the Board hereby adopts the recitals set forth above as the basis of its findings; and THAT, the Board finds that it is necessary to install new wet scrubber equipment in Central San's treatment plant to replace the existing wet scrubber equipment in order to comply with both the Section 129 Limits and the pending limits under Rule 6-1; and THAT the Board finds the public interest is best served by approving�a`sole-source procurement of EnviroCare wet scrubber air emission control equipment; and t Ai I& THAT the Board authorizes the General Manager to enter into asole-source equipment procurement contract with EnviroCare in an amount estimated at $250,000 for Stage 1 engineering services, and Stage 2 fabrication, provision, delivery, and coordination of the wet scrubber equipment for the Solids Handling Facility Improvements, District Project 7348. PASSED AND ADOPTED this 20t" day of December, 2018, by the Board of Directors of the Central Contra Costa Sanitary District by the following vote: AW — 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 December 10, 2018 EOPS Regular Committee Meeting Agenda Packet- Page 21 of 57 Page 9of9 Central Contra Costa Sanitary District Resolution 2018- Page 3 of 3 COUNTERSIGNED: Katie Young 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 ®®z a December 10, 2018 EOPS Regular Committee Meeting Agenda Packet- Page 22 of 57