REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Execute Agreements with Northstar Chemical dba Pacific Star Chemical, LLC and Univar Solutions USA, LLC for the Supply and Delivery of Bulk Chemicals to Silicon Valley Power, With a Total Combined Maximum Compensation Not-to-Exceed $2,292,000, Inclusive of All Option Years
Report
BACKGROUND
Silicon Valley Power (SVP), the City of Santa Clara’s electric utility, operates two power generation plants. At the Donald Von Raesfeld (DVR) Power Plant, safe and efficient operations depend on properly treated water systems. To support these operations, SVP uses bulk chemicals to treat water and prevent corrosion and scaling in boilers, condensers, and cooling systems. Due to the high temperatures and pressures associated with power plant operations, the use of these chemicals is a common industry practice for maintaining and protecting plant equipment, including at SVP facilities. The City of Santa Clara (City) has historically procured these bulk chemicals on an ongoing basis, and continued agreements for their supply and delivery are necessary to ensure uninterrupted operations at SVP facilities.
This report addresses the purchase of three bulk chemicals, as summarized in Table 1 below.
Table 1: Summary of Bulk Chemicals and Estimated Annual Usage.
|
Bulk Chemical |
Estimated Annual Usage |
|
Sodium Hydroxide Caustic 30% |
3 Dry Tons |
|
Sodium Bisulfite 25% |
3,500 Gallons |
|
Sodium Hypochlorite 12.5% |
35,000 Gallons |
DISCUSSION
Pursuant to City Code Section 2.105.140(d) of the Santa Clara City Code (City Code), a formal Request for Bids (RFB) was conducted with the award recommendation based on the lowest responsive and responsible bid. The RFB for the supply and delivery of bulk chemicals was published on the City’s e-procurement system. A total of 55 companies viewed the RFB and three bids were received by the submittal deadline from the following firms:
• Mar Vista Resources, LLC (Mar Vista Resources)
• Northstar Chemical dba Pacific Star Chemical, LLC (Pacific Star)
• Univar Solutions USA, LLC, (Univar)
Upon evaluation, staff determined that Mar Vista Resources was non-responsive due to proposing the use of a subcontractor for the delivery of the bulk chemicals, which was not permitted under the terms of the RFB. The remaining two bids were deemed responsive and responsible.
Bidders were requested to submit unit pricing for each bulk chemical. Unit pricing was applied to the estimated annual usage to calculate the estimated annual costs and based on the lowest responsive and responsible bid for each chemical, staff’s recommended award is listed in Table 2 below.
Table 2: Estimated Annual Costs and Recommended Award
|
Bulk Chemical |
Pacific Star |
Univar |
Recommended Award |
|
|
|
|
|
|
Sodium Hydroxide Caustic 30% |
$7,320.00 |
$8,017.11 |
Pacific Star |
|
Sodium Bisulfite 25% |
No Bid |
$10,010.00 |
Univar |
|
Sodium Hypochlorite 12.5% |
$138,250.00 |
$119,000.00 |
Univar |
Each agreement includes an initial five-year term starting on or around June 1, 2026, and ending on May 31, 2031, with up to five one-year options to extend the term through May 31, 2036. The agreement with Pacific Star will have a maximum compensation of $50,000 covering the initial five-year term for the purchase of Sodium Hydroxide Caustic 30%, while the agreement with Univar will have a maximum compensation of $800,000 for the same period for the purchases of Sodium Bisulfite 25% and Sodium Hypochlorite 12.5%. These agreements may be amended to exercise the optional extension periods, with any increases in compensation remaining within the total combined maximum compensation reflected below.
Pricing is fixed for the first year of the agreement, after which the vendors may request rate adjustments no more than once annually. Any proposed rate adjustment is subject to approval by the City and must be substantiated by the vendors to the satisfaction of the City.
The combined maximum compensation is $2,292,000. This amount includes the cost of chemicals, applicable sales tax, delivery, and a 20% contingency to account for variability in operational demand and potential market fluctuations. Table 3 below summarizes the maximum compensation for both agreements.
Table 3: Cost Summary for Both Agreements
|
Vendor |
Amount |
|
|
|
|
Pacific Star |
|
|
Initial Term (5 years) |
$50,000 |
|
Option Years (Estimated, 5 years) |
$60,000 |
|
Total (10 years) |
$110,000 |
|
|
|
|
Univar |
|
|
Initial Term (5 years) |
$800,000 |
|
Option Years (Estimated, 5 years) |
$1,000,000 |
|
Total (10 years) |
$1,800,000 |
|
|
|
|
Total (Both Agreements) |
$1,910,000 |
|
Contingency (20%) |
$382,000 |
|
Total Not-to-Exceed Maximum Compensation |
$2,292,000 |
While the award for each chemical is indicated in Table 2 above, staff recommend that the City Council authorize the City Manager or designee to amend the agreements, as necessary, to permit procurement of Sodium Hypochlorite 12.5% from Pacific Star and, conversely, Sodium Hydroxide (Caustic 30%) from Univar in the event the primary vendor is unable to meet delivery, quantity, or scheduling requirements.
Accordingly, staff further recommend that the City Council authorize the City Manager or designee to adjust compensation between the agreements, provided that the total combined maximum compensation does not exceed $2,292,000. Actual expenditures will vary depending on operational demand. Staff will monitor and manage expenditures throughout the term of the agreements to ensure that costs remain within the authorized maximum compensation.
ENVIRONMENTAL REVIEW
The actions being considered do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(2) of Title 14 of the California Code of Regulations as the proposed actions solely involve the supply and delivery of bulk chemicals to the DVR Power Plant.
FISCAL IMPACT
Funds for the contract are available in the Electric Utility Operating Fund budget for FY 2025/26. Funds for future years will be requested through the normal budget process.
COORDINATION
This report has been coordinated with the Finance Department and the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Authorize the City Manager or designee to execute agreements with Northstar Chemical dba Pacific Star Chemical, LLC and Univar Solutions USA, LLC for the supply and delivery of bulk chemicals, for an initial five-year term starting on or around June 1, 2026, and ending on May 31, 2031, with up to five one-year options to extend the term through May 31, 2036, for a total combined maximum compensation not-to-exceed $2,292,000, inclusive of a 20% contingency, subject to the appropriation of funds and the review and approval as to form by the City Attorney; and
2. Authorize the City Manager or designee to take any actions necessary to implement and administer the agreements and negotiate and execute future amendment(s) to (a) exercise the option years, (b) implement rate adjustments on the terms provided in Exhibit B, (c) procure bulk chemicals from the secondary vendor under this RTC as needed and reallocate compensation between the agreements accordingly; and (d) make de minimis changes, provided that the total combined maximum compensation is not exceeded, subject to the appropriation of funds and the review and approval as to form by the City Attorney.
Staff
Reviewed by: Nico Procos, Director of Silicon Valley Power
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. Proposed Agreement for Services with Northstar Chemical dba Pacific Star Chemical, LLC
2. Proposed Agreement for Services with Univar Solutions USA, LLC