REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Execute an Agreement with Groome Industrial Service Group, LLC for Professional Heat Recovery Steam Generator Cleaning Services for Silicon Valley Power, With a Total Maximum Compensation Not-to-Exceed $3,719,144, Inclusive of All Option Years
Report
BACKGROUND
Silicon Valley Power (SVP), the City’s electric utility, operates two power generation plants. At the Donald Von Raesfeld (DVR) Power Plant, SVP maintains two horizontal gas flow ATS/Express Heat Recovery Steam Generators (HRSGs) and associated heat transfer equipment that support combined-cycle power generation. The HRSGs recover waste heat from gas turbine exhaust to produce steam for a steam turbine, thereby increasing power generation, improving plant efficiency and reliability.
During normal operations, HRSG internal surfaces are exposed to high-temperature exhaust gases, which can result in fouling, deposits, and other contaminants accumulating on heat transfer surfaces. If left unaddressed, this buildup can reduce thermal efficiency, increase backpressure, elevate emissions, and accelerate equipment wear or contribute to unplanned outages.
To maintain performance and reliability, SVP requires specialized HRSG cleaning services on an as-needed basis.
DISCUSSION
Pursuant to section 2.105.140(d) of the Santa Clara City Code (City Code), staff conducted a formal Request for Bids (RFB) for Heat Recovery Steam Generator Cleaning Services, with award to be made to the lowest responsive and responsible bidder. The RFB was published on the City’s e-procurement system on September 25, 2025, remained open for approximately seven weeks, and staff conducted direct outreach to firms capable of performing the work. Although 22 companies viewed the solicitation, no bids were received by the deadline of November 14, 2025.
Section 2.105.220 of the City Code provides that when no bids or proposals are received, the Purchasing Division Manager or designee may either readvertise or procure the required goods or services on the open market without further competitive bidding. After evaluating the outcome of the solicitation and prior procurement efforts for similar services, the Purchasing Division Manager determined that reissuing the bid was unlikely to yield a different result. In 2024, staff conducted a similar solicitation that also did not result in viable bids, and the City subsequently entered into an agreement with Groome to perform a single HRSG cleaning to meet operational needs.
In connection with the 2025 solicitation, staff again identified and contacted qualified firms, but no timely bids were received. Groome submitted a bid after the deadline, which could not be considered under the terms of the RFB. Consistent with section 2.105.220, staff evaluated the required services on the open market and determined that Groome is qualified to perform the work and that the proposed pricing is fair and reasonable. Accordingly, staff recommends that the City Council authorize the City Manager to execute an agreement with Groome for as-needed HRSG cleaning services.
The proposed agreement provides for HRSG cleaning and related services on an as-needed basis, including removal of fouling, deposits, and other contaminants from heat transfer surfaces to restore equipment performance and efficiency. Groome will utilize localized high-pressure acoustic pressure waves methods to reduce backpressure, improve heat transfer, and extend the operational life of the HRSG units.
Services are anticipated to be performed on an as-needed annual basis during scheduled spring and fall outage periods, typically consisting of one HRSG unit cleaning per outage. The agreement also includes additional as-needed services, including Selective Catalytic Reduction cleaning, catalyst cleaning, and KinetiClean HP evaporator cleaning.
The agreement includes an initial two-year term beginning on or about June 1, 2026, and ending on or about May 31, 2028, with up to three one-year options to extend the term through May 31, 2031. The total maximum compensation for the full contract term, including all option periods, is $3,719,144. This amount is based on anticipated HRSG cleaning services, generally ranging from approximately $128,000 to $239,880 per service depending on the type of cleaning, and includes a 10% contingency to address variability in outage schedules, the potential need for additional as-needed cleaning services, and market-related cost fluctuations over the full contract term. Actual expenditures will vary depending on actual operational demand. Staff will monitor and manage expenditures throughout the term of the agreement to ensure that costs remain within the authorized maximum compensation. Table 1 summarizes the maximum compensation for the agreement.
Table 1: Cost Summary
|
Term |
Amount |
|
Initial Term (2 years) |
$1,371,520 |
|
Option Years (Estimated, 3 years) |
$2,009,520 |
|
Subtotal (5 years) |
$3,381,040 |
|
Contingency (10%) |
$338,104 |
|
Total Not-to-Exceed Maximum Compensation |
$3,719,144 |
Compensation will be based on fixed lump-sum pricing per HRSG unit. Pricing will remain firm for the initial two-year term of the agreement, after which the contractor may request rate adjustments no more than once annually during the option periods. Any requested rate adjustment is subject to City approval and must be supported by documentation satisfactory to the City.
ENVIRONMENTAL REVIEW
Staff recommends that the City Council determine that the action being considered is exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15301 (Class 1 - Existing Facilities) of Title 14 of the California Code of Regulations, as the proposed work involves the maintenance of existing facilities.
FISCAL IMPACT
Funding for the agreement is 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. Determine the proposed action is exempt from CEQA pursuant to Section 15301 (Class 1 - Existing Facilities) of Title 14 of the California Code of Regulations;
2. Authorize the City Manager or designee to execute an agreement with Groome Industrial Service Group, LLC for professional Heat Recovery Steam Generator (HRSG) cleaning services, with a term commencing on June 1, 2026, and ending on May 31, 2028, with up to three one-year options to extend the term through May 31, 2031, for a total maximum compensation of $3,719,144, inclusive of a 10% contingency, subject to the appropriation of funds and the review and approval as to form by the City Attorney; and
3. Authorize the City Manager or designee to take any actions necessary to implement and administer the agreement, and negotiate and execute future amendment(s) to (a) exercise the option years, (b) implement rate adjustments on the terms provided in Exhibit B, and (c) make de minimis changes, provided that the total 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 Groome Industrial Service Group, LLC