REPORT TO COUNCIL
SUBJECT
Title
Action on Authorizing the City Manager to Execute an Agreement for Services With ACCO Engineered Systems Inc. for the Replacement of Two New Air Compressors, Two New Air Dryers, and to Provide Preventative Maintenance and Repair Services at Silicon Valley Power Facilities With a Maximum Compensation Not to Exceed $1,500,000 and an Optional 10-Year Extension, All to be Funded by Silicon Valley Power
Report
BACKGROUND
The City of Santa Clara’s Electric Department, Silicon Valley Power (SVP), operates two power generation plants, the Donald Von Raesfeld Power Plant (DVR) and the Gianera Generating Station (Gianera), along with other assets critical to SVP’s operations.
At these facilities, compressed air systems are critical in supporting safe and reliable power generation. These systems produce and supply clean, dry compressed air to power various equipment, including pneumatic instrumentations, control systems, control valves, and actuators. Without a reliable supply of compressed air, key operations, such as starting or shutting down turbines, regulating pressure vessels, and maintaining automated controls, can be compromised.
The compressed air systems at DVR consists of the following components:
|
Component |
Quantity |
Age/Condition |
Status |
|
Air Compressors |
2 |
20 years old |
One out of service |
|
Air Dryers |
2 |
20 years old |
Functional but aging |
|
Ancillary Equipment (includes air tanks, chillers, filters) |
Multiple |
20 years old |
Functional but aging |
Due to failure of one of the two compressors, SVP temporarily secured a rental unit to maintain operations. The remaining original equipment is well past its expected service life.
DISCUSSION
Pursuant to Section 2.105.140(d) of the Santa Clara City Code, a formal Request for Bid (RFB) was conducted with the award recommendation based on the lowest responsive and responsible bidder.
The RFB for the replacement and ongoing maintenance of the compressed air systems at DVR was published on the City’s e-procurement system. A total of 36 companies viewed the RFB and four bids were received from the following firms:
• ACCO Engineered Systems, Inc. (ACCO)
• Air & Lube Systems Inc.
• Central Air Compressor
• Quincy Compressor LLC
Bidders were requested to submit pricing for the removal and replacement of two air compressors and two air dryers including installation, testing, and commissioning services as part of the base bid. Preventative maintenance and repair services were included as optional items. Upon initial evaluation, staff deemed two bids non-responsive for not meeting the minimum qualifications in the RFB and for not being technically compliant.
The two responsive bids are as follows:
Table 1 - Responsive Bids
|
Bidder Name |
Base Bid Amount |
|
ACCO |
$713,800 |
|
Air & Lube Systems Inc. |
$1,062,140 |
Staff recommend awarding an agreement to ACCO as the lowest responsive and responsible bidder.
Summary of Proposed Agreement: The proposed agreement with ACCO includes the turnkey replacement of two air compressors and two air dryers at DVR, at the bid amount, and 10 years of ongoing preventative maintenance and repair services following system acceptance. All work will be performed in accordance with applicable codes and is subject to prevailing wage requirements. The agreement includes the following key terms:
• Initial Term: Two years, starting on or around November 1, 2025, and ending on or around October 31, 2027, with a maximum compensation not to exceed $900,000, which includes a firm fixed price of $713,800 for the complete system replacement, estimated taxes of $47,158, and a contingency of approximately 18% ($139,042) for unanticipated system requirements and services.
• Optional Periods: One 10-year renewal option through October 31, 2037, for ongoing preventative maintenance and repair services.
• Warranty: One-year warranty on installed systems from system acceptance.
Compensation: System replacement will be based on a milestone payment structure tied to the completion of specific deliverables, including final system acceptance before the final payment is issued. Ongoing preventative maintenance and repair services will be based on time and materials rates fixed for the first two years. After that, ACCO may request a price adjustment capped at 2% per year.
Table 2 - Compensation Summary
|
Cost Elements |
Amount |
|
System Replacement (2 air compressors, 2 air dryers), including on-site services for removal, installation, and commissioning |
$713,800 |
|
Estimated Taxes |
$47,158 |
|
Contingency |
$139,042 |
|
Total (Initial 2-Year Term) |
$900,000 |
|
Optional 10-Year Period (As-Needed Preventative Maintenance and Repair Services (estimated at $60,000/year x 10 years)) |
$600,000 |
|
Maximum Total Compensation |
$1,500,000 |
ENVIRONMENTAL REVIEW
Staff recommends that the City Council determine that the proposed actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to 15302 (Replacement) of Title 14 of the California Code of Regulations as the work involves the replacement and maintenance of utility mechanical equipment with negligible or no expansion of capacity.
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 public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Determine that the proposed actions are exempt from CEQA pursuant to Section 15302 (Replacement) of Title 14 of the California Code of Regulations;
2. Authorize the City Manager or designee to execute an agreement with ACCO Engineered Systems, Inc. for the replacement of two air compressors and two air dryers at the Donald Von Raesfeld Power Plant, for an initial two-year term starting on or around November 1, 2025, and ending on October 31, 2027, with a maximum compensation not to exceed $900,000, 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 as necessary to implement and administer the Agreement, and to execute amendments to the Agreement to (a) increase the maximum compensation by up to $600,000, for a total maximum compensation of $1,500,000 (funded by the SVP Operating or Capital Fund as applicable) over the term of the Agreement; (b) add or delete services consistent with the scope of services; (c) adjust future rates based on market conditions; (d) exercise one 10-year option to extend the term through October 31, 2037, for ongoing preventative maintenance and repair services; and (e) make de minimis changes, subject the appropriation of funds and review and approval as to form by the City Attorney.
Staff
Reviewed by: Nico Procos, Director of Silicon Valley Power
Approved by: Jovan D. Grogan, CEO Silicon Valley Power
ATTACHMENTS
1. Proposed Agreement with ACCO Engineered Systems, Inc.