REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Increase the Purchase Order Authorization with 3M Company for 715 Aluminum Conductor Composite Reinforced Conductors and Accessories for an Aggregate Maximum Compensation Amount of $5,000,000
Report
BACKGROUND
In 2008, the City of Santa Clara’s Electric Department, Silicon Valley Power (SVP), adopted 3M Aluminum Conductor Composite Reinforced (ACCR) as the standard conductor for new and reconductored transmission lines within the City. A sole source justification for ACCR conductors was submitted to the Purchasing Division Manager in 2015. In 2023, the Purchasing Division Manager reaffirmed the sole source determination for an additional five years through June 2028, after determining that no other manufacturers were identified that could provide a conductor meeting SVP’s requirements. Accordingly, purchases of ACCR conductors and related accessories qualify under the single source criteria exception set forth in Section 2.105.280(b)(2) of the Santa Clara City Code. This section authorizes purchases that are “required to ensure operation or function to match other products with respect to repair, expansion, or completion of a system, existing structure or program currently in use by the City, including, but not limited to, utility and technology purchases required to achieve interoperability with existing systems or programs.” Consistent with section 2.105.280(b)(2), the sole source determination was based on the fact that continued of the same conductor ensures consistency in system design, operations, maintenance, repairs, and future system expansions while maintaining interoperability with the SVP’s existing transmission infrastructure.
Consistent with this sole source determination, ACCR conductors and related accessories are purchased directly from 3M Company to obtain the most favorable pricing by avoiding distributor markups.
On March 19, 2024 (RTC 24-33), the City Council authorized the City Manager to execute the 3MTM ACCR Terms and Conditions of Sale and issue associated Purchase Orders to 3M Company in an aggregate amount not to exceed $2,500,000 through December 31, 2030, for 715 ACCR conductors and related accessories.
DISCUSSION
SVP currently has several ongoing and planned projects requiring the continued purchase of 3M ACCR conductors and related accessories. These projects include: (1) Northwest Loop Capacity Upgrade (CIP 2444), (2) NRS-KRS 115kV Transmission Line (CIP 2455), (3) Walsh-Uranium 60kV Reconductor (CIP 2458), (4) Duane-Scott 115kV Reconductor (CIP 2465), (5) future loop and reconductoring projects, and (6) other transmission and system improvement projects currently under evaluation.
As discussed above, SVP has standardized the use of 3M ACCR conductors throughout its transmission system. To date, approximately $1,500,000 has been expended under the current authorization of $2,500,000, leaving approximately $1,000,000 in remaining authorization capacity. SVP is preparing to place a new order for 88,000 linear feet of ACCR conductor, at an estimated cost of $1,600,000, for the NRS-KRS 115kV Transmission Line Project. Because the anticipated purchase exceeds the remaining available authorization, staff is requesting an increase of $2,500,000 to the existing authorization for a revised maximum compensation amount of $5,000,000.
Table 1 below summarizes the current authorization, proposed increase, expenditures to date, and anticipated future expenditures.
Table 1 - Authorization Summary for 3M ACCR Conductors
|
Description |
Amount |
|
Current City Council Authorization |
$2,500,000 |
|
Additional Authorization Requested |
$2,500,000 |
|
Revised Maximum Compensation Amount |
$5,000,000 |
|
|
|
|
Summary of Expenditures (Past and Planned) |
|
|
Expenditures to Date |
$1,500,000 |
|
Anticipated Purchase (NRS-KRS 115kV Transmission Line Project) |
$1,600,000 |
|
Total Expended and Planned |
$3,100,000 |
|
Remaining Authorization Capacity After Planned Purchase |
$1,900,000 |
Approval of the additional authorization will allow SVP to procure ACCR conductors and related accessories for the NRS-KRS 115kV Transmission Line Project while maintaining sufficient authorization capacity to support additional transmission and reconductoring projects. These materials are critical components of SVP’s transmission infrastructure and currently have lead times of approximately 20 weeks. Maintaining adequate authorization enables SVP to place orders in advance of project construction schedules and help avoid procurement delays that could impact project schedules, system reliability improvements, and other planned infrastructure upgrades necessary to support SVP’s continued system growth and operational needs.
Since the original authorization in 2024, the unit pricing for 3M ACCR conductors has also increased by approximately 22% this year alone. ACCR conductors are ordered based on the required linear footage and are delivered on large reels containing specified lengths of conductor. The increase in conductor pricing is attributable to several market factors, including tariff-related impacts affecting electrical transmission materials, such as the aluminum used in ACCR conductors. Staff will continue to monitor market conditions, material pricing, and project demand to ensure adequate authorization levels are maintained to support current and future transmission and reconductoring projects.
The original authorization approved by the City Council included a term through December 31, 2030. However, due to the long-term and ongoing nature of SVP transmission and reconductoring projects, staff is recommending removal of the expiration date associated with the purchase authorization. The authorization would instead remain in effect until the approved maximum compensation is exhausted. SVP will return to the City Council for additional authorization if future project demands require additional purchasing capacity beyond the approved amount.
The Purchasing Division Manager will review the sole source determination prior to its expiration in June 2028. If, at that time, the Purchasing Division Manager determines that other products can meet SVP’s requirements, any remaining purchase authorization will not be used beyond the expiration of the approved sole source determination.
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 in that the proposed action solely involves the procurement of supplies.
FISCAL IMPACT
There is no budgetary impact associated with this authorization. Funding for conductors and accessories associated with 3M Company are included in SVP capital or operating budgets where applicable. Budget for projects occurring in the future will be requested through the budget process.
COORDINATION
This report has been coordinated with the Finance Department and 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 issue Purchase Orders to 3M Company, for an additional $2,500,000 for a revised maximum aggregate amount not to exceed $5,000,000 for 715 Aluminum Conductor Composite Reinforced (ACCR) conductors and related accessories with no set procurement term limitation, subject to a valid sole source determination, appropriation of funds and review, and approval as to form by the City Attorney; and
2. Authorize the City Manager or designee to take any action as necessary to implement and administer the Purchase Orders, subject to the above maximum compensation and 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