REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the Office of the City Manager to Negotiate and Execute Amendments to Agreements for the Performance of Services with Precept Environmental, Inc. and Art Alger, Inc. dba Peninsula Crane & Rigging to Extend the Terms and Increase the Maximum Compensations
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
Silicon Valley Power (SVP), the City of Santa Clara’s Electric Utility, owns significant assets requiring ongoing maintenance including three power plants in City limits, several remote assets, substations, as well as transmission and distribution lines throughout the City. Additionally, SVP is required to comply with safety and regulatory requirements including North American Electric Reliability Corporation (NERC), Western Electricity Coordinating Council (WECC), Occupational Safety and Health Administration (OSHA), and Bay Area Air Quality Management District (BAAQMD).
In order to support the various maintenance and regulatory needs of the electric utility, SVP contracts with over one hundred contractors, consultants, and other vendors to provide services and products. Most of the services referenced in this report are provided at SVP’s power generation facilities located in City of Santa Clara: (1) The main facility, the Donald Von Raesfeld Power Plant (DVR), is a 2x1 combined cycle power plant rated at 147 Megawatts of electrical power; (2) City of Santa Clara Cogeneration Plant (Cogen), is a cogeneration facility that utilizes two gas turbines for power generation. Waste heat from Cogen is collected to generate steam for supply to a paper mill. This facility is rated at 7 Megawatts; and (3) The Gianera Generating Station (Gianera), the City’s peaking generation facility, is rated at 49.5 Megawatts of electrical power.
During the last two years, SVP and the Purchasing Division of the Finance Department have been working closely together to perform solicitations pursuant to applicable provisions of City Code Section 2.105. During this time, over fifty solicitations have been completed using competitive processes including cooperative purchases, informal bids, formal bids, Request for Proposals (RFP), and Statements of Qualifications (SOQ). Several of these solicitations have resulted in multiple awards. In some cases, a master agreement is awarded with multiple contractors and a secondary informal bidding process takes place for specific scopes. In addition to issuing new solicitations, SVP and Purchasing took action to extend the term of over fifty agreements from three years to five years in order to maximize the value of the solicitation process.
SVP and Purchasing are continuing to work through a priority list of over fifty additional solicitations. Extending agreements and issuing Purchase Orders under staff authorization where permitted within the purchasing policy assures that the City is protected including insurance certifications from vendor and reduces emergency procurement. There will be other items for Council consideration on upcoming agendas to maintain continuity of services.
DISCUSSION
A list of those proposed services follows:
Cooling Tower Sanitizing:
SVP uses a cooling tower system in order to ensure the DVR Power Plant can operate all of its equipment within its thermal limitations. For the safety of SVP’s staff and the public and to ensure compliance with DVR’s Waste Water Permit, the cooling tower must be kept clean and free of waterborne pathogens such as the legionella bacteria. SVP has this service performed annually as a part of regular scheduled maintenance at DVR. Cleaning the cooling tower provides the added benefit of improving DVR’s thermal efficiency which helps protect critical equipment at DVR, including turbines and generators. DVR cannot operate without a cooling tower.
The City currently has an agreement with Precept Environmental, Inc. (Precept) with a five-year term ending on March 16, 2022. Staff recommends that the Office of the City Manager is authorized to enter into an amendment to this agreement to extend the term through March 16, 2025 for an eight-year term with a maximum compensation not to exceed $280,000 (approximately $35,000 annually). Staff will request a quote from the contractor annually.
Operated Crane, Rigger, and Related Services
SVP owns and operates many types of heavy equipment including transformers, turbines, generators, pumps and motors. SVP uses operated crane, rigger, and related services during maintenance and repair activities on this equipment including: removing large equipment such as turbines, loading or offloading equipment, and hoisting equipment. Examples requiring crane, rigging, and related services include maintenance and repair of: cooling tower, heat recovery steam generator, vertical pumps, and transformer replacements.
On March 28, 2017, after a competitive Request for Proposal (RFP) process, the City entered into an agreement with Art Alger, Inc. dba Peninsula Crane & Rigging (Peninsula Crane) to provide operated crane, rigger, and related services. Three companies responded to this RFP and Peninsula Crane was selected as the low bidder.
The agreement termed out on June 8, 2021; Council authorized the City Manager to execute an amendment to the agreement with Peninsula Crane to increase maximum compensation from $129,000 to $300,000 to include services at additional SVP facilities and additional routine and emergency services due to SVP’s expanded preventative maintenance program. At that time, staff anticipated issuing a Statement of Qualifications (SOQ) for these services in calendar year 2021. Due to other priorities and staffing issues addressed above, this SOQ has not been issued. Staff recommends authorizing the Office of the City Manager to execute an amendment to the agreement with Peninsula Crane increasing the maximum compensation to $700,000 and extending the term for an additional three years through March 27, 2025.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. Furthermore, the action being considered is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15301 “Existing Facilities” as the activity consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities mechanical equipment or topographical features involving negligible or no expansion of use beyond that existing at the time of the lead agencies determination. Moreover, the action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
Funding for these agreements will come from the capital or operating budget based on the asset requiring products or services.
Sufficient funding for the agreements is included in the FY 2021/22 and FY 2022/23 Biennial Adopted Operating Budget. Funding for future years is subject to future appropriation and will be included in future budget processes.
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 <mailto:clerk@santaclaraca.gov>.
RECOMMENDATION
Recommendation
1. Authorize the Office of the City Manager to negotiate and execute Amendment No. 1 to the Agreement for the Performance of Services with Precept Environmental, Inc. to extend the term through March 16, 2025 (an additional three years) and increase the maximum compensation to $280,000;
2. Authorize the Office of the City Manager to negotiate and execute Amendment No. 2 to the Agreement for Services with Art Alger, Inc. dba Peninsula Crane & Rigging to extend the term through March 27, 2025 (an additional three years) and increase the maximum compensation to $700,000; and
3. Authorize the Office of the City Manager to execute additional amendments to increase the maximum compensation during the term of the subject agreements if the demand for services exceeds maximum compensation, subject to the appropriation of funds.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: City Manager’s Office
ATTACHMENTS
1. Agreement for the Performance of Services with Precept Environmental, Inc.
2. Agreement for the Performance of Services with Peninsula Crane & Rigging
3. Amendment No. 1 to the Agreement for the Performance of Services with Peninsula Crane & Rigging