REPORT TO COUNCIL
SUBJECT
Title
Action to Delegate Authority to the City Manager to Negotiate and Execute an Agreement for Services With Reliability Optimization, Inc. for Predictive Maintenance Services for Silicon Valley Power
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, substations, and transmission and distribution lines largely located within the City of Santa Clara (City). As part of SVP’s ongoing preventative maintenance program, SVP uses a contractor to perform predictive maintenance testing services. This testing is a critical component of SVP’s Preventative Maintenance strategy. Results indicate machinery health and identify potential failure mechanisms. With information gained from these predictive maintenance testing services, SVP can allocate resources to prevent failures and resulting outages.
DISCUSSION
On July 5, 2022, the City published Request for Proposals (RFP) #21-22-78 for Predictive Maintenance Services. One proposal was received from Reliability Optimization Inc. (ROI). ROI is the incumbent vendor, and their proposal was found to be responsive to the requirements of the RFP. Purchasing staff reached out to a second firm that viewed the RFP to find out why they did not submit a proposal. They informed staff that many of the required services would need to be subcontracted, therefore, they decided not to participate in the process.
Staff recommends awarding the agreement to ROI. ROI has demonstrated experience and expertise providing quality predictive maintenance services for SVP’s power plants, and, recently, for SVP’s substation assets. Under the proposed agreement, ROI will provide all labor, materials, equipment, and technical expertise needed to provide the required services including vibration testing and analysis, on-line motor analysis, off-line motor analysis, infrared thermographic imaging, airborne ultrasonic testing, lubrication oil analysis, and transformer oil analysis. ROI will perform predictive maintenance services on critical plant and substation equipment and will perform services at intervals based on factors such as criticality of machinery to be tested, operating pattern associated with equipment, and industry best practices. ROI will issue a report after completion of each set of tests including root cause analysis with recommendations to correct issues, and identification of abnormal conditions. For any issues that require immediate attention, ROI will immediately notify the City so that SVP may take action to resolve the issue as soon as possible. When needed, ROI can perform further analysis such as a post correction survey to ensure identified issues were fully resolved after corrective measures were implemented. ROI will store all information in a database providing SVP the opportunity to leverage all historical data for comparison during future services. All services will be performed pursuant to NERC standards, industry best practices, and applicable laws and regulations.
ROI will invoice a fixed amount for routine services and additional services will be invoiced using time and materials rates. ROI’s labor rates will be fixed for the term of the agreement. As SVP anticipates adding several substation assets during the term of this agreement, staff requests authorization to amend the agreement to include additional services, as needed.
ENVIRONMENTAL REVIEW
Staff recommends that the City Council determine that the actions being considered are exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15301 of Title 14 of the California Code of Regulations as the proposed actions constitute maintenance services which involves negligible or no expansion of an existing use.
FISCAL IMPACT
The proposed Agreement includes a maximum compensation of $2,250,000 for the initial five-year term. Annual costs are anticipated not to exceed $450,000 but may be higher on an annual basis based on need for time and materials services. Sufficient funds are available in the Amended FY 2022/23 Operating Budget in the Electric Utility Operating Fund for generation and substation.
Funds required for this agreement in future years will be included in proposed budgets for the corresponding years.
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. Determine that the proposed actions are categorically exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15301 of Title 14 of the California Code of Regulations;
2. Delegate authority to the City Manager to negotiate, approve and execute an Agreement for Services (Agreement) with Reliability Optimization, Inc. for a five-year term beginning on or around January 25, 2023 with maximum compensation not to exceed $2,250,000 ; and
3. Delegate authority to the City Manager to execute amendments in order to add or delete services consistent with the scope of work and increase the total maximum compensation to an amount not to exceed $3 million subject to the appropriation of funds; and to take any and all actions as are necessary or advisable to implement and administer the Agreement.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Rajeev Batra, City Manager