REPORT TO COUNCIL
SUBJECT
Title
Action on an Agreement with Black & Veatch Management Consulting, LLC for Consulting Services for the Setting of Water, Sewer, and Recycled Water Rates Charged to Santa Clara Customers
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
Rates charged to Santa Clara residents and businesses for water, sewer, and recycled water services are approved by the City Council on an annual basis. Every April, the Water & Sewer Utilities Department (Department) recommends to the City Council a suitable rate schedule that produces revenues adequate to provide high quality services, support capital improvements, and maintain adequate reserve balances.
The Department utilizes a consulting firm to prepare a rate study to assure proposed rates are fair and equitable and meet regulatory requirements. The firm is tasked with examining historical and current financial reports, forecasting cost items over the study period, reviewing capital improvement programs, performing cost of service analysis, and developing cash flow analysis.
The agreement with Black & Veatch Management Consulting, LLC that covered the last four years of rate studies termed out in September 2021.
DISCUSSION
Pursuant to City Code Section 2.105.330, a formal request for Statement of Qualifications (SOQ) was conducted for this procurement, with the award recommendation based on “best value.” The factors considered in the award were experience of firm and project team, technical approach, and cost.
In August 2021, the City released a SOQ for the Utility Rate Study. The SOQ was published on Periscope S2G (formerly BidSync), the City’s e-procurement system. A total of 47 companies viewed the SOQ, and four proposals were received from the following firms:
• Black & Veatch Management Consulting, LLC
• HF&H Consultants, LLC
• NewGen Strategies and Solutions, LLC
• Raftelis Financial Consultants, Inc.
The proposals were independently evaluated by a three-member evaluation team. The proposals were evaluated and ranked against the criteria published in the SOQ. Based on receiving the highest overall score, staff recommends award of contract to Black & Veatch Management Consulting, LLC. The firm has demonstrated a solid project methodology and staffing plan to deliver quality analysis to support the City’s rate setting process.
Under the proposed agreement with Black & Veatch, the total cost is $184,975 to prepare a rate study annually for five fiscal years. The Department determined that the scope of the study would be limited to updating each previous year’s rate study. In the event the City requires to fully analyze cost breakdowns and/or to prepare additional rate studies that may be required, staff is requesting authority to execute future amendments to the agreement.
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(b)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
FISCAL IMPACT
The agreement with Black & Veatch is for a not to exceed amount of $184,975 over the next five (5) years. The cost will be absorbed in the Department’s Asset Management Program capital improvement project.
COORDINATION
This report was coordinated with the Department of Finance 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 <mailto:clerk@santaclaraca.gov>.
RECOMMENDATION
Recommendation
1. Authorize the City Manager to execute an agreement with Black & Veatch Management Consulting, LLC to prepare rate and fee study reports for the City’s water, sewer, and recycled water rates for a five-year term starting January 1, 2022 and ending on December 31, 2026, with maximum compensation not-to-exceed $184,975 and subject to the appropriation of funds; and
2. Authorize the City Manager to negotiate and execute amendments to the Agreement for additional related services that may be required, subject to the appropriation of funds.
Staff
Reviewed by: Gary Welling, Director, Water & Sewer Utilities
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Agreement with Black & Veatch Management Consulting, LLC