REPORT TO COUNCIL
SUBJECT
Title
Action on Agreements with D2 Industrial Services, Farwest Insulation Contracting, and JT Thorpe Industrial Inc. for Insulation and Heat Trace Services Primarily at Power Plants
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
The City of Santa Clara’s Electric Department, Silicon Valley Power (SVP), uses contractors to provide insulation and heat trace services. These services are related to ensuring systems operate within optimal temperature range for the following power plants:
• The Donald Von Raesfeld Power Plant (DVR), a 2x1 combined cycle power plant rated at 147 Megawatts of electrical power.
• The City of Santa Clara Cogen (COGEN), a cogeneration facility that utilizes two (2) gas turbines for power generation. Additionally, at this facility, the waste heat is collected to generate steam for supply to a paper mill. This facility is rated at 7 Megawatts.
• The Gianera Generating Station (Gianera), a peak generation facility, rated at 49.5 Megawatts of electrical power.
SVP uses multiple types of insulation systems at these power plants. These insulation systems assist with maximizing power production and delivery efficiency, complying with cold weather preparedness requirements of the North American Electric Reliability Corporation (NERC), preventing piping from freezing during extreme cold weather events, maintaining operations at temperatures as low as 25°F, and ensuring employee protection from extreme temperatures. The proposed services include repairing and replacing insulation blankets and installing heating systems along pipes, tanks, and other equipment. While services are primarily performed at SVP’s power plants, they may be performed at other facilities as well.
DISCUSSION
Pursuant to City Code Section 2.105.140(c), a formal Request for Proposals (RFP) was conducted, with the award recommendation based on “best value.” The RFP for insulation and heat trace services was published on the City’s e-procurement system. Proposals were received from the following three vendors:
• D2 Industrial Services (D2)
• Farwest Insulation Contracting (Farwest)
• JT Thorpe Industrial Inc. dba Liberty Industrial Group, Inc. (JT Thorpe)
The proposals were independently evaluated by a three-member evaluation team against the criteria and weights published in the RFP. Staff determined that all three bidders met the minimum requirements specified in the RFP. Therefore, staff recommends entering into a master agreement with each contractor. Under the master agreement, the City will issue a work order request or an emergency work order. In the case of a work order request, the City will receive quotes from the contractors, and the City will base final selection for each task on factors such as availability during scheduled outages, experience with the specific equipment, and price. This process will ensure timely, fair, and efficient selection process.
The proposed master agreements include a high-level scope of services and compensation paid on a time and materials (T&M) basis at the rates established in the agreement. Contractors may request adjustments once per calendar year. Any rate increases must be approved by the City and must be substantiated by the contractors to the satisfaction of the City.
Services performed by D2, Farwest, and JT Thrope may include:
• Inspection, maintenance, and repair for insulation and heat trace work at DVR, COGEN, and Gianera.
• Repair or replacement of insulation systems with equivalent systems.
• Project management and scheduling services.
• Management of major project evolutions and interfaces with SVP.
Staff requests authorization for the City Manager to execute agreements with D2, Farwest and JT Thorpe with a maximum compensation not to exceed $500,000 for each agreement and an initial 5-year term with an optional one-year extension. In addition, staff requests authorization for the City Manager to execute additional amendments as needed, including an additional $500,000 across all three agreements. This provides staff with flexibility to amend each agreement as needed to reflect services assigned to each contractor through the work order process described in this report. For administration purposes, the effective date of these agreements will be July 1, 2023, though no services have been authorized. Services will only be authorized after City Council approval of the recommendations set forth in this staff report. All agreements will be in final forms approved by the City Attorney.
ENVIRONMENTAL REVIEW
Staff recommends that the City Council determine that the actions being considered are exempt from the California Environmental Quality Act (“CEQA”) pursuant section 15301 of Title 14 of the California Code of Regulations as the services involve operation, maintenance, and repair of existing facilities and mechanical equipment.
FISCAL IMPACT
The costs associated with these proposed agreements are budgeted as part of SVP’s capital and operating budget based on the type of project requiring services.
Funding for the first two years of the agreement is included in the Adopted FY 2023/24 and FY 2024/25 Operating Budget in the Electric Utility Operating and Capital Funds.
Funds required for these agreements in future years will be included in proposed budgets for 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> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Determine the proposed actions are exempt from CEQA pursuant to Section 15301 (Existing Facilities) of Title 14 of the California Code of Regulations;
2. Authorize the City Manager to execute agreements with D2 Industrial Services, Farwest Insulation Contracting, and JT Thorpe Industrial Inc. (collectively, “Agreements”) for a five year term starting on or around July 1, 2023 and ending on or around June 30, 2028, with a maximum compensation of $500,000 for each agreement, funded by the Electric Operating and Capital Funds subject to the appropriation of funds;
3. Authorize the City Manager to execute any related documents and take any actions as are necessary or advisable to implement and administer the Agreements; and
4. Authorize the City Manager to negotiate and execute amendments to the Agreements to (a) add or delete services consistent with their scope of services; (b) adjust future rates to account for increased costs; (c) extend the term of the Agreements one additional year through June 30, 2029; and (d) increase the maximum compensation by a total of $500,000 across all three Agreements for a total aggregate maximum compensation of $2,000,000, subject to the appropriation of funds.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jōvan D. Grogan, City Manager
ATTACHMENTS
1. Proposed Agreement with Farwest Insulation Contracting
2. Proposed Agreement with JT Thorpe Industrial Inc. dba Liberty Industrial Group Inc.
3. Proposed Agreement with D2 Industrial Services