REPORT TO COUNCIL
SUBJECT
Title
Action on an Agreement for Services with Grid Subject Matter Experts, LLC to Provide Silicon Valley Power With Consulting and Support Services for North American Reliability Corporation Critical Infrastructure Protection Compliance
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
As a transmission operator registered with the North American Reliability Corporation (NERC), Silicon Valley Power (SVP) is subject to numerous reliability regulations that apply to its operations and specifically to equipment that supports real-time monitoring and control. The real-time operations of SVP’s electric transmission and distribution systems are made possible through the use of a Supervisory Control and Data Acquisition (SCADA) system. Using data points from SVP’s service territory and the California Independent System Operator (CAISO) balancing authority, the SCADA system enables SVP system operators to assess the state of the power grid and make critical operating decisions to ensure reliable electric service to Santa Clara residents and businesses.
Given the critical importance of SCADA in modern control centers, NERC and the Federal Energy Regulatory Commission (FERC) mandate that transmission operators with SCADA systems comply with specific cybersecurity requirements, known as Critical Infrastructure Protection (CIP) standards. Non-compliance with these standards could result in fines as high as $1 million per day. To ensure compliance, SVP contracted with Grid Subject Matter Experts, LLC (GridSME) in 2018 to assist in the development of a NERC CIP Compliance Program. The agreement is set to expire on December 31, 2024.
DISCUSSION
Pursuant to Section 2.105.140(c) of the Santa Clara City Code, a formal Request for Proposals (RFP) was conducted, with the award recommendation based on “best value.”
The RFP for Consulting and Support Services for NERC Critical Infrastructure Compliance - SCADA was published on the City’s e-procurement system. Three proposals were received from the following firms:
• Archer Energy Solutions, LLC
• 1898 Company (a part of Burns & McDonnell)
• Grid Subject Matter Experts, LLC (GridSME)
The proposals were independently evaluated by a three-member evaluation panel against the criteria and weights published in the RFP, including experience, technical capability, proposed solution, and cost. The evaluation panel determined that the GridSME’s proposal provided the best value as they have 20 years of experience in the field and was the only respondent to fully meet the requirements of the RFP. Therefore, staff recommends entering into an agreement with GridSME for consulting and support services for NERC SCADA CIP compliance.
Staff is seeking City Council authorization for the City Manager to execute the proposed agreement with GridSME for an initial five-year term, beginning on January 1, 2025, and ending on December 31, 2029. The agreement has a maximum compensation of $600,000, with GridSME being compensated on a time and materials basis according to the rates specified in the agreement. These rates will remain fixed for the first two years of the agreement, after which they may be adjusted based on the Consumer Price Index, with increases capped at 3% annually.
In addition, staff is seeking City Council authorization for the City Manager to negotiate and execute amendments to the agreement to (1) add or delete services consistent with the scope of services, (2) authorize rate adjustments of no greater than 3% annually, (3) extend the term by three additional years through December 31, 2032, and (4) increase the maximum compensation by up to $400,000 for a total maximum compensation of $1,000,000 over the eight-year term. Approval of these recommendations will ensure continuity and allow for changes in the levels of service required to ensure compliance with NERC CIP requirements.
ENVIRONMENTAL REVIEW
Staff recommends that the City Council determine that the action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(a)(5) of Title 14 of the California Code of Regulations as the proposed work to be performed is administrative and will not result in direct or indirect physical changes in the environment.
FISCAL IMPACT
The maximum compensation for the initial five-year term under the proposed Agreement with GridSME is $600,000. Sufficient funds are available in the FY 2024/25 Operating Budget in the Electric Utility Operating Fund.
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 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, or by email to: clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov>.
RECOMMENDATION
Recommendation
1. Authorize the City Manager or designee to execute an agreement with Grid Subject Matter Experts, LLC (Agreement) to provide North American Reliability Corporation (NERC) compliance services and Supervisory Control and Data Acquisition (SCADA) system support for a term starting on January 1, 2025 and ending on December 31, 2029, with a maximum compensation of $600,000, to be funded by Electric Utility Fund, subject to the approval as to form by the City Attorney; and
2. Authorize the City Manager or designee to take any actions as necessary to implement and administer the Agreement and to negotiate and execute amendments to the Agreement to (a) add or delete services consistent with the scope of services, (b) adjust rates by up to 3% annually, (c) extend the term for up to three additional years, (d) make other no cost or term extension amendments, and (e) increase the maximum compensation by up to $400,000 for a total maximum compensation of $1,000,000 over an eight-year period through December 31, 2032, subject to the appropriation of funds and approval as to form by the City Attorney.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Proposed Agreement with GridSME, LLC