CITY OF TALLAHASSEE
CITY COMMISSION AGENDA ITEM
ACTION REQUESTED ON: May 27, 2009
SUBJECT/TITLE: Approval of Amendment to Central Electric Manufacturing Company Purchase Order for Metalclad Switchgear
TARGET ISSUE:

STATEMENT OF ISSUE

Existing Substation BP-12 is near maximum capacity at peak load conditions and serves critical customers including, but not limited to, Tallahassee Memorial Hospital (TMH), Tallahassee Police Department (TPD), and also serves as a back up for Capital Regional Medical Center (TRMC). The Electric Utility is in the process of expanding the substation for greater capacity and reliability.

On February 7, 2006 the City Commission approved a three-year term contract for Central Electric Manufacturing Company for the supply of metalclad switchgear. Subsequently, purchase order 0001022634 in the amount of $657,035 was issued for the switchgear required for the expansion of Substation BP12, to be supplied in two phases as the project progressed. Part of the switchgear has been purchased and delivered, and the Electric Utility needs to give notice to proceed to the manufacturer for the remaining switchgear to complete the project. Due to project delays, additional items required by the City, and substantial price increases for copper, steel and transportation, Central Electric has requested an increase of $98,804.81 to the purchase order.

This agenda item is requesting City Commission approval to issue an amendment to the purchase order in the amount of $98,804.81. This is an increase of 15% to the purchase order.

RECOMMENDED ACTION

Option 1: Approve an amendment to PO 0001022634 in the amount of $98,804.81 to Central Electric Manufacturing Company.

FISCAL IMPACT

Option 1: $98,804.81. Funding is available in project 06118. Balance on May 12, 2009 is $446,967.

Kevin G. Wailes, General Manager – Electric Utility

Anita Favors Thompson, City Manager

For information, please contact: Brian Fisher, Electric Power Engineering, x5034

SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES

Existing Substation BP-12 is near maximum capacity at peak load conditions and serves critical customers including, but not limited to, Tallahassee Memorial Hospital (TMH), Tallahassee Police Department (TPD), and also serves as a back up for Capital Regional Medical Center (TRMC). The Electric Utility is in the process of expanding the substation for greater capacity and reliability.

On February 7, 2006, the City Commission approved a three-year term contract for Central Electric Company for the supply of metalclad switchgear. Subsequently, purchase order 0001022634 in the amount of $657,035 was issued for the switchgear required for the expansion of Substation BP12, to be supplied in two phases as the project progressed. Part of the switchgear has been purchased and delivered, and the Electric Utility needs to give notice to proceed to the manufacturer for the remaining switchgear to complete the project.

The Central Electric contract states that the cost may increase due to delays caused by the purchaser (such as extension of the delivery date); scope of supply changes; labor rate increases; material escalation; cost of rescheduling, or additional shipping expense.

Since the purchase order was issued, the cost of materials, specifically copper, steel and SIS wire, has increased significantly. Central Electric initially requested an increase of $142,131; however, Electric Utility staff rejected this as excessive under current circumstances. A review of the metals index showed that although the unanticipated recent price increases for copper and steel were dramatic, the current price is now lower than the peak. The current index price was utilized for the revised calculation. Additionally, the City has requested items not in the original bid. A third 3000 amp tie breaker section was requested, and it was necessary to require Cutler-Hammer circuit breakers in order to match the equipment supplied with the first switchgear. Finally, the project was delayed pending repair of one of the substation power transformers. This delayed the order for the remaining switchgear, which could not be installed before the repair of the transformer was completed.

The increase breaks down as follows:

· Specification of specific type of circuit breakers and associated equipment: $33,946.46.
· Addition of a third tie breaker section: $40,047.00.
· Material, labor and freight escalation: $24,811.35.

City Commission approval is requested to issue a purchase order amendment in the amount of $98,804.81 to Central Electric Manufacturing Company. This is an increase of 15% to the purchase order.

Procurement Services and Budget and Policy have reviewed this agenda item and concur that it meets purchasing and budget guidelines.

CHARITABLE CONTRIBUTIONS

Award not based on Charitable Contribution Preference.

OPTIONS

Option 1: Approve an amendment to PO 0001022634 in the amount of $98,804.81 to Central Electric Manufacturing Company.

Option 2: Do not approve the amendment. This is not recommended since the changes are in accordance with the contract, re-bidding the switchgear is not expected to provide a lower cost and will further delay the project.

FISCAL IMPACT

Option 1: $98,804.81. Funding is available in project 06118. Balance on May 12, 2009 is $446,967.

Option 2: Unknown, but not expected to provide a lower cost.

ATTACHMENTS/REFERENCES

None