CITY OF TALLAHASSEE
CITY COMMISSION AGENDA ITEM
ACTION REQUESTED ON: May 27, 2009
SUBJECT/TITLE: Approve Award of RFP No. 0039-09-RM-RC Power Plant Chemical Treatment Program - A.B. Hopkins and Sam O. Purdom Generating Stations
TARGET ISSUE:
STATEMENT OF ISSUE
The City of Tallahassee owns and operates the Purdom and Hopkins generating stations that have both steam and combined cycle generating units. These units represent over 80% of the City’s available generating capacity and each unit has multiple water cycles utilized in the operations of the units. The chemistry of the water and the associated chemicals utilized in these systems are critical to ensure reliable unit operation and compliance with applicable regulatory requirements. The City utilizes term contracts for the required chemicals for these water systems. Included in the cost of the chemicals is expert technical assistance on water cycle issues. This agenda item is seeking approval to award the contract for Power Plant Chemical Treatment Programs for A.B. Hopkins and Sam O. Purdom Generating Stations (RFP No. 0039-09-RM-RC) to Nalco Company.
RECOMMENDED ACTION
Option 1: Award of RFP No. 0039-09-RM-RC, Power Plant Chemical Treatment Program- A.B. Hopkins and Sam O. Purdom Generating Stations, to Nalco Company, the vendor receiving the highest ranking from the selection committee, for a base period of three years and authorize staff to exercise the contract extension provisions for up to an additional two years, with an economic adjustment to be applied in year four and year five.
FISCAL IMPACT
Option 1: Estimated at $1,100,000 for the five-year period of the contract. The actual cost will be dependent on the quantity of chemicals needed to treat the cooling towers and the boilers at the generating facilities. Funding will be provided from operating and capital funds at the time the need is identified.
Kevin G. Wailes, General Manager – Electric Utility
Anita Favors Thompson, City Manager
For information, please contact: Rob McGarrah, Manager Power Production, x 5534
SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES
1. The City of Tallahassee owns and operates two steam-generating units, Unit 1 at Hopkins Generating Station and Unit 7 at Purdom Power Plant, and two combined cycle generating units, Unit 8 at Purdom Power Plant. and Unit 2A at Hopkins Generating Station. These units represent over 80% of the City’s available generating capacity.
2. Each of these units has multiple water cycles utilized in the normal operations. The chemistry of the water and the associated chemicals utilized in these systems are critical to ensure reliable unit operation and compliance with applicable regulatory requirements. The City utilizes term contracts for the required chemicals for these water systems. Included in the cost of the chemicals is expert technical assistance on water cycle issues.
3. Electric staff developed the technical requirements, and RFP No. 0039-09-RM-RC was issued as a competitive sealed proposal. The RFP identified seven evaluation categories. These categories were: (1) Experience and Ability; (2) Conformance of Technical Specifications; (3) Conformance to Commercial Requirements; (4) Cost; (5) Approach; (6) MBE Participation; and (7) Charitable Contributions. The RFP defined the requirements of each evaluated criteria. An RFP selection committee was assembled to evaluate the proposals. The evaluation committee was comprised of representatives from Hopkins Generating Station, Purdom Power Plant, Production Management and the Environmental Policy and Energy Resources department.
4. Notices were broadcast to 107 vendors and three supplemental vendors. Out of the 14 vendors that downloaded copies of the bid documents, three vendors responded. ArrMaz Custom Chemicals (ArrMaz), Nalco Company (Nalco), and GE Water & Process Technologies (GE) submitted proposals for consideration.
5. Each vendor’s proposal included annualized costs for the treatment programs. GE based their values on actual historical data from being the vendor for the current term contract for the treatment program. ArrMaz and Nalco based their values on flow rates and calculations their staff had developed. In order to fairly evaluate the cost portion of the proposals submitted, the evaluation committee asked all three vendors to meet with them in order that the chemical costs identified in their proposal could be itemized based on unit and purpose and to answer other questions related to their proposal.
6. Based on the evaluation committee’s review, Nalco was identified as the top ranked vendor. This ranking was posted, and the evaluation committee notified the three vendors of the recommendations. Subsequent to this posting, Nalco submitted exceptions to the commercial terms and conditions of the RFP. Electric staff consulted with Risk Management and the City Attorney’s office, on the specific commercial exceptions. Based on these discussions, the commercial exceptions requested by Nalco are acceptable. Procurement Services was consulted with respect to the process to follow in moving forward with the award. Based on these consultations, the evaluation committee convened again and rescored the Nalco “Conformance to Commercial Requirements” criteria. Since the exceptions were submitted after the initial ranking process the Selection Committee revised the scoring of this criteria to zero for Nalco. Nalco remained the top ranked vendor and a revised ranking sheet was posted by Procurement. Procurement did not receive any challenges to the revised ranking from the other vendors.
7. This agenda item is seeking approval to award the contract for Power Plant Chemical Treatment Programs for A.B. Hopkins and Sam O. Purdom Generating Stations (RFP No. 0039-09-RM-RC) to Nalco for a base period of three years and approval to extend the contract for two years with an economic adjustment to be applied in year four and year five, should the department decide to exercise the contract extension provision.
8. GE is the vendor that had been providing these services in accordance with Contract 536 for Power Plant Chemical Treatment Programs at A.B. Hopkins and Sam O. Purdom Generating Stations. This contract expired the end of March 2009 and Procurement approved the power plants continuing to use GE for services as a purchasing exception. This extension was to allow for this RFP process to be completed and for a transition period between the two vendors.
9. Power Plant Chemical Treatment Programs for A.B. Hopkins and Sam O. Purdom Generating Stations (RFP No. 0039-09-RM-RC) was issued prior to the City Commission approving the Local Economic Emergency Fast Tracking program. As a result, the evaluation criteria requirements developed for that process relating to MBE, Location and Volume of City Work were not utilized in this RFP.
10. Procurement Services and Budget and Policy have reviewed this agenda item and concur that it meets purchasing and budgeting guidelines.
11. As noted above, under the current process the firm that is supplying the chemicals also provides the technical support to determine what chemical treatment programs are utilized. While this has worked well historically, staff is reviewing whether this method of service delivery should be continued. Based on this review, there are two potential options. The first is to remain with this service delivery model. The second option is to engage an independent water treatment consultant to provide the technical support and program development, while purchasing the chemicals only from the manufacturers/suppliers. If the second option is selected, this term contract may be terminated early once replacement contracts for the separation of responsibilities are in place.
CHARITABLE CONTRIBUTIONS
NO CHARITABLE CONTRIBUTIONS MADE BY ANY RESPONDENT.
1. Bids/Proposals received from three vendors.
2. None of the firms claimed charitable contributions.
Award not based on Charitable Contribution Preference.
OPTIONS
Option 1: Award of RFP No. 0039-09-RM-RC, Power Plant Chemical Treatment Program - A.B. Hopkins and Sam O. Purdom Generating Stations, to Nalco Company, the vendor receiving the highest ranking from the selection committee, for a base period of three years and authorize staff to exercise the contract extension provisions for up to an additional two years, with an economic adjustment to be applied in year four and year five.
Option 2: Rerank the proposals.
Option 3: Reject all the proposals and issue a new Request for Proposals.
FISCAL IMPACT
Option 1: Estimated at $1,100,000 for the five-year period of the contract. The actual cost will be dependent on the quantity of chemicals needed to treat the cooling towers and the boilers at the generating facilities.
Funding will be provided from operating and capital funds at the time the need is identified.
Option 2: Unquantifiable until the re-ranking is accomplished.
This option is not recommended. Awarding to other than the recommended vendor will result in additional costs to the City. It is estimated that the program costs will be between $1,465,000 and $1,650,000 for the five-year period of the contract if awarded to other than Nalco. The actual cost will be dependent on the quantity of chemicals needed to treat the cooling towers and the boilers at the generating facilities and the type and amount of testing services required during the contract period.
Option 3: Unquantifiable.
This option is not recommended. The fiscal impact cannot be determined until the ranking of the vendors is completed and the service option is identified.
ATTACHMENTS/REFERENCES