REPORT TO COUNCIL
SUBJECT
Title
Reject Bids Received and Modify an Existing Contract for Water Meters (F16-26)
Report
REPORT IN BRIEF
Approval is requested to reject the four bids received in response to Invitation for Bids (IFB) No. F16-26 for water meters. Approval is also requested for the issuance of a blanket purchase order for a one-year extension of the contract with the current meter vendor, Badger Meter, Inc.
EXISTING POLICY
Pursuant to Section 2.08.140 (b) of the Sunnyvale Municipal Code, Council approval is required to reject bids/award contracts greater than $100,000. Pursuant to Section 2.08150(c) of the Sunnyvale Municipal Code, contract modifications which result in an increase in the original contract amount must be authorized by the awarding authority, unless there is a provision in the contract otherwise allowing modification of the amount.
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(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
BACKGROUND AND DISCUSSION
Water meters are continually in demand by the Environmental Services Department for replacement of existing meters and for installation of meters in new developments. Water meters are received and inventoried at Central Stores and issued to Water Division employees on an as-needed basis. Most meters are equipped with an Electronic Radio Transmitter (ERT), a radio-based endpoint manufactured by Itron that transmits meter data to a utility vehicle.
The City has contracted with Badger Meter since 2010 as the result of a competitive bid process (RTC No. 10-284). The Badger Meter contract was extended in 2013 in order to conduct a residential pilot program using automated meter reading and monitoring through cellular technology to create efficiencies and reduce water consumption (RTC No. 13-250).
With the existing Badger contract nearing its end date, an Invitation for Bids (IFB No. F16-26) for water meters utilizing the ERT radio-reading technology was posted on the Onvia DemandStar public procurement network and directly provided to known water meter suppliers. Sealed bids were publicly opened on October 14, 2015. Four responsive bids were received, from Mueller Systems, Zenner USA, HD Supply Waterworks, and National Meter & Automation. As can be seen on the Bid Summary (Attachment 1), the low bidder was Zenner USA, with pricing for the majority of the meters approximately 16% lower than the next lowest bidder.
Staff was unfamiliar with the Zenner product and requested samples of the meters to ensure compatibility with the City’s handheld meter-reading devices. During the initial testing process the City’s handhelds were unable to communicate with the Zenner meters. Staff obtained a new test batch of meters and was again unable to obtain reads from the meters. Given the inability of the Zenner meters to communicate with the City’s meter-reading devices, and the pricing disparity between the bidders, staff recommends that Council reject the bids received. The technology around “smart” meters continues to evolve and, with a contract extension for Badger in place to ensure on-going delivery of meters in the interim year, additional time will be allowed for staff to holistically review of the meter reading function. Prior to issuing a new RFP, staff will evaluate all available technologies on the market and develop an RFP that will allow the City to take advantage of the latest advances in electronic meter reading.
The current contract with Badger Meter expired on March 31, 2016. Since the most recent bid process was unavailing, the current vendor has agreed to extend their contract pricing through March 31, 2017 to ensure the City continues to have a supply of meters available to meet operational needs, which would be advantageous for the City. This one-year extension requires Council approval.
FISCAL IMPACT
Meter requirements and total costs vary from year to year depending upon a variety of factors. Purchases over the last year totaled approximately $200,000. This level of expenditure is anticipated to continue. Budgeted funds are available in Environmental Services Department Operating Program 360, Water Resources, and in Project 827180, Automation of Water Meter Reading.
Funding Source
The Water Resources operating program and Automation of Water Meter Reading project are funded by the Water Supply and Distribution Fund.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City's official-notice bulletin board outside City Hall, at the Sunnyvale Senior Center, Community Center and Department of Public Safety; and by making the agenda and report available at the Sunnyvale Public Library, the Office of the City Clerk and on the City's website.
RECOMMENDATION
Recommendation
1) Reject all bids received in conjunction with Invitation for Bid No. F16-26 for water meters; and 2) approve the issuance of a blanket purchase order to extend the existing contract with Badger Meter to March 31, 2017, in substantially the same form as Attachment 2 to this report, not-to-exceed budgeted amounts, for water meters.
Staff
Prepared by: Pete Gonda, Purchasing Officer
Reviewed by: Timothy J. Kirby, Acting Director, Finance
Reviewed by: John Stufflebean, Director, Environmental Services
Reviewed by: Walter C. Rossmann, Assistant City Manager
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Bid Summary
2. Draft Blanket Purchase Order