REPORT TO COUNCIL
SUBJECT
Title
Award of Contract for Preventive Maintenance and Corrective Repairs to Water and Wastewater Engines (F15-20)
Report
REPORT IN BRIEF
Approval is requested to award a three-year contract in an amount not-to-exceed $2 million to Peterson Power Systems of San Leandro to perform preventive and corrective maintenance services on the power generation engines located at the Water Pollution Control Plant (WPCP) and various water and sewer pumping stations throughout the City. Approval is also recommended to delegate authority to the City Manager to extend the contract for up to two years, not to exceed budgeted amounts.
BACKGROUND AND DISCUSSION
The Power Generation Facility (PGF) at the WPCP is an electrical generation power plant which was commissioned in 1997. The PGF is owned and operated by the City and has the capacity to generate 1.6 megawatts of electricity. The facility is equipped with two Caterpillar Model 3516 Engine Generator sets with Caterpillar Brushless SR4 Generators. The engines are designed to burn lean fuels, including landfill gas, digester gas and air blended natural gas, or any combination of those gases. Digester and landfill gases are free by-products of waste processing, and are used in place of natural gas and electricity to help offset two-thirds of the Plant's energy expenses, estimated at approximately $1.2 million annually.
The water and sewer pumping stations utilize two Caterpillar engines at Baylands Pump Station No.1 and five Waukesha engines at Baylands Pump Station No.2, which drive storm water pumps; and emergency water pumps powered by Waukesha engines at the Wolfe-Evelyn and Mary-Carson Water Plants.
Historically, Council approved one-time purchase orders for the large engine overhauls, with smaller on-call blanket purchase orders for routine and emergency maintenance issued annually under the City Manager's award authority. The blanket purchase orders were kept separate in order to segregate the emergency and routine repair components. As the engines age, they have required more ongoing repairs, increasing the contract amounts closer to the Council approval threshold of $100,000. In 2012, Council approved consolidated emergency and routine repair contracts under one umbrella (RTC No. 12-262).
Over the last seven years the City has spent approximately $2.1 million in service costs. Of this cost approximately $1 million was spent on one time projects for major rebuilds and corrective maintenance, $997,000 on ongoing maintenance and $74,000 on water and sewer pumping station engine routine maintenance.
In 2013 new air regulatory emission requirements on the PGF engines have led to additional maintenance and more frequent overhauls. It is anticipated that ongoing costs for the maintenance will be higher over the next five years. With the engines aging and the quality of the landfill gas decreasing it is anticipated that additional corrective maintenance needs will arise. Therefore, staff is recommending Council approve a three-year contract not to exceed $2 million to consolidate all the maintenance needs under one contract.
Peterson Power Systems of San Leandro is the only authorized Caterpillar engine dealer in the Bay Area and as such, is the only local source for parts and service for the remanufactured parts used in the overhaul of these engines. Additionally, Peterson Power technicians are qualified to repair the Waukesha engines. This type of single sourcing is an allowable competitive bid exemption under Section 2.08.070 of the Sunnyvale Municipal Code.
ENVIRONMENTAL REVIEW
The contract is exempt from the requirements of the California Environmental Quality Act ("CEQA") in that continuing maintenance activities are not a project under CEQA Guidelines section 15378(b)(2).
FISCAL IMPACT
Budgeted funds are available in operating programs 360 (Water Resources), 367 (Wastewater Collection System), and 365 (Wastewater Management), in the Wastewater Equipment Replacement Fund (020201) and in special project 830210 (Repairs to the Power Generation Facility).
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) Award a three year contract in substantially the same form as the draft services agreement attached to the report, not to exceed $2,000,000, to Peterson Power Systems for emergency and routine maintenance and repair services; 2) Delegate authority to the City Manager to renew the contract for up to two additional years, subject to budgeted funding and provided pricing and service remain acceptable to the City and; 3) Find that the contract is not a project under CEQA.
Staff
Prepared by: Pete Gonda, Purchasing Officer
Reviewed by: Grace K. Leung, Director, Department of Finance
Reviewed by: John Stufflebean, Director, Environmental Services Department
Reviewed by: Robert A. Walker, Assistant City Manager
Approved by: Deanna J. Santana, City Manager
ATTACHMENT
1. Draft Services Agreement