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EXECUTE CONTRACT AGREEMENTS TO PURCHASE WATER AND WASTEWATER TREATMENT CHEMICALS THROUGH THE BAY AREA CHEMICAL CONSORTIUM
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RECOMMENDATION
It is recommended that the City Council approve a motion to:
1. authorize the City Manager to execute contracts for the purchase of chemicals for water and wastewater treatment for Fiscal Year 2016-2017, and
2. approve findings of an exception to the competitive bidding process.
It is also recommended that the motion authorize the City Manager to take appropriate and necessary actions to carry out the purpose and the motion.
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Summary
In an effort to obtain a potential reduction in the purchase of water and wastewater treatment chemicals, the City joined the Bay Area Chemical Consortium (BACC) in 2013. BACC is a group of 49 public agencies within eight regions located throughout the Central Valley and Bay Area that coordinate their chemical bids to obtain the best possible bulk bid prices through a competitive process. This will be the fourth year that the Municipal Utilities Department has participated in the BACC bid process. Significant cost savings have been realized by the City’s participation in the Consortium. The chemicals to be purchased and the recommended suppliers are:
1. Univar USA, Inc. of Kent, WA for the purchase of Citric Acid at $5.79/gallon ($0.559/dry pound) (Attachment A).
2. Thatcher Company of Salt Lake City, UT for the purchase of Ferric Chloride at $437.78 per dry ton (Attachment B).
3. Univar USA, Inc. of Kent, WA for the purchase of Sodium Bisulfite at $0.95 per gallon. (Attachment C).
4. Brenntag Pacific, Inc. of Santa Fe Springs, CA for the purchase of Sodium Hydroxide at $0.2200 per dry pound (25%), and $0.1990 per dry pound (50%) (Attachment D).
5. Univar USA, Inc. of Kent, WA for the purchase of Sodium Hypochlorite at $0.4105 per gallon (Attachment E).
6. Sierra Chemical of Sparks, NV for the purchase of Sulfur Dioxide at $0.465 per pound (Attachment F).
7. Pacific Coast Chemicals of Berkeley, CA for the purchase of Sulfuric Acid at $4.25 per gallon (Attachment G).
8. Polydyne, Inc of Riceboro, GA for the purchase of polymer Polydyne WE-906 at $1.08 per pound (Attachment H).
9. Polydyne, Inc. of Riceboro, GA for the purchase of polymer Polydyne NW-127 at $0.12 per pound (Attachment I).
10. CalChem Enterprises of Modesto, CA for the purchase of Aluminum Chlorohydrate (CC2000) at $0.192 per pound (Attachment J).
By this action, the City Council will authorize the City Manager to execute 10 contracts for the purchase of water and wastewater treatment chemicals to the most responsive, responsible, and competitive vendor for each chemical. The term of each contract will be for one year with options to extend the contracts on a year-to-year basis, not to exceed three yearly renewals.
DISCUSSION
Background
Various chemicals are necessary in the water and wastewater treatment process. The chemicals induce changes in the water or wastewater that will reduce hazardous conditions and/or remove specific impurities. These chemical and physical changes are necessary to meet our water and discharge permit requirements.
In an effort to obtain a potential reduction in the cost of water and wastewater treatment chemicals, the City joined the Bay Area Chemical Consortium (BACC) in 2013. BACC is a group of 49 public agencies located throughout the Central Valley and Bay Area that coordinate their chemical bids to obtain the best possible bulk bid prices. BACC members pay a lump sum of approximately $400 per bid to facilitate the bidding process. Dublin San Ramon Services District (DSRSD), the coordinating Agency for BACC, coordinated all bid specification preparations and advertisements this year. The purpose of the BACC is to allow agencies to combine the chemical purchases together to create a bulk quantity for bid pricing. The BACC awards the lowest overall bid for each chemical. Participants are encouraged to not vary from the lowest overall bid, as it would undermine the prices quoted for bulk quantities.
MUD participated in the preparation of the bid specifications and was able to select the specific chemicals required at Regional Wastewater Control Facility (RWCF), the Delta Water Treatment Plant (DWTP), and the Wastewater Collections System. The combined solicitations of all the agencies are a cooperative purchase agreement that offers vendors an opportunity to sell greater quantities of their products, resulting in lower prices for the agencies.
Present Situation
Chemical costs vary from year-to-year and in an effort to obtain the best possible price, the City sought a larger venue for the chemical bids by joining BACC. The invitation to bid was advertised by BACC in the Bay Area Newsgroup newspaper on March 1 and 16, 2016 for each chemical. In addition, notice was sent on March 11, 2016, to all vendors registered with the City’s Bid Flash of the bid release, with a link to the BACC bid site. Because this bid will serve multiple agencies, the bid notices were also published in various publications throughout Northern California. The bids were opened by DSRSD, as the coordinating agency, and read aloud to all in attendance on April 5, 2016. Results of the bids were then released to BACC members. The bids of interest to the City are shown in the following table:
|
Chemical |
Unit |
15-16 Rates, $/Unit |
16-17 Lowest Bidder |
16-17 Rate, $/Unit |
% Difference vs. Current Contract |
|
Polydyne NW-127 |
lb |
$0.16 |
Polydyne, Inc. of Riceboro GA |
$0.12 |
-25% |
|
Polydyne WE-906 |
lb |
$1.18 |
Polydyne, Inc. of Riceboro GA |
$1.08 |
-8.5% |
|
Aluminum Chlorohydrate (CC2000) |
lb |
$0.216 |
CalChem Enterprises of Modesto, CA |
$0.192 |
-11% |
|
Citric Acid |
gal/lb |
$6.01/$1.16 |
Univar USA, Inc. of Kent, WA |
$5.79/$0.559 |
-3.4% |
|
Ferric Chloride |
dry ton |
$495.65 |
Thatcher Co. of Salt Lake City, UT |
$437.78 |
-11.7% |
|
Sodium Bisulfite |
gal |
$0.844 |
Univar USA, Inc. of Kent, WA |
$0.95 |
+11.1% |
|
Sodium Hydroxide (25%) |
lb |
$0.2035 |
Brenntag Pacific, Inc. of Santa Fe Springs CA |
$0.2200 |
+7.5% |
|
Sodium Hydroxide (50%) |
lb |
$0.1970 |
Brenntag Pacific, Inc. of Santa Fe Springs CA |
$0.1990 |
+1% |
|
Sodium Hypochlorite |
gal |
$0.4685 |
Univar USA, Inc. of Kent, WA |
$0.4105 |
-10.2% |
|
Sulfur Dioxide |
lb |
$0.44 |
Sierra Chemical Co. of Sparks NV |
$0.465 |
+5.4% |
|
Sulfuric Acid |
gal |
$3.54 |
Pacific Coast Chemicals of Berkeley, CA |
$4.25 |
+16.7% |
The lowest responsible, responsive bidder was determined by the overall lowest cost provided to all BACC member agencies in each region. Contracts are awarded to the lowest overall bidder to all the agencies within the designated regions in order to take advantage of the lower bulk quantity bids. Choosing a bid other than the lowest overall bid undermines the intent of the consortium and negates the value of participation in the consortium.
Findings
Stockton Municipal Code Section 3.68.070(A)(5) provides for an exception to the competitive bidding requirements in cases where City Council has approved findings that support and justify the purchase through a cooperative purchasing agreement.
Proposed findings to support this purchase are:
1. The Bay Area Chemical Consortium (BACC) is a group of 49 public agencies that coordinated their chemical bids to obtain the best possible bulk bid price.
2. The BACC conducts a competitive bid process to obtain the best possible bulk bid price.
3. The City of Stockton joined the BACC to participate in their public bidding process of chemicals necessary for the water and wastewater treatment processes.
4. The bid specification used by the BACC has been reviewed and determined to be compatible with City of Stockton standards.
5. Participation in the BACC cooperative purchase agreement best serves the City by saving money on larger scale chemical purchases and is in the best interest of the public.
FINANCIAL SUMMARY
Funds will be available following Council approval of the FY 2016-2017 budget for the procurement of each chemical for FY 2016-2017 from the following accounts:
431-4331-574 Regional Wastewater Control Facility, Chemicals
431-4332-571 Wastewater Collections, Chemicals
421-4234-571 Delta Water Supply Treatment Plant, Chemicals
Funds will be allocated as follows:
|
Chemical |
Quantity |
Cost/Unit |
Wastewater Cost |
Water Cost |
|
Polydyne NW-127 |
1,250,000 lbs |
$0.12 |
$150,000 |
-- |
|
Polydyne WE-906 |
42,000 lbs |
$1.08 |
$46,000 |
-- |
|
Aluminum Chlorohydrate |
93,000 lbs |
$0.192 |
-- |
$18,000 |
|
Citric Acid |
2,000 gallons |
$5.79 |
-- |
$11,500 |
|
Ferric Chloride |
455 ton |
$437.78 |
$200,000 |
-- |
|
Sodium Bisulfite |
160,000 gal WW 4,000 gal W |
$0.95 |
$150,000 |
$4,000 |
|
Sodium Hydroxide (25%) |
370,000 lb WW 122,000 lb W |
$0.2200 |
$81,000 |
$27,000 |
|
Sodium Hydroxide (50%) |
127,000 lb/ 1,400,000 lb WW1 |
$0.1990 |
$26,000/ $279,000 |
-- |
|
Sodium Hypochlorite |
440,000 gal WW 200,000 gal W |
$0.4685 |
$205,000 |
$93,700 |
|
Sulfur Dioxide |
480,000 lb |
$0.44 |
$212,000 |
-- |
|
Sulfuric Acid |
1,500 gal (12T) |
$4.25 |
-- |
$6,375 |
|
|
TOTAL |
|
$1,349,000 |
$160,575 |
1 For use in the Wastewater Collections System from account 431-4332-571.30-54.
The quantities listed above are estimates only. The actual quantities purchased may vary depending on treatment needs and will be purchased at the contracted rates. Purchase of these chemicals will follow Council’s approval of the FY 2016-2017 budget. Future chemical purchases will be budgeted in the same accounts in the following fiscal years to be approved by Council through the annual budgeting process.
There is no impact to the General Fund, or any other unrestricted funds, from this action.
Attachment A - Contract for Citric Acid
Attachment B - Contract for Ferric Chloride
Attachment C - Contract for Sodium Bisulfite
Attachment D - Contract for Sodium Hydroxide
Attachment E - Contract for Sodium Hypochlorite
Attachment F - Contract for Sodium Dioxide
Attachment G - Contract for Sulfuric Acid
Attachment H - Contract for Polymer WE-906
Attachment I - Contract for Polymer NW-127
Attachment J - Contract for Aluminum Chlorohydrate