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APPROVE FINDINGS AND EXECUTE CONTRACT AGREEMENTS FOR THE PURCHASE OF WATER AND WASTEWATER TREATMENT CHEMICALS THROUGH THE BAY AREA CHEMICAL CONSORTIUM
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving findings in support of an exception to the competitive bidding process.
2. Authorize the City Manager to execute six (6) contracts for the purchase of chemicals for water and wastewater treatment for Fiscal Year 2022-23.
It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of the resolution.
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Summary
In 2013, the City of Stockton (City) joined the Bay Area Chemical Consortium (BACC) to benefit from bulk product pricing for the purchase of water and wastewater treatment chemicals. The BACC is a group of 62 public agencies within eight regions located throughout the Central Valley and Bay Area that coordinate chemical bids to obtain the best possible bulk bid prices through a competitive process. This will be the ninth year the Municipal Utilities Department (MUD) has participated in the BACC bid process. Over the last several years, significant cost savings have been realized by the City’s participation in the BACC. However, the chemical industry has experienced widespread price increases over the past year, predominantly due to COVID-19 related material and labor shortages, production disruptions, and increased transportation costs. The recommended suppliers and chemicals to be purchased include the following :
1. Hill Brothers Chemical Company of Brea, CA for the purchase of Aqueous Ammonia at $1.97 per gallon (Exhibit 1 to the Resolution).
2. Univar USA, Inc. of Kent, WA for the purchase of Sodium Bisulfite at $1.995 per gallon (Exhibit 2 to the Resolution).
3. Brenntag Pacific, Inc. of Santa Fe Springs, CA for the purchase of Sodium Hydroxide (25%) at $975 per dry ton (Exhibit 3 to the Resolution).
4. Univar USA, Inc. of Kent, WA for the purchase of Sodium Hydroxide (50%) at $816.74 per dry ton (Exhibit 4 to the Resolution).
5. Univar USA, Inc. of Kent, WA for the purchase of Sodium Hypochlorite at $1.5469 per gallon (Exhibit 5 to the Resolution).
6. Northstar Chemical of Sherwood, OR for the purchase of Citric Acid at $21.60 per gallon (Exhibit 6 to the Resolution).
The Council action will approve findings of an exception to the competitive bidding process and will authorize the City Manager to execute six (6) contracts for the purchase of water and wastewater treatment chemicals to the most responsive, responsible, and competitive vendor for each chemical at the specified unit price. 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 for water and wastewater treatment processes. The chemicals induce changes in the water or wastewater to reduce hazardous conditions and/or remove specific impurities. These chemical and physical changes are necessary to meet drinking water quality standards and wastewater discharge permit requirements.
To obtain a reduction in the cost of water and wastewater treatment chemicals, the City joined the Bay Area Chemical Consortium (BACC) in 2013. The BACC is a group of 62 public agencies from eight regions located throughout the Central Valley and Bay Area that coordinate competitive bidding for chemical contracts. The purpose of the BACC is to allow agencies to combine the chemical purchases to create a bulk quantity for bid pricing. The BACC awards a contract to the lowest overall bidder for each chemical in each region. The BACC members pay a lump sum of approximately $500 per bid to facilitate the bidding process. Participants are encouraged not to vary from the lowest overall bid, as it would undermine the prices quoted for bulk quantities.
The MUD participated in the preparation of the bid specifications and selected the specific chemicals required at the Regional Wastewater Control Facility (RWCF), Delta Water Treatment Plant (DWTP), and Wastewater Collections System. The combined solicitations of all the agencies are a cooperative purchase agreement that offers vendors an opportunity to sell larger quantities of their products, resulting in lower prices for the agencies.
Present Situation
For 2022, the Bay Area Clean Water Agencies (BACWA), on behalf of the BACC, has coordinated all bid specification preparations and advertisements. The invitation to bid for each chemical was advertised by the BACWA in the Alameda Times Star newspaper on January 27, 2022. In addition, notice of the bid release was sent on February 7, 2022, to all vendors registered with the City’s Bid Flash, along with a link to the BACWA bid site. BACWA, as the coordinating agency, received bids electronically through PlanetBids.com by February 24, 2022. Results were then released to the BACC members.
The lowest bids of interest to the City are shown in the following table:
|
Chemical |
Unit |
FY 21-22 Rate $/Unit |
FY 22-23 Lowest Bidder |
FY 22-23 Rate $/Unit |
Unit Price Change |
|
Aqueous Ammonia |
Gal |
$1.11 |
Hill Brothers Chemical Company |
$1.97 |
77% |
|
Sodium Bisulfite |
Gal |
$1.75 |
Univar Solutions USA Inc. |
$1.995 |
14% |
|
Sodium Hydroxide (25%) |
Dry Ton |
$517.04 |
Brenntag Pacific, Inc. |
$975.00 |
89% |
|
Sodium Hydroxide (50%) |
Dry Ton |
$461.85 |
Univar Solutions USA Inc. |
$816.74 |
77% |
|
Sodium Hypochlorite |
Gal |
$0.71 |
Univar Solutions USA Inc. |
$1.5469 |
117% |
|
Citric Acid |
Gal |
$8.19 |
Northstar Chemical |
$21.60 |
164% |
The chemical industry has experienced widespread price increases over the past year, predominantly due to material and labor shortages, production disruption, and increased transportation costs. The increased cost to produce and deliver the necessary treatment chemicals are reflected in the price increases shown in the table above.
The lowest responsible, responsive bidder was determined by the overall lowest cost provided to all the BACC member agencies in each region. Contracts are awarded to the lowest overall bidder to all the agencies within the designated regions 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 an exception to the competitive bidding requirements when the City Council approves 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 62 public agencies that coordinates 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 the public bidding of chemicals necessary for 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.
6. All six (6) of the proposed contracts are cooperative purchasing agreements for the purchase of supplies or services through other governmental jurisdictions or public agencies.
FINANCIAL SUMMARY
Funds will be available following Council approval of the FY 2022-23 budget for the procurement of each chemical for FY 2022-23, from the Wastewater Utility funds, Water Utility Funds, and as allocated annually in the table below:
|
Chemical |
Est. Annual Quantity |
Cost/ Unit |
Wastewater Estimated Annual Cost* |
Water Estimated Annual Cost |
Total 4-year Not to Exceed Amount |
|
Aqueous Ammonia |
45,000 Gal WW 50,000 Gal W 50,000 Gal Wells |
$1.97 |
$96,629 |
$197,000 |
$1,228,500 |
|
Sodium Bisulfite** |
220,000 Gal WW 7,500 Gal W |
$1.995 |
$478,401 |
$20,303 |
$2,086,400 |
|
Sodium Hydroxide (25%) |
325 Dry Ton WW 100 Dry Ton W |
$975.00 |
$345,394 |
$97,500 |
$1,853,000 |
|
Sodium Hydroxide (50%) |
155 Dry Ton WW |
$816.74 |
$137,988 |
$0 |
$577,300 |
|
Sodium Hypochlorite** |
625,000 Gal WW 50,000 Gal W 250,000 Gal Wells |
$1.5469 |
$1,053,826 |
$592,230 |
$6,886,500 |
|
Citric Acid |
10,000 Gal W |
$21.60 |
$0 |
$216,000 |
$903,700 |
|
|
|
TOTAL |
$2,112,238 |
$1,123,033 |
$13,535,400 |
* Wastewater Estimated Annual Cost includes 9% for taxes.
** Water Estimated Annual Cost includes Less Than Load (LTL) delivery fees of $445 per delivery for volumes less than 2,000 gallons.
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. The not-to-exceed amount represents the total expense, for both water and wastewater throughout the potential 4-year contract term. The contracts allow for price changes if the contracts are extended. The not-to-exceed total includes a 3% annual escalation per year to account for potential cost of living increases.
Purchase of these chemicals will follow City Council approval of the FY 2022-23 Annual Budget. Funds for future chemical purchases will be budgeted in the same accounts, in subsequent fiscal years, and subject to approval by the City Council through the annual budget development process.
There is no impact to the General Fund, or any other unrestricted funds, from this action.