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AWARD A CONSTRUCTION CONTRACT TO COLLICUTT ENERGY SERVICES, INC. FOR COGENERATION ENGINES NO. 1 & NO. 4 OVERHAUL AND SOURCE TEST - PROJECT NO. M16009
recommended action
RECOMMENDATION
It is recommended that the City Council approve a resolution authorizing the City Manager to:
1. Reject all bids for the Cogeneration Engine No. 1 Overhaul and Source Test, Project No. M09102, previously received on August 14, 2014 for the project advertisement of Cogeneration Engine No. 1 only.
2. Approve the filing of Notice of Exemption No. MUD-CE-5-15 under the California Environmental Quality Act (CEQA) for the Cogeneration Engines No. 1 & No. 4 Overhaul and Source Test, Project No. M16009 (Exhibit 1).
3. Approve the project specifications and addenda for the Cogeneration Engines No. 1 & No. 4 Overhaul and Source Testing, Project No. M16009.
4. Award a construction contract in the amount of $1,087,922 to Collicutt Energy Services, Inc. of West Sacramento for the Cogeneration Engines No. 1 and No. 4 Overhaul and Source Test, Project No. M16009 (Exhibit 2).
It is further recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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Summary
The Municipal Utilities Department operates and maintains the Regional Wastewater Control Facility (RWCF). The treatment process utilizes cogeneration engines to provide heat for the anaerobic sludge digestion process which in turn uses the methane gas byproduct as a fuel source for internal combustion engines. The cogeneration facility consists of three engines that produce electricity to power other wastewater treatment equipment and reduce the need to purchase power. Engines No. 1 and No. 4 are currently out of service and in need of overhaul. Engine overhaul is recommended based on hours of operation and to ensure the engines meet the emissions requirements set by the San Joaquin Valley Air Pollution Control District.
If approved by Council, this action will award a construction contract in the amount of $1,087,922 to Collicutt Energy Services, Inc. (Collicutt) for the overhaul and source test of Cogeneration Engines No. 1 and No. 4.
DISCUSSION
Background
The RWCF uses anaerobic digesters for the stabilization of wastewater sludge. A by-product of the sludge digestion process is the production of digester gas (primarily methane), which can be used as a fuel source to power cogeneration engines to generate electricity. Cogeneration is the process by which the digester gas is used as a clean fuel source in internal combustion engines to generate electricity and heat.
The RWCF operates three General Electric Waukesha internal combustion engines that are designed to generate up to a total of 3 megawatts of electricity. The electricity generated is used to power plant equipment and processes. Currently, the total power demand for the RWCF is approximately 3.7 megawatts. The remaining power demand is met by power purchased through Pacific Gas and Electric. Heat generated by the engines is recovered and used to facilitate the anaerobic digestion process.
Waukesha cogeneration engines and generators require periodic overhauls to maintain designed performance. Waukesha recommends major engine overhaul and service after 40,000 hours of operation. Based on hours of operation, MUD staff previously solicited and received bids that were publicly opened on August 14, 2014, to overhaul Engine No. 1 only. The lowest responsive bid received was submitted by Collicutt Energy Services for $499,581. However, prior to award of a contract to Collicutt for the Engine No. 1 overhaul, a catastrophic failure occurred with Engine No. 3, which had been recently overhauled by Collicutt. This resulted in placing the overhaul contract award for Engine No. 1 on hold until the cause of the Engine No. 3 failure could be determined. In addition to resolving the dispute over the cause and responsibility for the Engine No. 3 failure, MUD staff reevaluated the Engine No. 1 bid documents to include provisions for additional safety features to prevent a similar, potential future failure of Engine No. 1 after any rebuild of the engine. Updates and revisions to the bid documents included instrumentation and controls that would protect the engine if any abnormal or irregular conditions were to occur such as what was experienced with Engine No. 3.
Additionally, while investigating and repairing the Engine No. 3 failure and modifying the Engine No. 1 bid document, Engine No. 4 reached the recommended run-time limit; therefore, the bid documents were amended to include the overhaul of Engine No. 4 and generator in a similar manner to Engine No. 1 and generator.
Present Situation
After a final resolution regarding the failure of Engine No. 3, the project was advertised on August 10, 2015 to include an updated and revised bid package pertaining to Cogeneration Engines Nos. 1 and 4. A non-mandatory pre-bid conference was then held on August 13, 2015, with four prospective bidders in attendance. Bids were received and publicly opened on October 15, 2015, with the following results:
|
COMPANY NAME |
LOCATION |
BID AMOUNT |
|
Collicutt Energy Services, Inc. |
West Sacramento, CA |
$1,087,922 |
|
Valley Power Systems, Inc. |
Industry, CA |
$1,159,536 |
|
Peterson Power Systems |
San Leandro, CA |
$1,389,838 |
|
|
|
|
|
Engineer’s Estimate |
$1,040,600 |
The bid received by the apparent low bidder, Collicutt Energy Services, Inc. of West Sacramento, is regular in all aspects and compliant with the project specifications. The bid specifications require the contractor to facilitate an engine inspection by MUD staff following disassembly at the contractor’s facility to establish the extent of replacement parts required for the overhaul. Collicutt Energy Services, Inc. has indicated they may transport Engine No. 1 to their special maintenance facility in Alberta, Canada for the overhaul work. If the contractor decides to transport the engine to Alberta, Canada, all transportation expenses for MUD staff will be paid for by the contractor.
It is recommended that the City Council authorize the City Manager to reject all bids from the previous bids received regarding engine no. 1 on August 14, 2014. Staff also determined that it is in the public interest and more efficient to overhaul both cogeneration engines Nos. 1 and 4. As a result, it is recommended that Council authorize the City Manager to execute the construction contract (Exhibit 2 to the resolution) in the amount of $1,087,922 with Collicutt Energy Services, Inc. of West Sacramento for the Cogeneration Engines No. 1 and No. 4 Overhaul and Source Test, Project No. M16009.
ENVIRONMENTAL CLEARANCE
It has been determined that this action/project is exempt from the requirements of the California Environmental Quality Act, since this type of action/project has been granted a “Categorical Exemption” under Article 19, Section 15302(c) of the State of California Environmental Quality Act Guidelines.
LOCAL EMPLOYMENT ORDINANCE
This project is exempt from the Local Employment Ordinance pursuant to Stockton Municipal Code Section 3.68.095-K-2. The Stockton Municipal Code allows exemptions to City construction contracts or portions thereof, wherein the work is of highly specialized nature and cannot be completed in the Stockton vicinity.
FINANCIAL SUMMARY
Funds for this project in the amount of $1,087,922 have been budgeted and are available in the Capital Improvement Program Account Number 437-7709-670 (Municipal Wastewater Utility - Capital Improvement Program Wastewater - RWCF Modifications and Replacements) and in the Capital Outlay - Capital Maintenance Account Number 431-4331-606.
There is no impact to the City’s General Fund, or any other unrestricted fund as a result of taking the recommended action.