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APPROVING THE MAJOR MECHANICAL, PUMP, AND ELECTRIC MOTOR REBUILD PRE-APPROVED VENDOR LISTS
recommended action
RECOMMENDATION
It is recommended the City Council adopt a resolution to:
1. Approve findings pursuant to Stockton Municipal Code (SMC) section 3.68.070 in support of an exception to the competitive bid process.
2. Approve an initial list of rotating vendors to provide necessary major mechanical, pump and electric motor rebuild services to the Municipal Utilities Department.
It is also 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 (MUD) operates and maintains many assets, including hundreds of pumps and electric motors. These assets convey water, wastewater, and stormwater throughout the City as part of the water and wastewater treatment processes. At times, MUD requires outside vendors for major mechanical, pump and electric motor rebuild services in instances when the work cannot be completed by City staff due to size of project, timing, or complexity of work. Establishing a list of pre-approved rotating vendors will provide additional as-needed capacity to restore equipment to service without making an unnecessary ongoing investment. Competitive quotes will continue to be required for major mechanical services to ensure the City receives fair pricing. A formal solicitation process will continue to be required for any projects over the Council established spending limit.
MUD is seeking an exception to the competitive bid process to establish a pre-approved list of major mechanical, pump and electric motor vendors. If approved, MUD will be able to use the rotating vendor list on an as-needed basis.
DISCUSSION
Background
MUD uses contracted services for major mechanical, pump and electric motor repair services on an as-needed basis. For various reasons, such as the size of project, timing, or complexity of work, City forces are not always available to complete the work in-house. Most work is below the Council established spending limit of $75,000 per project.
Historically, the work was considered a separate project if it was performed for one of the three utilities (water, wastewater, stormwater) and on a specific piece of equipment. For example, repairs on a pump at the Regional Wastewater Control Facility (RWCF) was considered a different project from pump repair work performed by the same contractor at an off-site storm pump station. Following a 2012 audit finding, it was determined at that time that although each project within the department was below the Council established spending limit, the cumulative effect for each vendor may exceed that limit. The audit in part recommended establishing a list of vendors to perform certain services, along with formally adopted criteria by which the vendors would be selected to perform such work.
Total annual major mechanical, pump and electric repair services expenditures for projects under Council established spending limits varied from approximately $160,000 to $650,000 over the past four years.
Present Situation
Major mechanical, pump and electric motor repair services will continue to increase due to aging infrastructure at MUD. Timing, complexity of repairs, size of equipment, consistency, and equipment expertise are all factors considered when determining if the work will be performed by City forces or by an outside vendor. The equipment, type of expertise required, and proximity limits the companies that are qualified to work on equipment at MUD for these services.
Pump and electric motor repair work is highly specialized. Most repairs require dismantling the equipment to diagnose the failure before determining what repairs will be needed. Chain of custody is lost if one company diagnoses the problem and another repairs it. There will be no guarantee additional repairs will not be necessary due to reassembling the pump to send to another company. It is not economical to have one company dismantle and diagnose a problem, then solicit bids from another to perform the repair. It is in the public interest to have the City utilize the same company performing the diagnosis to also perform the repair
MUD staff have reviewed past practices and have created a list of eligible contractors capable of performing the specialized major mechanical, pump and electric motor repair services as needed. Those contractors that have demonstrated consistent performance, the technical knowledge to work on the City equipment, and compliance with necessary insurance and licensing requirements have been included on the initial list. Pump and electric motor repair work will be awarded by rotation to those contractors on the list to ensure that the entire list is being utilized for procurement purposes. For major mechanical work between $5,000 and $75,000, a minimum of three quotes will be solicited from the listed contractors with award to the lowest qualified respondent to ensure the City receives fair pricing.
These contractors have demonstrated through a history of past performance, the necessary expertise and capability to perform the needed work and have a current business license on file with the City. The contractors are listed for each of the three service categories on the following page:
Major Mechanical Services
Falco Construction, Stockton
Mechanical Analysis & Repair, Inc., (MarTech), Lodi, CA
Monterey Mechanical Co., Oakland, CA
Richard A. Soracco, Jr., General Engineering, Lodi CA
Pump Repair Services
Delta Pump, Stockton
Geiger Manufacturing, Inc., Stockton
Mechanical Analysis & Repair, Inc., (MarTech), Lodi, CA
Shape Inc., Stockton
Turbo Machinery Repair, Inc., Richmond, CA
Universal Pump & Supply, Stockton
Electric Motor Repair Services
Ace Armature & Motor Shop, Stockton
Industrial Electrical Co., Modesto, CA
Koffler, San Leandro, CA
Mechanical Analysis & Repair, Inc., (MarTech), Lodi, CA
Stanley Electric Motor Co., Inc., Stockton
Although these initial lists include contractors that meet the set criteria and with a proven history of performance with the City, MUD has developed policy and procedures for maintaining these lists which include how additional contractors may be added or removed from the lists; requirements for insurance, licensing, contracts; and quote solicitations. These lists are intended as a pre-qualification process for contractors. All contractors on the lists are required to sign a letter agreement with the City, have a City business license, demonstrate their ability to perform the work, hold appropriate State licensing for their industry, and maintain on file the appropriate insurance certificates. Failure to meet any of these requirements, or a documented history of failure to perform, are grounds for removal from the list. Any contractor removed from the lists may be considered for reinstatement after two years from the date of removal if agreed to by City staff. The City’s procurement division of Administrative Services is responsible for maintaining the lists.
Time is of the essence for these services as it cannot be anticipated when and to what extent they may be needed, especially in the event of an urgent or an emergency situation.
FINDINGS
Pursuant to SMC section 3.68.070, Council may approve findings that support an exception to the competitive bidding process. The findings to support an exception to the competitive bid process and approve rotating vendor lists for major mechanical, pump and electric motor repair services include:
a. The necessary work on a per project basis is under the Council spending limit ($75,000) for individual projects.
b. This specialized major mechanical, pump and motor repair vendor list will allow the City to quickly contract with vendors during specialized major repair situations.
c. Based on an audit finding, the cumulative total of these purchases by vendor may exceed the limit because of the specialized nature of the work. During these specialized major repair situations, the City may not be able to always apply the normal purchasing, threshold, bidding and contracting requirements but will nevertheless have the need to move quickly and efficiently to contract for services.
d. The audit, in part, recommended management consider establishing grouped and approved lists into a single authorization by City Council for contracting services that cumulatively may exceed the Council limit. This pre-approved vendor list will assist MUD in handling such specialized repair situations.
e. The scope of services is very specific, which limits the number of qualified vendors available within reasonable proximity to the City. Those contractors currently qualified have been included on the lists. The policy allows other contractors to be added to the list and identifies the criteria for remaining on the list.
f. The MUD policy will ensure that the opportunity for work will be fairly distributed among the qualified vendors through the quote solicitation process and that City purchasing procedures are followed. This policy and purchasing procedures are in the public interest and will assist in ensuring that the specialized work is performed by the most qualified vendors.
g. Additional vendors can be added to the list in the future by submitting a written request, obtaining a City business license, and submitting appropriate insurance documentation.
h. Establishment of the pre-approved vendor list does not guarantee that the City will provide such specialized work to the vendors on the list or any particular amount of work.
FINANCIAL SUMMARY
There is no direct financial impact to the City from approving a rotating list of qualified vendors to provide pump and electric motor repair services. All work for these vendors will be funded through the annual operations and maintenance budgets for the Water, Wastewater, and Stormwater utilities, as applicable. There is no impact to the General Fund, or any other unrestricted fund, from this action.