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PURCHASE WATER AND WASTEWATER TREATMENT CHEMICALS THROUGH THE BAY AREA CHEMICAL CONSORTIUM AND APPROVE FINDINGS
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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 (FY) 2018-19, and
2. Approve findings in support 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 intent of the motion.
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Summary
To obtain a reduction in the purchase cost of water and wastewater treatment chemicals, the City joined the Bay Area Chemical Consortium (BACC) in 2013. The BACC is a group of 42 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 sixth year the Municipal Utilities Department (MUD) 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. The chemicals to be purchased and the recommended suppliers are:
1. Terra Chem, Inc of Fellows, CA for the purchase of Aqueous Ammonia at $1.17 per gallon (Attachment A).
2. Thatcher Company of Sacramento, CA for the purchase of Ferric Chloride at $566.00 per dry ton (Attachment B).
3. Univar USA, Inc. of Kent, WA for the purchase of Sodium Bisulfite at $1.471 per gallon (Attachment C).
4. Univar USA, Inc. of Kent, WA for the purchase of Sodium Hydroxide at $0.357 per dry pound (25%), and $0.3222 per dry pound (50%) (Attachment D).
5. Univar USA, Inc. of Kent, WA for the purchase of Sodium Hypochlorite at $0.6552 per gallon (Attachment E).
6. Northstar Chemical Company of Sherwood, OR for the purchase of Citric Acid at $5.59 per gallon (Attachment F).
By this action, the City Council will authorize the City Manager to execute six (6) contracts for the purchase of water and wastewater treatment chemicals with 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 process. 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 our water and 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 42 public agencies from eight regions located throughout the Central Valley and Bay Area that coordinate their chemical bids to obtain the best possible bulk prices through competitive procurements. The BACC members pay a lump sum of approximately $500 per bid to facilitate the bidding process. Dublin San Ramon Services District (DSRSD), on behalf of the 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 to the lowest overall bidder for each chemical in each region. Participants are encouraged not to vary from the lowest overall bid, to avoid undermining the prices quoted for bulk quantities.
The MUD participated in the preparation of the bid specifications and selected 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 results in 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
Chemical costs vary from year-to-year. To obtain the best possible price, the City sought a larger venue for the chemical bids by joining the BACC. The invitation to bid was advertised by the BACC in the Bay Area Newsgroup newspaper on March 16, 2018, for each chemical. In addition, notice was sent on March 19, 2018, to all vendors registered with the City’s BidFlash of the bid release, with a link to the BACC bid site. The bids were publicly opened by DSRSD, as the coordinating agency, and read aloud to all in attendance on April 10, 2018. Results were then released to the BACC members. The bids of interest to the City are shown in the following table:
|
Chemical |
Unit |
17-18 Rate $/Unit |
18-19 Lowest Bidder |
18-19 Rate $/Unit |
Unit Price Change |
|
Aqueous Ammonia |
Gal |
$1.26 |
Terra Chem, Inc. Fellows CA |
$1.17 |
-$0.09 |
|
Ferric Chloride |
Dry Ton |
$498.00 |
Thatcher Co., Sacramento CA |
$566.00 |
+$68.00 |
|
Sodium Bisulfite |
Gal |
$1.59 |
Univar USA, Inc., Kent WA |
$1.471 |
-$0.119 |
|
Sodium Hydroxide (25%) |
Dry Lb |
$0.2894 |
Univar USA, Inc., Kent WA |
$0.357 |
+$0.0676 |
|
Sodium Hydroxide (50%) |
Dry Lb |
$0.2557 |
Univar USA, Inc., Kent WA |
$0.3222 |
+$0.0665 |
|
Sodium Hypochlorite |
Gal |
$0.482 |
Univar USA, Inc., Kent WA |
$0.6552 |
+$0.1732 |
|
Citric Acid |
Gal |
$5.50 |
Northstar Chemical Co, Sherwood OR |
$5.59 |
+$0.09 |
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 for an exception to the competitive bidding requirements in cases where 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 42 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 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 and is in the best interest of the public.
6. All six (6) of the proposed contracts are cooperative purchasing agreements authorized by the City Council 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 2018-19 budget for the procurement of each chemical for FY 2018-19 from the following accounts and as allocated in the table below:
431-4331-574 Regional Wastewater Control Facility, Chemicals
431-4332-571 Wastewater Collections, Chemicals
421-4234-571 Delta Water Supply Treatment Plant, Chemicals
|
Chemical |
Estimated Quantity (Units) |
Cost/Unit |
Wastewater Estimated FY 2018-19 Cost |
Water Estimated FY 2018-19 Cost |
Total Not to Exceed Amount |
|
Aqueous Ammonia |
30,000 Gal WW 28,000 Gal W |
$1.17 |
$35,100 |
$32,760 |
$284,000 |
|
Ferric Chloride |
400 Dry Tons |
$566.00 |
$226,400 |
-- |
$947,200 |
|
Sodium Bisulfite |
150,000 Gal WW 600 Gal W |
$1.471 |
$220,650 |
$883 |
$927,000 |
|
Sodium Hydroxide (25%) |
60,000 Dry Lb WW 12,000 Dry Lb W |
$0.357 |
$21,420 |
$4,284 |
$107,536 |
|
Sodium Hydroxide (50%) |
24,000 Dry Lb WW 115,000 Dry Lb Coll |
$0.3222 |
$7,733 WW $37,053 Coll |
-- |
$187,400 |
|
Sodium Hypochlorite (12.5%) |
575,000 Gal WW 200,000 Gal W |
$0.6552 |
$376,740 |
$131,040 |
$2,124,400 |
|
Citric Acid |
3,600 Gal |
$5.59 |
-- |
$20,124 |
$84,200 |
|
|
TOTAL |
|
$925,096 |
$189,091 |
$4,661,736 |
The quantities listed above are estimates only. The actual quantities purchased may vary depending on treatment needs and will be purchased at the contracted unit 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 increases if the contracts are extended. The not-to exceed total includes a 3% annual escalation per year to account for those potential increases.
The estimated not to exceed cost of the contracts for FY 2018-19 is $1,114,187. The FY 2018-19 Annual Budget includes appropriation for the costs in the chemicals expenditure accounts mentioned above to cover the first year of the contracts. Purchase of these chemicals will follow Council’s approval of the FY 2018-19 Annual 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. The total not to exceed cost of this contract over a period of four years (one year with three optional yearly renewals) is set at $4,661,736.
There is no impact to the General Fund, or any other unrestricted funds, from this action.
Attachment A - Contract for Aqueous Ammonia
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 Citric Acid