200 S. Anaheim Blvd.
Suite #620
Anaheim, CA 92805
Tel: (714) 765-5110
Fax: (714) 765-5288
www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
FINANCE DEPARTMENT
DATE: APRIL 18, 2023
FROM: FINANCE DEPARTMENT
SUBJECT: AUTHORIZATION OF AGREEMENT FOR THE PURCHASE OF
SUBSTATION SWITCHGEAR EQUIPMENT
ATTACHMENT (Y/N): YES ITEM # 09
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion, waive Council Policy 4.0 and authorize an agreement with Veteran Supply Services, LLC (VSS), for the purchase of high voltage substation switchgear equipment, in the amount of $3,738,561 plus applicable tax, and authorize the Purchasing Agent to execute the agreement for the purchase and sale of equipment (Agreement) and related documents, on behalf of the City of Anaheim (City); and authorize the Public Utilities General Manager, or designee, to take any and all actions as are necessary to implement and administer the Agreement.
DISCUSSION:
Anaheim Public Utilities (APU) has an ongoing Capital Improvement Program to replace aging utility equipment, such as high voltage substation switchgear, nearing the end of their useful life to improve reliability and operational flexibility. The proposed switchgear is needed for present and future capacity to distribute electricity to residents and businesses, and will replace existing substation switchgear that is 32 years old.
Bids were solicited for the purchase of one 15kV metal clad switchgear for installation at a substation in Central Anaheim. The bid cost was to include delivery, assembly at the substation site, and field-testing before being fully energized. Bidders were asked to provide a fixed price even though the extended lead-time for production will require delivery in Q4 2024. Two bids were received, however neither bid could be awarded under the requirements of the bid offering. One bid response was excessively higher in price (over $8 million) and the other bid took exceptions to several terms and conditions of the Agreement, including the requirement that the cost be for a fixed price.
Therefore, the bids could not be accepted as submitted.
Staff reviewed the issues with both bids and reached out to the bidder, VSS, who offered a competitive price to confirm the exceptions taken to the bid. VSS acknowledged terms were inserted into their bid offer that made the bid unacceptable. VSS reviewed the items inserted into the bid response to determine whether they, and the equipment manufacturer, could accept the City terms as written, and guarantee the same fixed price they initially bid for the duration of the Agreement. After further discussion between the Authorization of Agreement for the Purchase of Substation Switchgear Equipment April 18, 2023
City and VSS, VSS representatives agreed to accept the City terms and guarantee their bid price.
Staff representing all the departments involved in the transaction met to discuss options.
Due to the extensive lead time for the acquisition of this item, the price offered by VSS in their bid was very competitive in this market, and the fact that the City has purchased similar equipment from VSS several times in the past, staff determined the best course of action was to ask Council to authorize entering into the Agreement directly with VSS under the City terms at the price offered in the rejected bid. VSS has been a successful bidder in the past and would have received the recommendation to award the recent bid had they not inserted unacceptable terms and conditions. Therefore, to avoid risking costly delays to the completion of the substation project and save the time and expense of soliciting new bids, staff recommends authorizing the Agreement with VSS.
IMPACT ON BUDGET:
Sufficient funds are budgeted in APU’s Fiscal Year 2022/23 Electric Capital Improvement Program budget from restricted Electric Utility Enterprise funds.
Respectfully submitted, Concurred by,
Barrick L. Bartlett Dukku Lee
Purchasing Agent Public Utilities General Manager
Attachment:
1. Agreement for the Purchase and Sale of Equipment