Agenda Item No: K.7
AGENDA REPORT
DATE: February 4, 2025
TO: Mayor and Council
FROM: David Gassaway, City Manager
SUBJECT: Resolution 2025-24 PW Cogeneration Engine Maintenance Services Agreement
Suspending Competitive Bidding, Authorizing the Execution of a Contractor Services Agreement Between the City of Fairfield and Holt of California, and Authorizing an Update to the Fiscal Year 2024-2025 Budget for Cogeneration Engine Maintenance Services
Funding Source: $224,790; Cogeneration Fund
Contact: Peter Peirce, (707) 428-7563
RECOMMENDED ACTION
Adopt resolution.
STATEMENT OF ISSUE
The cogeneration engine in the City’s central utility plant (CUP) at the Civic Center Complex failed, resulting in damage to internal components. Staff is requesting the suspension of competitive bidding, authorization for the city manager to execute a contractor services agreement with Holt of California (Holt), and authorization for a one -time budget adjustment to increase appropriations by $224,790 in the fiscal year (FY) 2024 -2025 Cogeneration Fund operating budget to pay for the repairs.
DISCUSSION
The City owns and operates the CUP within the Civic Center Complex, which includes City Hall, Council Chambers, Police Department, Fire Station 37, Community Center, and the Adult Recreation Center buildings.
The CUP employs a highly efficient and cost-effective cogeneration system that uses a single fuel source to simultaneously generate electrical and thermal energy. This energy supplies most of the Civic Center Complex's electricity, heating, and cooling needs. Local utility companies supply energy needs in excess of what the CUP produces.
On January 2, 2025, the cogeneration engine, a critical component of the cogeneration system, had significant mechanical failures that resulted in the complete shutdown of the entire system.
The Cogeneration engin e requires immediate repairs, including a top-end engine overhaul and installation of a short block and the servicing and testing of the generator. Promptly addressing these repairs will result in significant cost savings for the City. When the CUP is inop erable, monthly utility costs can range from $53,000 during off -peak months to $125,000 during peak months. However, when the CUP is fully operational, utility costs are reduced by 50% or more.
The City participates in a cooperative purchasing agreement with Sourcewell, a government agency that conducts rigorous competitive procurement processes on behalf of other government agencies nationwide. This cooperative purchasing agreement gives the City access to thousands of prequalified vendors and service providers and Sourcewell’s national competitive pricing structure.
Sourcewell awarded Contract No. 092222-CAT to Caterpillar Inc. for products and services related to power generation equipment. The City has the opportunity to procure the necessary cogeneration engine repairs with Caterpillar Inc. through their local authorized dealer, Holt, at the competitive prices negotiated by Sourcewell.
The City’s Purchasing Policy requires that staff conduct a formal bidding process for all general contractual servi ces exceeding $100,000. However, the City adopted Ordinance No. 2019 -10 amending Chapter 28 of the Fairfield Municipal Code. Section 28.60 of the Fairfield Municipal Code provides that the council may suspend competitive bidding and procure general contractual services through the use of an alternative selection process if such procurement is in the best interests of the City.
The attached resolution authorizes the suspension of competitive bidding and authorizes the city manager to execute a contractor s ervices agreement with Holt for cogeneration engine repairs in the amount of $490,790 ($446,172 plus a 10% contingency of $44,618).
The repairs will be paid for by the Cogeneration Fund (Fund 531). As these types of mechanical failures were not anticipated during the FY 2024-2025 budget development process, repair costs were not included in the FY 2024 -2025 Cogeneration Fund operating budget. The attached resolution authorizes a one -time budget adjustment to increase appropriations in the FY 2024 - 2025 Cogeneration Fund operating budget by $224,790 for the repairs, which will be offset using the existing balance in the Cogeneration Fund.
FINANCIAL IMPACT
Total authorization for the cogeneration engine repairs is $490,790 ($446,172 plus a 10% contingency of $44,618).
Funding for the repairs was not included in the FY 2024 -2025 budget and will require a one-time budget adjustment of $224,790 to increase appropriations in the Cogeneration Fund (Fund 531), to be funded with the existing fund balance in the Cogeneration Fund.
PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
N/A
ALTERNATIVE ACTION
If the council has any questions, this request may be delayed so that staff may provide the necessary background information. This is not recommended, however, as the City’s utility costs may increase while the CUP remains inoperable.
COORDINATED WITH
Finance
STAFF CONTACT
Chris Lewis, Sr. Management Analyst
(707) 428-7089
[email protected]
ATTACHMENTS
Attachment 2: Proposed Resolution
Attachment 3: Proposed Agreement