CITY OF HUNTINGTON BEACH
Sole-Source Justification
(For use on all goods and services acquisitions.)
This justification document consists of two (2) pages. All information must be provided and all questions must be answered. The "Required Approvals" section must include a date for each signature, as appropriate for the transaction.
Requesting Department Information
Date: August 7, 2024
Requestor Name: Vince Madrid Division Manager: Alvin Papa (Type names. Do not sign.)
Department: Public Works Department Head: Chau Vu
(Type names. Do not sign. Must be same as signature below.)) Department Contact Information
Contact Name: Chris Davis Street Address: 19001 Huntington Street Telephone: 714-374-1641
Fax: Shipping Address: 19001 Huntington Street
Cellular phone:
Required Contact Information
Contractor/Supplier Name: JCI Jones Chemicals, Inc.
Contractor/Supplier Address: 2801 Post Oak Blvd, Suite 600 Contractor/Supplier City/State/Zip: Houston, TX 77056
Original Contract Amount:* Amendment Amount:* (if applicable) New Contract Amount:* $30,000 $150,000 annually
(Includes original contract and previously (*Includes original contract and all amendments, approved amendments) (*Current amendment only) including current amendment) Provide a brief description of the acquisition, including all goods and/or services the contractor will provide:
Chlorine
Contract Type and Term
Contract Type: Contract Term: What account number will be used to purchase? Select One: Goods Begin: 7/1/2024 Business Unit: 50685803 Service
Goods & Services End: Object Code: 64305
Required Approvals
Department Head Finance Manager - Budget Chief Financial Officer Assistant City Manager I Approved • Denied M Approved • Denied M Approved • Denied Approved • Denied Signature Signature
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Signature
8/142024 8/14/2024
Date Date 5/15/24
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(Transactions exceeding $50,000
must be approved by City Council
CITY OF HUNTINGTON BEACH
Sole Source Justification
(For use on all goods and services acquisitions.)
Complete responses must be provided for all of the following items.
A. THE GOOD/SERVICE REQUESTED IS RESTRICTED TO ONE SUPPLIER FOR THE REASONS STATED BELOW:
1. Why is the acquisition restricted to this goods/services/supplier? (Explain why the acquisition cannot be competitively bid.) in the western United States, JC Jones Chemicals, Inc. (JCI) is the only known supplier of 1-ton and 150- pound chlorine gas cylinders suitable for use in public potable water distribution systems. JCI's nearest facility is in Torrance, California. The next nearest alternate chlorine supplier is Olin Corporation, whose nearest chlorine plant and distribution center is located in Freeport, Texas.
A reliable and high-quality chlorine supply is crucial to our water system, and the public health and safety of the Huntington Beach residents. In the past year, there have been supply chain disruptions due to force majeures and lack of trucking ability. The Utilities Division has qualified staff with Class B drivel licenses with HAZMAT and Tank Vehicle Endorsements. JCI's facility in Torrance allows staff some operational flexiblity to ensure that chlorine deliveries are not impacted. There is no known equal.
2. Provide the background of events leading to this acquisition.
The Utilities Division uses chlorine gas to treat water pumped from the groundwater water wells. The City has used JCI for over 15 years. Historically, the annual chlorine supply cost was less than $30,000 and was procured using non-competitive procurement in accordance with Huntington Beach Municpal Code (HBMC) Section 3.02.070 Small Procurements.
Since 2021, the price of chlorine gas has more than doubled due to raw material cost increases for chlorine and sodium hydroxide products. Due to these price increases, the planned annual procurement cost of chlorine exceeds the amount allowable for Small Procurements per the HBMC.
3. Describe the uniqueness of the acquisition (why was the good/service/supplier chosen?).
The City has used chlorine gas as the primary disinfection method since the Utility Division's creation in 1964. All of the City's wells and reservoirs are outfitted to disinfect water using chlorine gas only. There is no alternate method available.
JCI was selected because they are the only known chlorine gas supplier of 1-ton and 150 pound cylinders in our region.
FYI - In June 2022, the City of Long Beach advertised and bid for their chlorine gas supply. 104 potential vendors were notified of the opportunity. Only one (1) bid was received. The firm was JCI.
4. What are the consequences of not purchasing the goods/services or contracting with the proposed supplier?
Without chlorine gas, the City would be forced to import its water supply from the Municipal Water District of Orange County (MWDOC) and pay almost double the cost of groundwater.
The cost of imported water from MWDOC is currently $1,256 per acre-foot. The Orange County Water District (OCWD) cost to pump groundwater from the City's wells is $688 per acre-foot plus $95 per acre- foot in energy and operating costs.
2 5. What market research was conducted to substantiate no competition, including evaluation of other items As noted, there are no other known suppliers of chlorine gas for 1-ton and 150 pound cylinders in the western United States. As a result, reliabilty and timely delivery cannot be assured.
Furthermore, the additional costs of hazardous material chlorine delivery via railcar, transoceanic shipping, and other long distances would be an unnecessary premium.
B. PRICE ANALYSIS
1. How was the price offered determined to be fair and reasonable? (Explain what the basis was for comparison and include cost analyses as applicable.) There are few remaining agencies using chlorine gas for potable water disinfection. Currently, we pay $362 per 150 pound cylinder. The City of Tustin is the only other City in Orange County that uses chlorine gas. They currently pay $437 per 150 pound cylinder which is 20% more.
For 1-ton cylinders, we currently pay $1,615 per 1-ton cylinder. Tustin's system is too small to need a one-ton.
2. Describe any cost savings realized or costs avoided by acquiring the goods/services from this supplier.
The City of Huntington Beach is expected to save 20% in chlorine gas costs when compared to the only known agency in the region who uses chlorine.
If the City is force to import water because we cannot pump water from the basin, the cost is $473 more per acre-foot as noted in A4. Assuming total demand of 25,000 AF, the 85% Basin Pumping Percentage of 21,250 Acre-Feet, would result in an increased cost to the City of $10,051,250.
Remit completed form to: City of Huntington Beach - Purchasing Division 2000 Main Street, Huntington Beach, CA 92648-2702
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