June 7, 2022, Item #11
DATE:
TO:
FROM:
CONTACT:
SUBJECT:
Summary:
AGENDA REPORT CityofPoway
June 7, 2022
Honorable Mayor and Members of the City Council
Eric Heidemann, Director of Public Works (~
Jessica Parks, Utilities Administrator, Public Works ~
(858) 668-4703 or [email protected] W r
CITY COUNCIL
Approval of a First Amendment to the Contract for the Sale and Purchase of Goods and Materials with Univar Solutions USA Inc. for the Purchase of Water Treatment Plant Chemicals; RFB No. 21-023
The City of Poway (City) owns and operates the Lester J. Berglund Water Treatment Plant, where raw water is treated and disinfected utilizing various chemicals in accordance with standards set forth by state and federal regulations and the American Water Works Association. On May 4, 2021, the City Council awarded a two-year contract to Univar Solutions USA Inc. (Univar), in the amount of $176,646 for the purchase of required chemicals. Since awarding the contract, Univar sent a notice about product shortages and cost increases beyond the contracted amounts. Staff recommends approval of the attached amendment to address the cost increases for chemical purchases. The requested amendment will increase the contract's not-to-exceed amount to $350,000.
Recommended Action:
It is recommended the City Council approve the first amendment to the contract for the sale and purchase of goods and materials to Univar Solutions USA Inc. and authorize the City Manager to execute the necessary documents.
Discussion:
On May 4, 2021, the City Council awarded a two-year contract to Univar for the purchase of aluminum sulfate and caustic soda at $375 per ton and $444 per ton, respectively. On March 17, 2022, Univar notified the City of cost increases for both chemicals beyond the contracted amounts. Staff met with Univar and discussed the causes for the increases, as well as the steps Univar was taking to contain and minimize the cost increases for chemicals. Due to supply constraints, inflationary operations costs, and inflationary transportation costs, the price for the chemicals has nearly doubled from last year. Staff contacted two other vendors for quotes, but the issues Univar is facing are nationwide, and staff could not obtain lower prices than what Univar presented. Beginning July 1, 2022, the 1 of 8
June 7, 2022, Item #11
proposed increases in price for aluminum sulfate and caustic soda are $600 per ton and $874 per ton, respectively.
At the March 1, 2022, City Council meeting, staff presented and the City Council approved a similar request for increased costs with other chemical vendors. While staff works to keep costs as low as possible, inflation and supply constraints are mutual issues among chemical vendors. These chemicals, while themselves are hazardous, are industry standard for use at water treatment facilities and are safely stored and used in compliance with state and federal regulations.
The treatment of the City's water is essential, and to avoid any lapse in the delivery of chemicals, staff requests approval of the amendment with Univar. As has occurred with our other chemical vendors, staff anticipates additional increases in the cost of aluminum sulfate and caustic soda and recommends an increase to the Univar contract from a not-to-exceed amount of $176,646 to a not to-exceed amount of $350,000.
Environmental Review:
This action is not subject to review under the California Environmental Quality Act (CEQA).
Fiscal Impact:
Sufficient funds have been programmed in the Water Supply, Treatment and Storage Division (402060-45200) for the Fiscal Year 2022-23 budget to be considered by City Council. The amendment with Univar Solutions USA Inc. will be executed upon adoption of the proposed budget.
Public Notification:
None.
Attachments:
A. Letter from Univar Solutions USA Inc.
B. First Amendment
Reviewed/ Approved By:
;1kuJ ~
Wendil<.aserman
Assistant City Manager
2 of8
Reviewed By:
Alan Fenstermacher
City Attorney City Manager
June 7, 2022, Item #11
Univar Solutions USA Inc.
8201 S. 212th
Kent, WA 98032-1994
USA
T 253-872-5000
F 253-572-5041
www.univarusa.com
March 25, 2022
City of Poway
14467 Lake Poway Rd.
City of Poway, CA 92064
UnivarSolutions
RE: Renewal pricing for Aluminum Sulfate and Caustic Soda 50% Dear Jessica,
Please see the attached IHS report and letter from our supplier indicating an increase larger than the CPI allowed by the contract. Caustic Soda price increase starting on July 1st, 2022, the proposed increase in price is $430.00 per ton, to a price of $874 per ton. Aluminum Sulfate price increase starting on July 1st, 2022, the proposed increase in price is $225.00 per ton, to a price of $600 per ton.
The increases are based on the substantial increase in costs seen across the entire chemical industry combined with the increased cost of operations & transportation. Univar Solutions is not able to absorb the full impact of these increases without detriment to our long-term business & sustainability. Therefore, we too must increase the cost across our product portfolio. We remain committed to mitigating these impacts, ensuring we can reliably supply our commitments, and meeting our customers' expectations during these turbulent times in the market.
The City of Poway is an important customer to Univar, and we have a good working relationship with an excellent service record.
For Caustic Soda please see the attached IHS and Argus index reports for Sodium Hydroxide 50%, this report shows the price increase in the market. The Caustic Soda prices for the United States West Coast are driven by North East Asian export prices, which generally are lower than Domestic US contract & export values. Simply put, the West Coast goes as the global market goes.
For Aluminum Sulfate I have attached the letters from our suppliers. Sulfuric Acid, which largely drives the cost of Alum. Aluminum pricing (like most metals) has increased ~40% in the last year. Unfortunately, Alum is subject to the largest cost and price increases, since 2008.
ATTACHMENT A
3 of 8
June 7, 2022, Item #11
~
0 ....
00 FOB Northeast Asia ($/dst) FOB Northeast Asia ($/dst) -ln ~ ~ ......... ~
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 8 8 8 8 8 8 8 8 8 § § g g
~ 8 8 8 8 8 8 8 8 8 8 8 8 g 8 8 g 8 8 8 8 8 8 8 8
2017-05 · 2000 -01 +--------t-r--+---+----+
2017 -07 2000 -09
2017 -09 )> 2001 -05
~ ~ 2017 ll ~ 2002 -01 V,
v, 2002 -09 Z 2018
•
01 Z 2003-0.5 0
2018 -03 Q 2004-01 ~
" ::T 2018 0.5 ::T 2004 -09 ti)
m ~ 2018 -07 QJ 200505 <I'
V, "
I 2018 -09 " I 2006 -01 ?
J> 2018 -11 ? .. 2006 -09 -·
~ -· z ~
~ QJ ~ 2007 -05 v,
i 2019-01 V, ~ 200801 "C
~ 2019 03 "C ~ "'-"1---+---1- 0
rn . 0 l> 200 R 09 ..,"'
~ 2019 -05 ... " ~ 2009 ·05 L--4----t---1--- )>.
~ l> &;··· · <
~ 201907 < .,, 2010 ·01 ti)
~ m- . ~
2019 -09 cl 201009 ~
2019-11 ~ J> - 2011 -05 n>
J> ~ ~ 3i 2012 -01 ~
~ 2020 -01 ::s § 2012 -09 ~
~ 2020 -03 ~ ~ 2013 -05 C:
v, C: S' I v,
~ 202005 V, ~ 2014 ·01 I :e
g 2020 -01 :E :::. 2014 -09 n
q n t
~ 2020 -09 n ~ 2015 -05 g
era 202 0- 11 g - 2016 -01 ;a_
2021-01 ~ 2016 ··09 cl
QJ 2017 -0.5 ~-,..---.1,_ ~
2021 -03 .fl 2018 -01 -----r l>
2021 -05 )> 2018 ·09 < < n> 2021 -07 ~ 2019-05 cl
2021-09 --r--4----L ~ 2020 -01 ~
2021 -11 l m 2020 -09
2021-05
2022'01 7 _ i- -+
0 ~ N W ~ ~ ffi ~ 00 ~ ~ ~ ~ ~
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ g 8 8 8 8 8 8 8 8 8 8 b ~ ~ 8 8 8 8 8 8 8 8 8 0 0 0 0 0 0 0 0 0 0 9 9 9 9 8 0 0 0 0 0 0 0 0 0 8 8 8 8
Ex-Tank US West Coast ($/dst) Ex-Tank US West Coast ($/dst) June 7, 2022, Item #11
CHEMICAL
QUANTITY
RENEWAL
UNIT
MIN.ORDER
COMMENTS
PRICE
REQUIREMENT?
16140382
Sodium
Per
Original
$874.00
Per
DST
Full
trucks
Price
increase
Hydroxide/Caustic
agreement
Delivered
due
to
market,
Soda
50%
see
attached
NSF
grade
market
info.
16141804
Aluminum
Per
Original
$600.00
Per
DST
Full
trucks
Price
increase
Sulfate
48%
NSF
grade
agreement
Delivered
due
to
market,
see
attached
market
info.
Univar
will
hold
this
pricing
firm
for
the
renewal
term
of
July
1,
2022-June
30,
2023;
this
is
the
1st
of
3 renewals
of
the
contract.
All
other
information
presented
with/within
the
original
bid/offer,
including
the
agreed
upon
terms
, conditions
etc.
remain
the
same.
Thank
you
for
the
opportunity
to
extend
the
current
contract
and
to
continue
to
supply
County
City
of
Poway.
We
very
much
appreciate
it.
Sincerely, J<X!/Ser~ Vice
President
-
Bulk
Chemical
Distribution
North
America
Univar
Solutions
USA
Inc.
P-
(3
31)
777-6092
C -
(215)
990-4406
joe.serna@univarsolutions
.com
[email protected] muniteam-west@univarsol utions
.com
www.univar.com Please
Note:
Seller
shall
indemnify
Buyer
for
losses
to
the
extent
caused
by
Seller's
negligence
or
breach
of
contract.
Neither
party
is
liable
for
incidental
or
consequential
damages
.
Seller's
liability
is
limited
to
the
purchase
price
of
the
goods.
SELLER
MAKES
NO
WARRANTY
OF
MERCHANTABILITY
OR
FITNESS
FOR
A
PARTICULAR
PURPOSE. Please
Note:
Where
applicable,
any
State,
Federal
or
other
appropriate
taxes
and/or
the
California
Mill
Assessment
will
appear
as
separate
line
items
on
any
invoices
from
Univar.
If
Univar's
offer
(pricing)
was
inclusive
of
these
charges
-
they
will
be
backed
out
of
the
"product"
line
item
and
shown
as
their
own
line
item(s)
at
the
time
of
billing
Please
Note:
Cooperative
Purchasing/Contract
Piggy-Back
Clauses:
Unless
otherwise
checked
"yes"
within
the
attached
offer,
it
is
Univar's
standard
policy
NOT
to
agree
to/participate
in
Cooperative
Purchasing
but
rather to
work
with
each
individual
agency
and
reach
a
pricing
agreement
that
is
based
on
their
needs
and
is
advantageous
for
both
parties
.
Unless
otherwise
noted
within
the
attached
offer-
pricing
within
is
only
applicable
for
the
locations
(and
any
potential
locations)
listed
within
these
bid
documents.
5 of8
June 7, 2022, Item #11
FIRST AMENDMENT TO CONTRACT
FOR THE SALE AND PURCHASE OF GOODS AND
MATERIALS
THIS FIRST AMENDMENT TO CONTRACT, is made and entered into effective this 1st day of July, 2022, by and between the CITY OF POWAY, a municipal corporation (hereinafter referred to as "CITY"), and UNIVAR SOLUTIONS USA INC., a New York state corporation, (hereinafter referred to as "SELLER").
RECITALS
1. CITY and SELLER entered into that certain "CONTRACT FOR THE SALE AND PURCHASE OF GOODS AND MATERIALS," dated July 1, 2021, (the "CONTRACT"), by which CITY and SELLER established the terms and conditions for providing goods and services to CITY.
2. The CONTRACT has a term of two (2) years, and further provides, inter alia, that the CONTRACT may be extended for three (3) additional one (1) year terms upon approval of the CITY's City Manager.
3. On March 17, 2022, SELLER notified the CITY that its cost for goods subject to this CONTRACT have increased since the submittal of their bid, outside of SELLER'S control.
4. Now the CITY and SELLER agree to increase the CONTRACT from a not- to-exceed limit of $176,646 to a not-to-exceed limit of $350,000.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
SECTION 1. Item 3 entitled "Price" of the CONTRACT is amended to read as follows:
3. Price.
Seller agrees to invoice the goods and services, as it may apply, sold at the prices identified in Bid Schedule, attached hereto as Exhibit 8, for the period commencing July 1, 2022, and ending June 30, 2023. Total fee is not to exceed $350,000. Each renewal period is subject to a cost increase based on the annual change in the previous calendar year's Consumer Price Index for the San Diego-Carlsbad area (All Urban Consumers CPI-U) or 3.5%, whichever is less. Price to include any State or Federal fees, e.g., CA Mill assessment fee.
SECTION 2. Except as otherwise amended by this FIRST AMENDMENT, all other terms and conditions of the CONTRACT shall remain in full force and effect. 6 of 8 ATTACHMENT B
June 7, 2022, Item #11
IN
WITNESS
WHEREOF,
the
parties
hereto
have
caused
this
FIRST
AMENDMENT
to
be
executed
on
the
date
first
above
written.
CITY
OF
POWAY
By:----------
Chris
Hazeltine,
City
Manager
ATTEST: Carrie
Gallagher,
CMC,
City
Clerk
APPROVED
AS
TO
FORM:
Alan
Fenstermacher,
City
Attorney
7 of8
UNIVAR
SOLUTIONS
USA
INC.
By:-----------
Shawnasey
McCarthy,
Municipal
Commercial
Manager
June 7, 2022, Item #11
EXHIBIT
B
BID
SCHEDULE
ANNUAL
SUPPLY
OF
CHEMICALS
FOR
THE
LESTER
J.
BERGLUND
WATER
TREATMENT
PLANT
Prices
for
Period
of
July
1,
2022
-June
30,
2023
CHEMICAL
UNIT
QUANTITY
UNIT
PRICE
DESCRIPTION
Aluminum
Sulfate
TON
194
$600.00
8.0%
Al2O3
Caustic
Soda
TON
234
$874.00
50%
Sodium
Hydroxide
8 of
8 TOTAL
$116,400.00 $204,516.00