City Council Agenda Report
Meeting Date: October 17, 2023
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Administrative Analyst
Subject
Professional Services Agreement with Northwest Electrical Services, LLC to Perform Technical Design, Controls, Automation and Analytical Services
Recommendation
A. Find that the proposed action is categorically exempt from California Environmental Quality Act (CEQA) review, in accordance with CEQA Guidelines Section 15301, because the project consists of the maintenance, repair or minor alteration of existing facilities/equipment and involves negligible or no expansion of an existing use; B. Find that the best interests of the City are served by a direct award of an agreement with Northwest Electrical Services, LLC without a competitive selection process pursuant to Vernon Municipal Code Section 3.32.110(B)(2);
C. Approve and authorize the City Administrator to execute a Professional Services Agreement with Northwest Electrical Services LLC, in substantially the same form as submitted for a threeyear term from November 17, 2023, through November 16, 2026, in an amount not to exceed $2,719,903 to provide technical design, controls, automation, construction, and analytical services for Vernon Public Utilities Department; and
D. Authorize a contingency amount of five percent (5%), or $135,995.15, for any unforeseen changes in fees or other expenses not included in the proposal, and grant authority to the City Administrator to issue Change Orders for an amount up to the contingency amount, if necessary.
Background
Vernon Public Utilities (VPU) continually prioritizes improving its infrastructure and upgrading technology while increasing efficiencies and strengthening its service offerings with the goal of providing high-quality, reliable, and responsive service at competitive and stable rates. As part of this effort, VPU continues to work toward upgrading, streamlining, and standardizing utility services along with Supervisory Control and Data Acquisition (SCADA) systems in all facilities and equipment in the electric, water, gas, and fiber divisions. The SCADA system enables VPU to provide essential services more cost-effectively, reliably, efficiently, and safely. This is critical for troubleshooting, especially for restoring service to customers during emergencies and interruptions in service.
On November 17, 2020, the City Council approved a three-year Professional Services Agreement with Northwest Electrical Services, LLC (NW) to perform technical design, controls, automation, and analytical services. That agreement is set to expire on November 16, 2023. NW has completed numerous successful projects during that time, including the implementation of a new Water SCADA system, the implementation and commissioning of a fully automated water controls system, updated water system instrumentation and controls, the design and installation of a new water system fiber network and design and installation of a fiber ring for fully redundant network hardware at Station A and City Hall, replacement of the H. Gonzales natural gas turbine peaker engines (HG1 and HG2), and updated cyber security measures to comply with the Federal Cybersecurity & Infrastructure Security Agency - Industrial Control Systems best practices.
The proposed agreement with NW for the next three years will allow VPU to continue improving efficiency in critical areas such as Power SCADA deployment and related hardware, MGS Support, and Water and Power SCADA Maintenance. Several Water electrical projects were delayed due to supply chain issues, especially for electrical equipment. As a result, Water projects for Wells 19 and 22 and Pumping Plant 1 will be completed by late 2023 or 2024. The training and development of operations and technical staff will also continue. There is a major effort to enhance the H. Gonzales units to support black start capability, so VPU does not rely on an older diesel generator.
As reflected in the proposal from NW, the company has consistently applied its expertise to many projects as part of the three-year agreement approved by the City Council in November 2020. At that time, there was a specific project scope planned for the water fund as outlined in the Water Fund Capital Improvement Plan (CIP) as VPU began the much-needed deferred maintenance to overhaul the City’s wells to supply groundwater to customers. Unfortunately, the deteriorating condition of the water facilities and the pandemic-induced supply chain issues did not allow for the projects to be completed as planned over the three-year period. Multiple wells failed during the contract, forcing the City to rely on imported water for a short period of time. Imported water has historically cost the City over $1,250,000 annually and is approximately four times more expensive than pumping the City’s allocated groundwater allowance. Following the failure of multiple wells within a short period, the Water Fund reprioritized and accelerated projects and increased the workload for NW to return wells to operation swiftly, thus mitigating the need to import costly water.
As VPU plans to complete the remaining work on the Water Fund CIP, NW will focus on automation, controls, data collection, analysis, and upgrades to the electric transmission and distribution system. A complete overhaul of the Power SCADA System is a significant undertaking and a critical project to take VPU into the green commerce and renewable energy future. The current Power SCADA system for remote control and real-time monitoring of the electric system was implemented in 1995. Upgrading the SCADA system will support VPU operations for the foreseeable future. As NW has already begun work to replace this legacy SCADA system, it is critical that VPU retain the services of NW to continue the work and avoid delays that could result in added costs or system interruptions. The transition to a more industry standard platform will provide added flexibility for the utility on the vendors that will be able to provide support and maintenance in the future.
Throughout the many projects that NW has been involved with, NW continuously involves VPU field staff in every step of the process, conveying vast knowledge regarding the controls, operation, and maintenance of electrical and control systems, thus adding tremendous value to all VPU divisions. As a result, VPU now has some in-house capability to troubleshoot technical issues and operate systems and facilities more efficiently and economically.
NW staff possesses a diverse technical skill set covering industrial design, utility operations, capital project implementation, and preventative maintenance. They perform the necessary and highly specialized tasks at a very competitive rate, assisting VPU in controlling costs. The principal staff at NW have over 75 years of combined, direct industrial experience serving in various positions in engineering, field services, startup and commissioning, operations, and overall Electric and Water plant management. NW has extensive experience in oil and gas, power generation, transmission and distribution, and machinery automation. Furthermore, NW has been instrumental in the development, design, and implementation of the Water SCADA system.
Moreover, these specialized skills and diverse experience are critical in the utility industry and demand for this level of technical and engineering expertise is very competitive. Additionally, for almost ten (10) years, NW has been leading the overall design and implementation of key SCADA and electronic systems for VPU which has been critical for overall system reliability and the future infrastructure needed by VPU. It is important to note that these are unique skills, and these critical projects require continuity for VPU’s current and future success as well as meeting customer reliability.
The proposed agreement is exempt from competitive bidding pursuant to Vernon Municipal Code (VMC) Section 3.32.110(A)(10) and can be exempt from competitive selection pursuant to Section 3.32.110(B)(2) if a direct award is found to be in the best interests of the City. VMC Section 3.32.110(B)(3) indicates that the City Council has the authority to make such a finding when the proposed contract exceeds $100,000. The City’s best interests are served by a direct award based on NW's demonstrated expertise in fields critical to VPU and their ability to provide services in a manner that will result in significant cost savings for the City, as outlined in this staff report.
Contracting with NW provides a significant advantage in terms of efficiency and cost.
Considering VPU’s budget, staff obtained competitive rates from other contractors and determined that the rates proposed by NW provide a significant value. Furthermore, NW has proposed to charge VPU a fixed hourly labor rate applicable to overtime labor as well. Equipment purchases executed by NW will be submitted for review and authorization by City staff, with no markup on equipment compared to other consultants who charge a markup on equipment purchases. NW proposes to be on-site and available to VPU and responds to trouble calls at all times throughout the day and night and can perform technical troubleshooting at any time (e.g., late night/early morning, weekends, holidays) without additional charges.
Award of this contract is prudent for VPU to continue to maintain, streamline, and upgrade utility facilities, equipment, and processes to ensure reliability, maintain safety goals, lower operational costs, and enhance the overall efficiency of operations across all utility divisions.
The proposed agreement has been reviewed and approved as to form by the City Attorney’s Office.
Fiscal Impact
The fiscal impact is not-to-exceed $2,855,898.15 during the proposed contract term of three years. Sufficient funds are available in the VPU Electric and Water Enterprise Funds for applicable Divisions and Accounts for the current fiscal year and sufficient funds will be budgeted in subsequent years.
Attachments
1. Services Agreement with Northwest Electrical Services, LLC