City Council Agenda Report
Meeting Date: June 17, 2025
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Senior Management Analyst
Subject
Services Agreement with Hill Brothers Chemical Company
Recommendation
A. Approve and authorize the City Administrator to execute a Services Agreement with Hill Brothers Chemical Company, in substantially the same form as submitted, for the supply of 19% aqueous ammonia for a total amount not to exceed $179,010 for a three-year term; and B. Authorize a contingency amount of ten percent (10%) or $17,901 in the event of unforeseen expenses, including price volatility, and grant authority to the City Administrator to approve and execute amendments up to the contingency amount, if necessary.
Background
Ammonia plays an essential role in the functioning of the Malburg Generating Station (MGS), by eliminating nitrogen oxides (NOx) that are produced as a byproduct during combustion. NOx significantly contributes to the formation of ground-level ozone, which can lead to respiratory issues, global warming, and other environmental issues. Therefore, ammonia is critical for maintaining regulatory compliance for MGS.
Following a competitive bidding process, on June 21, 2022, the City Council approved a threeyear Services Agreement with Hill Brothers for the supply of 19% aqueous ammonia. The current agreement is set to expire on June 30, 2025. With the contract expiration date approaching, on or about April 17, 2025, staff issued a Request for Bids (RFB) to solicit bids for the purchase of 19% aqueous ammonia, as required per Vernon Municipal Code (VMC) Section 3.32.070. The RFB was advertised on the City’s Planet Bids platform. Bids were received from two firms by the May 7, 2025 deadline.
The bid results are as follows:
1. KAAM Group - $181,496.25
2. Hill Brothers Chemical Company - $179,010
Hill Brothers was deemed the lowest responsive and responsible bidder for supplying the required aqueous ammonia. Accordingly, staff recommends that the City Council approve a Services Agreement with Hill Brothers for the supply of 19% aqueous ammonia for a total amount not-to-exceed $179,010, which includes estimated sales taxes of $17,010. Additionally, staff recommends a contingency amount of ten percent (10%) or $17,901 in the event of unforeseen expenses, including price volatility, for a combined total not-to-exceed of $196,911.
VMC Section 3.32.220(C) allows rate increases during the term of the contract as long as increases are tied to an appropriate index. Aqueous Ammonia is a price-volatile commodity, as natural gas, the primary input for ammonia production, experiences frequent price fluctuations.
Due to the volatility that ammonia producers and suppliers experience, the published RFB included a provision to allow for price adjustments based on the most appropriate publicly available index. Pursuant to VMC Section 3.32.030(A), City Council approval is required for the proposed agreement, as the total value of the contract exceeds $100,000.
The proposed Services Agreement has been reviewed and approved as to form by the City Attorney’s Office.
Fiscal Impact
The fiscal impact is not-to-exceed $196,911. Sufficient funds are available in Electric Fund budget, Malburg Generating Station, Chemicals, Account No. 055-050-586-520235 for FY 2025- 26, and will be budgeted in subsequent years.
Attachments
1. Services Agreement with Hill Brothers Chemical Company