City Council Agenda Report
Meeting Date: January 20, 2026
From: Brian Saeki, City Administrator
Department: City Administration
Submitted by: Lilia Hernandez, Assistant to the City Administrator Subject
Ratification of Contingency Funds for First Global Gear Services, LLC Recommendation
Ratify use of $4,511.95 in contingency funds for Purchase Order with First Global Gear Services, LLC to cover increased costs due to tariffs on the purchase of gearbox bearings for the Malburg Generating Station.
Background
On May 6, 2025, the City Council approved several purchases related to the planned Fall 2025 Malburg Generating Station outage. The approvals included a $535,861.68 Purchase Order (PO) with Siemens Energy, Inc. (Siemens) for the purchase of steam turbine generator parts and a related 15% contingency of $80,379.25; and a $116,708.42 PO with First Global Gear Services LLC (FGGS) for the purchase of gearbox bearings and a related 15% contingency of $17,506.26.
The City Administrator was granted the authority to issue change orders up to the respective contingency amounts.
In November 2025, FGGS notified staff of additional shipping costs for the gearbox bearing purchase amounting to $22,018.21. The additional cost was mainly due to an unanticipated new 15% duty tax and an additional 50% steel tax. Considering the Council approved contingency amount of $17,506.26 for the PO with FGGS, there was a shortfall of $4,511.95. This posed a challenge, as the gearbox bearings were being shipped from France and FGGS required full payment prior to shipping.
To avoid delays, staff requested to utilize a portion of the $80,379.25 contingency funds previously allocated and approved by the City Council for the Siemens PO to cover the remaining $4,511.95 needed for the FGGS PO. Given the urgency as the outage neared, and recognizing the difference was minimal, the Finance Department and City Administrator agreed with staff’s recommendation. Accordingly, on November 25, 2025, the City Administrator approved the request to utilize $4,511.95 of the contingency funds approved for the Siemens PO to cover the full $22,018.21 invoice from FGGS. The utilization of additional contingency funds for FGGS is being submitted for ratification by the City Council, as the May 6, 2025 approval was only for $17,506.26.
Fiscal Impact
The fiscal impact of the contingency funds used totaled $22,018.21 ($17,506.26 + $4,511.95).
Sufficient funds are available in the Electric Fund, Malburg Generating Station, Steam Turbine, Account No. 055-050-586-529006 for the current fiscal year.
Attachments
1. FGGS Invoice No. FGGI142-4-2