City Council Agenda Report
Meeting Date: October 6, 2026
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Principal Management Analyst Subject
Purchasing Agreements Related to Repair Work for Malburg Generating Station 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 of the existing cooling tower at the Malburg Generating Station (MGS) and involves negligible or no expansion of an existing use; B. Approve and authorize the City Administrator to execute a Labor and Materials Contract with SPX Cooling Tech, LLC, in substantially the same form as submitted, to perform repair work on the MGS Cooling Tower, for a total amount not-to-exceed $156,700; C. Authorize a contingency amount of ten percent (10%) or $15,670 to cover any unforeseen expenses and grant authority to the City Administrator to approve and execute amendments up to the contingency amount, if necessary;
D. Approve and authorize the issuance of a Purchase Order to DLE Equipment, Inc. for the purchase of mechanical component parts for the repair work on the MGS Cooling Tower, for a total amount not-to-exceed $191,681.84; and
E. Authorize a contingency amount of ten percent (10%) or $19,168.18 in the event of unforeseen expenses and grant authority to the City Administrator to approve and execute change orders up to the contingency amount, if necessary.
Background
The Malburg Generating Station (MGS) operates a multicell cooling tower designed to dissipate low-quality heat generated during the production process. The cooling tower provides essential cooling for various plant processes that generate heat, with the primary heat load coming from the Steam Turbine Generator. After steam is produced from the exhaust heat of the Gas Turbines and used to generate energy inside the Steam Turbine, it is discharged into the Condenser. Cold water from the Cooling Tower recondenses the steam back into condensate, allowing it to be reused in the steam cycle.
The Cooling Tower, constructed in 2005 during the original development of MGS, is made of wood and fiberglass components. These materials have an expected service life of approximately 20 to 30 years and can deteriorate over time due to exposure to ultraviolet radiation, chemicals, and continuous water saturation.
MGS staff have consistently monitored the condition and performance of the Cooling Tower, evaluating its structural integrity. Routine maintenance and repairs have been conducted to ensure reliable cooling capacity. While staff have successfully maintained cooling efficiency, recent inspection reports have revealed signs of deterioration in several mechanical components within the Cooling Tower cells and in critical wooden supports, especially as the Cooling Tower approaches the later stages of its expected service life.
The necessary repairs require specialized engineering plans and material specifications. SPX Cooling Tech, LLC (SPX)/Marley serves as the Original Equipment Manufacturer (OEM) and installation contractor for the Cooling Tower equipment. As the OEM, SPX/Marley maintains the original drawings and design specifications, which are confidential and constitute the exclusive property of SPX/Marley. Therefore, Vernon Public Utilities (VPU) has engaged SPX to perform the refurbishment and address the critical structural and mechanical issues. The proposed work is necessary to maintain the reliability and operational efficiency of the Cooling Tower and to reduce the risk of equipment failure or further deterioration of critical structural components.
Completing this work will help ensure that the Cooling Tower continues to provide the required cooling capacity for MGS operations.
The proposed Labor and Materials Contract and Purchase Order are exempt from competitive bidding and competitive selection pursuant to Sections 3.32.110 (A)(2) and 3.32.110 (B)(I) of the Vernon Municipal Code (VMC). This exemption arises as the original drawings, and design specifications are proprietary to SPX/Marley. Furthermore, SPX serves as the OEM and installation contractor of the Cooling Tower. Additionally, DLE Equipment, Inc. (DLE) serves as the sole source provider of SPX/Marley, for the mechanical component parts necessary to complete the proposed work.
VPU staff recommends approving a Labor and Materials Contract and Purchase Order, along with associated contingencies, for the repair work on the Cooling Tower. A 10% contingency is included to account for unforeseen expenses. The details of the proposed Labor and Materials Contract, Purchase Order, and corresponding contingencies are as follows:
1. Labor and Materials Contract with SPX for $156,700 to repair work on the Cooling Tower; and 10% contingency or $15,670; and
2. Purchase Order with DLE for $191,681.84 to purchase mechanical component parts for the repair work on the Cooling Tower; and 10% contingency or $19,168.18.
City Council approval of the proposed Contract with SPX is required pursuant to VMC
3.32.030(B), as within the last twelve (12) months, the City has paid or awarded SPX a total of $245,792. Pursuant to VMC Section 3.32.030(A), City Council approval of the proposed Purchase Order with DLE is required as the total value of the Purchase Order requested exceeds $100,000.
The proposed Labor and Materials Contract with SPX has been reviewed and approved as to form by the City Attorney’s Office.
Strategic Plan Goals
Goal 6: Optimize Public Utility Operations to Ensure Affordable Services Fiscal Impact
The fiscal impact is not-to-exceed $383,220.02. Sufficient funds are available in the Electric Fund, Malburg Generating Station, Capital Outlay, Account No. 055-050-586-660000 for the current fiscal year.
Attachments
1. Labor and Materials Contract with SPX Cooling Tech, LLC.
2. Sole Source Letter from SPX Cooling Tech, LLC.
3. Quote from DLE Equipment Inc.
4. Sole Source Letter from DLE Equipment Inc.