August 16, 2005

SUBJECT:     Authorization to Amend an Existing Contract for Routine Maintenance and Emergency Repairs to the Power Generation Facility Engines (F0507-04)

REPORT IN BRIEF

Approval is requested to amend an existing $50,000 contract with Peterson Power Systems of San Leandro for routine maintenance and emergency repairs to the Power Generation Facility engines for the Department of Public Works Environmental Services Division.  The requested amendment increases  authorized expenditures by $25,000 to cover expenses through August 31, 2005, the end of the current contract term, and extends the contract for an additional year in an amount not to exceed $75,000, making a total contract term of two years and a total contract amount not to exceed $150,000.

BACKGROUND

The Power Generation Facility (PGF) is an electrical power generation plant located within the Water Pollution Control Plant (WPCP). The PGF was designed in 1995, constructed in 1997 and commissioned in November 1997. The PGF is owned and operated by the City of Sunnyvale and is capable of generating 1.6 megawatts of electricity. The facility is equipped with two Caterpillar Model 3516 Engine Generator Sets (800kW each) with Caterpillar Brushless SR4 Generators.

The engines are designed to burn lean fuels, including landfill gas, digester gas and air-blended natural gas (ABNG) or any combination of those gases. Currently, about 90% of the fuel demands are met by the use of landfill and digester gas, with the balance being made up with ABNG. The PGF facility presently generates enough power to meet all of the needs of the Water Pollution Control Plant, and a small amount of power is exported back to the California power grid. In addition, heat generated by the engines is recovered and used in other plant processes.

DISCUSSION

In order to efficiently burn the blended gas fuel and optimize electrical output, the Caterpillar engines must be tested and maintained on a regular basis. Routine maintenance is recommended by the factory for every 1,000 hours of operation. Currently, the City pays $1,580, plus parts, for the 1,000-hour maintenance, and each engine averages at least one service call per month.

To provide a mechanism for WPCP staff to efficiently schedule maintenance and testing visits and address minor emergency repairs, Blanket Purchase Order No. 27304-B was established in August 2004 with Peterson Power Systems (the only factory authorized Caterpillar dealer in the Bay Area) under the City Manager’s contract award authority of $50,000. A series of unanticipated emergency repairs, including the replacement of the No. 12 cylinder on Engine No. 1 at a cost of $22,383, will drive the cost of maintaining the Caterpillar engines above $50,000.  Staff estimates that additional expenditures up to $25,000 will be required before the Blanket Purchase Order expires on August 31, 2005, thereby requiring Council action.  This includes approximately $8,000 in outstanding invoices and another $17,000 for engine testing and routine maintenance services scheduled for the end of August 2005.  Staff also recommends extending the existing Blanket Purchase Order for an additional one-year period in an amount not to exceed $75,000.

Section 2.08.070(b) of the Sunnyvale Municipal Code exempts from competitive bidding “situations where solicitations of bids would for any reason be impractical, unavailing or impossible”.  In this case, Peterson Power Systems is the only local authorized dealer and the only source for Caterpillar factory remanufactured parts which significantly lower the City’s costs to maintain  and repair the two PGF Caterpillar engines.

FISCAL IMPACT

Total costs to the City for the two-year contract are as follows:

          Originally anticipated cost – Blanket Purchase               

          Order No. 27304-B, not to exceed                                         $  50,000

Requested increase through August 31, 2005,

not to exceed                                                                    $  25,000

Requested one-year extension through August 31, 2006,

not to exceed                                                                    $  75,000

Total Contract Amount, not to exceed                                     $150,000                                

Funds are available in various operating accounts in the Department of Public Works Environmental Services Division.

RECOMMENDATION

It is recommended that Council amend an existing contract with Peterson Power Systems by:

• Increasing the total authorized expenditures by $25,000 through August 31, 2005; and
• Extending the existing contract for a one-year period in an additional amount not to exceed $75,000, making a total contract amount not to exceed $150,000.

Prepared by:

Elaine Wesely

Purchasing Officer

Reviewed by:

Mary J. Bradley,

Director, Finance

Reviewed by:

Marvin Rose

Director, Public Works

Approved by:


Amy Chan

City Manager

Attachments

1. Blanket Purchase Order No. 27304-B (.pdf format)

2. Draft Change Order (.pdf format)