November 29, 2005

SUBJECT:      Award of a Contract to Overhaul Power Generation Facility Caterpillar Engine No. 1 (F0511-31)

REPORT IN BRIEF

Approval is requested for the award of a contract to Peterson Power Systems of San Leandro to perform a top-end overhaul of the Power Generation Facility Caterpillar Engine No. 1 for the Department of Public Works Environmental Services Division.

BACKGROUND

The Power Generation Facility (PGF) is an electrical generation power 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 has the capacity to generate 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 maintained on a regular basis. The factory- recommended rebuild is at 10,000 hours of operation.  Engine No. 1 currently is at 13,300 hours; and Engine No. 2 was rebuilt at 12,000 hours in July 2005 (RTC #05-212).  The Caterpillar PM-4 (Top End Overhaul) Service Package includes: replacing valve rotators, cooling system thermostats, oil system thermostats, gaskets and seals with new units; replacing sixteen cylinder heads, turbo cartridges, auxiliary water pump and fresh water pump with factory- remanufactured units; rebuilding to factory specifications the exhaust waste gate, carburetors and gas regulator; cleaning and testing the aftercooler (as needed); megometer testing of generator windings; and on-site cleaning of dust/debris from the generator windings.

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 of San Leandro is the only authorized Caterpillar dealer in the Bay Area and, as such, is the only local source for the remanufactured Caterpillar parts used in the PM-4 overhaul.

FISCAL IMPACT

Service costs are as follows:

Core charges are essentially “deposits” on the parts replaced with factory remanufactured parts. If the cylinder heads and pumps turned in by the City can be refurbished by the factory and used in other rebuilds, there is no cost; if the parts are non-rebuildable, the City is subject to core charges. It is anticipated by WPCP staff that all City parts are reusable and that no core charges will apply.  Therefore, the total cost of $82,753 is a “worst case” scenario.  If no core charges apply, total cost to the City (with contingency) will be $57,203.  However, there is no way to actually determine the condition of Engine No. 1 until it is disassembled.

Funds for this project are available in the Department of Public Works Wastewater Management Program.

RECOMMENDATION

It is recommended that Council award a contract, in substantially the same form as the attached draft Purchase Order and in an amount not to exceed $82,753, to Peterson Power Systems for the overhaul of Power Generation Facility Caterpillar Engine No. 1.

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

Attachment

Draft Purchase Order(pdf)