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HomeMy WebLinkAboutIR 7785 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7785 To the Mayor and Members of the City Council December 21 , 1993 Subject: AWARD OF SLUDGE DEWATERING AND LAND APPLICATION CONTRACT Sludge or biosolids produced at the Village Creek Wastewater Treatment Plant were originally disposed in lagoons at the plant site . In 1969 sludge drying beds were constructed to dewater the sludge and the City began a cooperative program with the Texas Department of Highways and Transportation to utilize highway rights of way for disposal . In the late 1970 ' s and early 1980 ' s , citizen complaints concerning odors emanating from the plant and sludge drying beds and other considerations caused the City to plan a sludge only landfill and an onsite mechanical sludge dewatering facility at that site . Construction of the sludge-only landfill was completed in 1989 . Ever changing economic conditions , environmental regulations , as well as unprecedented rainfall prompted a review of the sludge handling plan in 1991 which led to a short term contract for the privatized operation of dewatering facilities and benefical use of the biosolids on farm and ranch lands with Oscar Renda Construction Contracting, Inc . (ORC) Inasmuch as no similar arrangement of comparable size existed in Texas , this contract approach was somewhat innovative . Factors such as land permitting delays , community acceptance , landowner interest , etc . were not fully known to the City. A "privatized" contract approach was selected . Success of the program led to City Council approval of a contract extension in June , 1992 for the continued operation of the dewatering facilities and beneficial use of biosolids on agricultural land. This contract was subsequently extended in June , 1993 for three months to continue the operation until bids could be received and another contract awarded. While the privatization contract for biosolids handling had been highly successful , the City staff believed that a reintroduction of competition would lower the prices being paid. The original 1991 contract with ORC included a bid price of $403/ton for non-pathogen reduced sludge . Subsequent change order extensions lowered the unit price for similar sludge to $210/ton. In total , more than $17 million has been paid to ORC under the initial contract and extensions . In August , 1993 , Alan Plummer and Associates completed contract documents for a five-year dewatering and disposal contract similar to the original contract . The contract was similar except that the dewatering facilities would be located at the sludge-only landfill , the contractor would be required to process 100% of the biosolids , not 50% of the production, and that the constructed facilities would be transferred to City ownership at the end of the contract term (5 years minimum to 10 years maximum) . Concurrently , contract documents were prepared for a "bridging" or interim arrangement to permit continued sludge processing upon expiration of the original contract about October 1 , 1993 and before the long term contract facilities could be constructed and placed into operation . - I.— ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS INFORMAL REPORT TO CRY COUNCIL MEMBERS No. 7785 T,E—% December 21 ,. 1993 To the Mayor and Members of the City Council Page 2 of 6 XIXA Subject: AWARD OF SLUDGE DEWATERING AND LAND TM APPLICATION CONTRACT During the development of the concept and details of the long-term sludge contract , several meetings were conducted with prospective interested bidders to identify opportunities and to solicit opinions . A prequalif Ication process for bidders was required to inform the staff and Engineer of prior experience on similar projects as well as financial capability. A panel of national experts was brought in to review the contract documents , specifications and prequalification requirements . On September 30 , 1993 bids were received concurrently on both the interim (nine month) contract as well as the long-term (five year) contract . The low responsive bidder on the interim project was Oscar Renda Contracting with a unit price of $160/ton of processed sludge . This contract was awarded by the City Council on October 12 , 1993 (M&C C-14042) . Since bids were received in late September , the staff has been working with the Texas Natural Resource Conservation Commission to resolve any regulatory permit or plan review issues which could complicate the long- term contract arrangement . In addition, the project Engineer and City staff have been carefully evaluating references for the apparent low responsible bidder , the Professional Services Group, Inc . (PSG) of Houston, Texas . On December 8 , 1993 the Commission granted the City a permit amendment for the sludge processing operation despite a protest filed by the City of Arlington. Also on December 2 , 1993 the Commission staff approved the contract documents , and specifications and plans for the construction of dewatering facilities . ff Shown below is a tabulation of the bids received on September 30 , 1993 for the long-term project : DESCRIPTION BIDDER Professional Service Oscar BioGro BFI Group Renda Total Base Bid $ 26 .42 $ 30 .44 $ 33 .49 $ 59 . 10 — (million dollars) Unit Price $129 . 95 $152 .00 $168 . 70 $309 .00 $/Ton ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7785 December 21 , 1993 To the Mayor and Members of the City Council Page 3 of 6 Subject: AWARD OF SLUDGE DEWATERING AND LAND APPLICATION CONTRACT Due to the complexity of the project (build, own operate , transfer) as well as economic attractiveness of the venture , some of the bidders have raised questions about the process , clarity of the bid documents , and qualifications of other bidders . The staff has diligently investigated the allegations to ensure that the competitive process was fair and open, the documents were clear as to intent , and that there are no other factors which should disqualify a recommended bidder. Some of the concerns and allegations are itemized below: Issue The contract documents were vague and unclear and therefore it is impossible to fairly compare bids . Response Alan Plummer and Associates , its subconsultants , and the staff have reviewed the bidding documents and find no basis to reject the bids due to vagueness . Some of the reasoning for this conclusion includes the fact that all bidders had opportunity to provide input into the basis upon which the documents were developed . Some bidders requested that the document provide flexibility . The Engineer and City staff made a deliberate effort to avoid unnecessary and restrictive contract requirements that could result in higher costs .In addition some of the allegedly "vague" requirements were also found in the 1991 initial project and 1993 interim project documents and no concerns were raised by bidders . The staff also believes that the prices bid are reasonably close for the three lowest bidders . The attractive prices , as reflected by comments of officials in other cities , in the opinion of staff reflects clarity of the scope of work. Issue The prequalification submittal did not require submitters to list any uncompleted work or pending lawsuits . Response The prequal if i cation document was intended to provide information to the City to evaluate comparable experience and fianancial strength. Reference checks have been utilized to evaluate contract performance on other contracts . Direct contact with other cities was considered to be the most direct means to verify contract compliance concerns . ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7785 December 21 , 1993 To the Mayor and Members of the City Council Page 4 of 6 Subject: AWARD OF SLUDGE DEWATERING AND LAND APPLICATION CONTRACT Issue The City should pursue the alternative disposal option for Class A sludge because of changing regulatory climate . Response Only one bidder submitted a price for the Class A alternative . BioGro bid $53 , 714, 750 .00 to process the sludge to a higher level of treatment . The Class A alternative was included in the bidding documents because the staff believed that the incrementally higher treatment costs may be offset by lower costs for regulatory monitoring and more accessible disposal sites . Some Council members likewise expressed an interest in evaluating this option . Inasmuch as the base bid item for beneficial use of sludge is being actively promoted by the EPA as an environmentally attractive option to landfilling and since it has been so successful to date , the higher prices do not appear to warrant pursuit of the Class A alternative . Issue It is alleged that one bidder , falsified its prequalification submittal by failing to report a South African Business connection by its parent company. Response The bidder in question , PSG, is a wholly-owned subsidiary of Anjou International, Inc . , an American company. Anjou is a wholly-owned subsidiary of Compagnie General de Eaux (CGE) , a publicly traded French company. CGE is a large company with 2 ,200 independent subsidiaries throughout the world. This allegation was thoroughly investigated by the New Orleans Sewerage and Water Board ' s independent counsel in 1991 who concluded that the alleged relationship with PSG and a joint venture was too tenuous to be in violation of their anti-apartheid statute . PSG further has certified that the parent company has no known South African connections at this time . The City Council on December 14, 1993 lifted the City's South African policy. ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7785 M-%do— December 21 , 1993 To the Mayor and Members of the City Council Page 5 of 6 0 NX Subject: AWARD OF SLUDGE DEWATERING AND LAND Im APPLICATION CONTRACT Issue The issuance of Addendum 412 and Addendum #3 to the bid documents required the bidders to assume additional risks due to possible changes in permits and regulations prior to the award of the contract . Response The permitting process with the State took longer than anticipated. The two referenced addendums did indeed require the bidders to evaluate the risk of regulatory changes during the time before contract award . In the final amended permit approved by the State , however , no additional requirements were placed on the bidders. The City staff working with Alan Plummer and Associates has diligently pursued the competitive bidding of biosolids dewatering and land application as outlined in the March 1993 briefing to the City Council . The objective of this project was to implement a long term contractural relationship with a private contractor and to lower the cost of the sludge operations . The use of the competitive bidding process has resulted in a significant opportunity to achieve cost reductions . As you will recall , an anticipated disadvantage of this approach was bidding disputes and protests and, accordingly, the City Council agreed to prohibit communication involvement between bidders, and the Council prior to the award of a contract . The bid documents anticipated that 90 days should be allowed by bidders for the City to make a decision . The 90 day period that bidders agreed to honor bids expires on December 28 , 1993. Bidders have been requested in writing to extend until January 31 , 1994 the bids submitted on this project . The City Council has several options to proceed on this project including: 1 . Award the contract to the low bidder, Professional Services Group (PSG) 2 . Reject all bids and negotiate with one or all bidders . 3 . Accept the Alternate Class A bid of BioGro . 4 . Reject all bids and rebid the project . OOW ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 77AS December 21 , 1993 ,,,,r;d& > To the Mayor and Members of the City Council Page 6 of 6 xa Subject; AWARD OF SLUDGE DEWATERING AND LAND yen APPLICATION CONTRACT The City staff requested that the Engineer review the bid documents and bid protests and recommend award of contract . APAI recommended award of contract to PSG, the low bidder . The staff anticipates a formal recommendation for action by the City Council on the January 4 , 1994 agenda based on further review of the consultants recommendation and the other potential options which may be in the best interest of the City. There is a significant cost savings associated with a long-term contracted arrangement and Qn toward this objective should be taken as soon as possi0 e. 1 Bob Terrell City Manager OPOI ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS