HomeMy WebLinkAboutIR 7822 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7822
April 19, 1994
To the Mayor and Members of the City Council
P, f Z
X Subject: STAFF REPORT ON ALLEGED INACCURATE
IM INFORMATION RELATED TO THE SLUDGE PROJECT
On Tuesday, April 12, 1994, Eric Schweizer, the Regional Manager of PSG circulated
a memorandum to the City Council in which he alleged that "inaccurate figures" were
included in information provided by the City staff regarding the Village Creek
Treatment Plant sludge projects. The staff has endeavored throughout this process
to deal fairly and honestly with all vendors and was unaware of any concerns
regarding the financial information presented in any forum. The staff has analyzed
the examples cited in Mr. Schweizer's memorandum and offer the following
comments:
PSG Example:
PSG Class A bid (10yr/5yr)
As presented to Advisory Committee: $35,362,200
As presented to City Council: $32,660,200
Response
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The costs shown above have been extracted from Informal Report No. 7806.
At the Pre-Council presentation when IR #7806 was discussed, the staff
provided a revised page 3 which corrected the proposed cost in the PSG
proposal for alkaline stabilized sludge (10 yr. contract, 5 yr. cost projection)
from $32,660,200 to $35,362,200. The Wholesale Wastewater Advisory
Committee was provided a copy of IR #7806 including the revised page 3 at
their March 15, 1994 meeting. In other words, both the City Council and the
Advisory Committee were provided the same information. It is unfortunate
that the initial oversight occurred, but the staff promptly corrected the error
before either the City Council or the Wholesale Advisory Committee were
briefed on the Informal Report.
PSG Example:
PSG Composting bid: OFRCIAL RECORD '
As presented to Council: $41,229,575 CITY SECRETARY
Correct as shown in bid document: $39,878,575 FT. WORTH,,, 'FEX.
Response:
The $41,229,575 reported by the City represents the actual cost of the first five
years of the contract. PSG's amount represents the average cost of the two
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five-year periods of a ten year contract. Both the actual cost and the average
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7822
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1873 INFORMATION RELATED TO THE SLUDGE PROJECT
cost are correct and can be used to compare bids. The only requirement for a
valid comparison is that the same be used for each contractor. In the analysis
of the bids, the City staff consistently chose to present the actual cost of the
first five years of the contract for each of the contractor's alternatives.
Note: The actual cost of the first five years of the contract and the average cost of the
two five-year periods are different because the contract documents specify that
the City will pay the Contractor for the dewatering facility over the first 60
months, or five years. PSG did not note any exception to this requirement.
* PSG Example:
PSG negotiated Base Bid Alternative for a 5-year term and pre-negotiated
renewal term of 5 years (119.$8/ton): $23,228,261
Response•
Once again PSG has chosen to show the average cost of the two five-year
periods of a 10 year contract. The actual cost of the first five years of the
contract are different because the contract documents specify that the City will
pay the Contractor for the dewatering facility over the first 60 months or 5
years. In this alternative, the actual five year cost (less inflationary
adjustments) would be $24,579,011. There is no doubt that the other vendors
could also lower their unit-costs if the City were willing to commit to a 10 year
contract term. The staff recommended a 5 year arrangement to maintain
future flexibility on disposal options as well as to provide the opportunity to
reintroduce competition if desired. Accordingly the City staff consistently
chose to present the actual cost comparisons for the first five years of the
contract for each of the contractor's alternatives.
* PSG Example:
PSG alternative of land application plus composting (total cost of$27 million)
omitted entirely.
OFFICIAL
CITY SECRETARY
FIT. WORTH, " l-
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS- —
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7822
&°a. 1.0 April 19, 1994
Gw_-, To the Mayor and Members of the City Council Page 3 of 3
STAFF PORT O ALLEGED C subject: RE N INACCURATE
1871 INFORMATION RELATED TO THE SLUDGE PROJECT
Response:
Point # 1
The statement that PSG is offering land application and composting for$27
million is misleading. The $27 million merely represents land application
and the option of composting, no actual production of compost. In this
scenario, compost would cost the City an additional $75.86/dry ton, or a 36
percent increase in the dewatering unit cost for the 10-year contract.
Point # 2
Comparison of PSG's Class "B" land application cost (Alternative #5) to
Oscar Renda Contracting's cost:
PSG's 10-year unit cost $140.22 per dry ton for Class "B" land
application is higher than Oscar Renda Contracting's five-year unit cost
of$124.00 per dry ton.
Point # 3
Comparison of PSG's composting cost (Alternative #5) to BIO-GRO's cost:
PSG's 10-year unit cost of $216.08 ($140.22 + $75.86) per dry ton for
composting is higher than BIO-GRO's unit cost of$176.13.
For the reasons outlined above, the staff did not consider the alternative to be this
contractor's most responsive proposal for producing Class A sludge along with land
application.
In summary, the City staff has made every attempt to provide accurate and timely
information on this project and the comments submitted by PSG do not alter the
staff's original recommendation.
Bob Terrell OFFICIAL M.. g[l%aRg
City Manager
CITY' SECRETARY
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS