The URL can be used to link to this page

Home My WebLink About16 Dispense Bidding and Negotiate Directly w Vendors Electric Materials TRUCKEE DONNE - AGENDA ITEM # 16 Public • MEETING DATE: December 7, 2022 TO: Board of Directors FROM: Joe Horvath P.E., Electric Utility Director/Assistant GM SUBJECT: Consideration to Dispense with Competitive Bidding and Negotiate Directly with Suppliers for the FY23 Procurement of Pad Mount Switchgear, Current Limiting Fuses, and Transformer Schedule B5 and B6 Units APPROVED BY ` _... Brian C. Wright, General Manager RECOMMENDATION: a) Adopt Resolution 2022-23 dispensing with competitive bidding for the following FY23 electric material procurements: Pad Mount Switchgear, Current Limiting Fuses, and Transformer Schedule B5 and B6 units. b) Authorize the General Manager to negotiate directly with suppliers for the FY23 procurement of the following materials up to the listed annual amounts, subject to approval and authorization by the General Manager: Pad Mount Switchgear - $350,000; Current Limiting Fuses - $300,000; and Transformer Schedule B5 and B6 units - $50,000. BACKGROUND: Regular and timely procurements of electric materials, supplies, and services are necessary to meet customer development and District operation and maintenance needs. Historically, staff has presented annual procurements to the Board for consideration and possible approval in the December timeframe, before the start of the next fiscal year. Materials procured under this action are routine and recurring in nature. Annual procurement approvals have provided efficiencies in avoiding the increasing challenges related to availability and delivery through early annual bulk procurements which help mitigate supply chain issues. However, challenges remain for several electric material items as detailed below. Bid advertising for all routine annual electric material procurements began in October 2022, and the bid openings were held on Monday, November 14, 2022. Responsive bids were received for the vast majority of electric materials. These annual procurement items will be presented to the Board for consideration in a separate agenda item. Unfortunately, there were three material items for which no bids were received. These items include pad mount switchgear, current limiting fuses, and a small portion of transformers. Pad mount switches, current limiting fuses, and distribution transformers are necessary components of electric distribution system construction and operation. Pad mount switches are used to sectionalize electric distribution lines as well as to provide the ability to switch between main feeder circuits. The ability to sectionalize areas of the electric distribution system minimizes customer outages during maintenance, construction, and repair activities. Distribution fuses are used to safely and efficiently sectionalize outages, and improve system reliability to customers. The use of current limiting distribution fuses is required to be in compliance with the Board adopted 2022 Wildfire Mitigation Plan. Transformers are used to step down distribution level voltage to usable service level voltages for the District's customers. Along with electric utilities nationwide, the District has been confronted with a shortage of electric utility transformers resulting in delivery times in excess of 12 months. Transformer manufacturers are struggling to get the specialized raw materials, including "core"steel used in transformer production. The shortage is exacerbated by competition for steel from other industries. Although the District received one responsive bid for all 12.47kV rated transformer types (35 units), no bids were received for 14.4kV pad mount transformer types (2 units, Schedule B5 and 136). This critical equipment is necessary to safely provide electric service to customers and support new residential and commercial development in Truckee. ANALYSIS AND BODY: One option would be for staff to repost the bids for these material items. However, due to pervasive supply chain issues affecting electric utility materials, especially transformers, there is a high degree of uncertainty if reposting bids will yield a different result. Reposting the bids would also require additional staff time and resources and the effort would likely be unavailing. Given the feedback the District has received from several suppliers, it may be impossible to obtain bids for these items. Alternatively, the District could make findings to dispense with competitive bidding and allow staff to negotiate directly with suppliers. Despite the unfortunate situation of supply chain constraints that have resulted in material price increases, delays to delivery, and suppliers not bidding on some materials, staff believes the ability to negotiate directly with suppliers is the most efficient and cost- effective method to acquire critical materials in the shortest possible time. In addition, dispensing with competitive bidding would better serve the public interest and allow the District to deal with the supply chain issues in a sensible and practical way. In order to proceed with this option, the Board must make findings to dispense with competitive bidding in accordance with California state law. The most efficient way to make these findings is through the adoption of a Resolution. Therefore staff recommends that the Board adopt Resolution 2022-23 (Attachment 1) dispensing with competitive bidding. The justification for dispensing with competitive bidding is described as follows, and is also detailed within the Resolution itself. The Public Contract Code (PCC) generally requires the District to award contracts for annual 2 procurements of goods materials and supplies and for the purchase of individual articles that exceed $10,000 through a competitive bid process to the lowest responsible bidder (PCC Sections 20206.4 — 20207.7.r). However, California court decisions have determined that the competitive bidding statutes are not to be applied in a way which denies public agencies the authority to deal with problems in a sensible, practical way (e.g. Domar Electric, Inc. v. City of Los Angeles, 9 CalAth 161 (1994)) and that where the public interest is better served by dispensing with competitive bidding, such as where the subject of a contract is such that competitive proposals would be unavailing or would not produce an advantage, and the advertisement for competitive bids would thus be undesirable or impractical, or impossible, a public agency may dispense with competitive bidding (e.g. Graydon v. Pasadena Development Agency, 104 Cal.App.3d 631 (1980)) . Staff also recommends that the Board authorize the General Manager to negotiate directly with suppliers for the FY23 procurement of the following materials up to the listed annual amounts: Pad Mount Switchgear - $350,000; Current Limiting Fuses - $300,000; and Transformer Schedule B5 and B6 units - $50,000. These annual amounts were the same as those listed in the Consideration of FY23 Annual Contract and Procurements staff report. Goals and Objectives: This item is in support of the following goals and objectives: District Code1.05.020 Objectives: 1. Responsibly serve the public. 4. Provide reliable and high-quality electric supply and distribution system to meet current and future needs. 6. Manage the District in an effective, efficient, and fiscally responsible manner. Strategic Goals: 1. Manage for Financial Stability and Resiliency 4. Take the best of private sector thinking to modernize the utility and add value to our communities. FISCAL IMPACT: The Board approved FY22-23 Budget includes funding for these electric material procurements, as a component of various capital expenditure project budgets. ATTACHMENTS: 1. Resolution 2022-23, Dispense With Competitive Bidding And Direct the General Manager to Negotiate the Most Advantageous Price 3