HomeMy WebLinkAboutStaff Report 184-07City of Palo Alto
City Manager’s Report
TO:
FROM:
DATE:
SUBJECT:
HONORABLE CITY COUNCIL
CITY MANAGER
3
DEPARTMENT: ADMINISTRATIVE
SERVICES
APRIL 9, 2007 CMR: 184:07
APPROVAL OF A TERM CONTRACT WITH OKONITE COMPANY IN
THE AMOUNT NOT TO EXCEED $800,000 ANNUALLY FOR THE AS
NEEDED PURCHASE OF THREE TYPES OF MEDIUM VOLTAGE
CABLES AND AUTHORIZATION FOR UP TO TWO ONE-YEAR
CONTRACT EXTENSIONS..
RECOMMENDATION
Staff recommends that Council:
1.Approve and authorize the City Manager or his designee to execute a Term Contract with
Okonite Company in an amount not to exceed $800,000 per year.
2.Authorize the City Manager or his designee to execute Term Contract extensions for two
additional one year periods.
DISCUSSION
To enhance the procurement method used to acquire medium voltage cables for the Utilities
Department, the Purchasing Division has reinstituted a Term Contract p~ocess previously used.
Through this process, a competitive solicitation is used to arrive at a contract that will be used on
an as needed basis (versus predetermine fixed amount ordered) with the maximum dollar amount
that can be order under this contract of $800,000 dollars per year. Moreover, this type of
contract results in greater efficiency in the ordering and management of this Commodity.
Medium voltage cables, also known as primary cables, are used in residential and commercial
underground distribution circuits for the distribution of power. For purposes of this contract,
there are three types of cables, 1/0 AWG, 750 MCM and 600 MCM. The voltage ratings of these
cables are 15,000 Volts and the cables are manufactured to comply with City of Palo Alto cable
specifications and industry standards.
A Request for Quotation (RFQ) for the as needed purchase of three types of medium voltage
cable was issued in February 2007. The solicitation document was sent to six suppliers. Three
suppliers responded, Okonite, HD Supply Utilities and Hendrix.
CMR:184:07 Page 1 of 2
The RFQ for each cable requested a unit price per foot based on estimated annual quantities for
purposes of making an award determination. Furthermore, these estimated quantities were
determined based on previous annual usage and estimated future use. Additionally, the RFQ
required bidders to include a provision for price adjustments for two optional 12-month contract
extensions.
Okonite Company (the current contactor to CPA for medium voltage cable) submitted the lowest
responsive bid among the three bids that were received. HD Supply Utilities submitted bid
prices for only two of the three bid items and the bid unit prices submitted was higher in cost
than Okonite’s bid price. The bid submitted from Hendrix was for an alternate type of cable that
did not meet the specifications of the Quotation Request, therefore was not considered for award.
The proposed Term Contract requires Council approval because the not to exceed expenditure
for this commodity will be $800,000 dollars per year. This amount is calculated based on
historical usage of the three cables as well as anticipated future needs to the City.
RESOURCE IMPACT
There will be no new resource impact on the Electric Fund as a consequence of implementing
this term contract. Electric Fund projects using cable have budgets that are sufficient to cover
cable costs. When cable is purchased through the new term contract it will become part of the
City’s Store’s inventory (as in the past). As the cable is used, inventory is reduced and the cost
of the cable is charged to an Electric Fund budgeted project or to budgeted operating expense.
POLICY IMPLICATIONS
Authorization of this Term Contract does not represent any change to the existing policy.
PREPARED BY:
g Manager
DEPARTMENT HEAD:
CiTY MANAGER APPROVAL:
ATTACHMENTS
A: Bid Summary
CARL
~f Administrative Services
City Manager
CMR:184:07 ,Page 2 of 2
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