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HomeMy WebLinkAboutStaff Report 10883City of Palo Alto (ID # 10883) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/1/2020 City of Palo Alto Page 1 Summary Title: Utilities Enterprise Fund Contract for Utility Line Clearing Title: Approval of Utilities Enterprise Fund Contract Number C2017692 0With Davey Surgery Tree Company for the 2020 Utility Line Clearance Project in an Amount Not-to-Exceed $14,486,057 for a Five-year Term From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council approve and authorize the City Manager or his designee to execute the attached General Service Agreement C20176920 (Attachment A), with Davey Tree Surgery Company for utility line clearing services in an amount not to exceed $14,486,057 over a five-year term. Background The City has contracted services for utility vegetation management since the mid-1980’s to ensure the clearing of trees and other vegetation from electrical conductors, poles, substations, fiber optic lines, traffic signals, and streetlights throughout Palo Alto. The most recent utility vegetation management contract was for a five-year term with Utility Tree Service LLC that ended on February 22, 2020. The City issued a Request for Proposals (RFP) for utility vegetation management services on November 25, 2019. Recent trends in the tree care industry, and specifically in the line clearance tree trimming sector, have impacted the new solicitation. There is increased pressure on Investor Owned Utilities such as PG&E to reduce the potential for fires around their electric infrastructure. This pressure has resulted in a dramatic increase in utility vegetation management activity on behalf of these Investor Owned Utilities. This has contributed to a statewide shortage of qualified line clearance tree workers. In addition to this increased demand for qualified workers, a recent State Assembly Bill, SB 247, has mandated that these tree workers be “…paid a rate no less than the prevailing wage rate for a first period apprentice electrical utility lineman…”. This increased base pay rate is 36 percent higher than the 2019 prevailing wage document for this trade. In addition to this increase in base pay there are additional benefits included in the requirements which further increase the labor cost of companies providing these services. (ID # 10883) City of Palo Alto Page 2 Discussion The work to be performed under the contract includes clearing of trees and other vegetation from the overhead electric distribution system throughout the City. Clearing vegetation from power lines is an on-going operation necessary to ensure the City provides safe, reliable power to the City’s utility customers. Clearance requirements have been established by the California Public Utilities Commission for Investor Owned Utilities and these requirements have been accepted as the applicable standard for vegetation clearance in the City of Palo Alto. All tree work must conform to the techniques and standards specified in the Tree Care Industry Association standard of care (ANSI A300 – Tree, Shrub and Other Woody Plant Maintenance – Standard Practices). As a utility operator, the City of Palo Alto is subject through regulatory requirements to keep all vegetation away from utility infrastructure regardless of ownership of said vegetation. This contract for vegetation management is separate from the City’s overall tree trimming contract in that it specifically addresses utility line clearance. Utility line clearance work requires additional personnel certifications and equipment requirements not needed for standard tree trimming. The proposed contract with Davey Tree Surgery Company requires adherence to these standards and to equipment requirements for utility line clearing. The term of the contract is five years. Staff has found that a multi-year contract is advantageous to the City as it allows a contractor to better amortize major equipment purchases and retain highly qualified workers, and in turn lower prices are proposed for the work. The work quantities included in the proposed rate schedules are based on recent work history by the previous line clearing contractor. Tree growth is highly dependent on precipitation; therefore, the actual work levels and costs may be higher or lower than the estimated quantities in the solicitation. The rate schedule establishes the unit and hourly rates for each type of work included in the contract scope. Summary of RFPProcess The Request for Proposals (RFP) for utility vegetation management services was distributed to potential contractors via planetbids.com and a competitive solicitation notification was emailed directly to arboricultural companies on November 25, 2019. Additionally, a pre-proposal meeting was held on December 9, 2019. The proposal period was 52 days. Proposals were received from two qualified contractors, Utility Tree Service, Inc. (UTS) and Davey Tree Surgery Co. (Davey) on January 15, 2020. The quantities given in the cost proposal schedules were based on an average amount of work that might be expected in a twelve-month period and were given as a basis for comparison of proposal costs. The City did not guarantee that the actual amount or proportion of work would correspond therewith. RFP Name/Number 2020 Utility Line Clearing Services / RFP 176920 Proposed Length of Project 5 years Number of Prospective Proposers on PlanetBids 128 vendors City of Palo Alto Page 3 Total Days to Respond to RFP 52 days Number of Company Attendees at Pre- Proposal Meeting 6 Number of Proposals Received 2 Proposal Price Range (Includes additional services) $12,360,748to$14,486,057 An evaluation committee consisting of three City staff members from the Public Works department reviewed and evaluated the proposals according to the criteria identified in the RFP. The criteriaused to evaluate the proposalswere as follows: Quality of the proposal Quality, performance and effectiveness of the solution, goods and/or services to be provided by the contractor Contractor's experience, including the experience of staff to be assigned to the project, with engagements of similar scope and complexity Cost to the city Contractor's financial stability Contractor's ability to perform the contract within the time specified Contractor's prior record of performance with city or others Contractor's ability to provide future maintenance, repairs parts and/or services Contractor's compliance with applicable laws, regulations, policies (including city council policies), guidelines and orders governing prior or existing contractsperformed by the contractor Acceptability of any additional contract terms and conditions as proposed by contractor Staff recommends that the Davey proposal of $14,486,057 for a maximum five-year term submitted be accepted based on responsiveness to the City’s needs as defined by the evaluation criteria. The proposal from Davey scored well across all the evaluation criteria. Davey’s proposal thoroughly addressed the needs of the line clearance program. Davey outscored UTS during the criteria evaluation process even though the UTS proposal had a lower overall cost. UTS included a list of ten contract exceptions, several of which were operationally unacceptable to Public Works staff and would have been likely to result in adverse impacts to the City such as increased administration, reduced productivity, or delayed responses. The proposed first year budget amount for the new contract is $2,728,939, a 90 percent increase over the fifth-year amount of $1,436,748 under the previous contract with Utility Tree Service LLC. Negotiations were conducted between the City and Davey. The main objective of these negotiations for the City was to secure the best pricing possible for the services included in this contract. Staff met with Davey for three negotiation sessions. Two of these sessions took place after it became clear that the COVID-19 pandemic would impact the city’s revenues and City of Palo Alto Page 4 budget. While the negotiations did result in substantial savings to the City via reduced unit and hourly pricing, a reduction in estimated work quantities was still required to keep the contract within the budget capacity of the Electric Fund. This agreed upon reduction in estimated work quantities compared to the previous contract was used to calculate the total costs for the five- year term. Staff believes it is possible to meet minimum regulatory compliance with this budget. Should additional work be needed, staff will return to Council to propose service level options together with associated costs andpropose an amendment to the contract. This contract includes a 90-day per-unit pricing review (Exhibit C of the contract) that was added during negotiations. This clause provides that during the 90-day trial period the City will pay the contractor at the hourly rate for all assigned work. After the 90-day period has closed, the contractor and City will evaluate and assess the per-unit pricing and negotiate a reduced rate if possible. If a lower unit rate cannot be agreed upon after the 90-day trial period, the City will assign lower quantities of unit work and will instead assign this work as hourly. If a lower unit rate cannot be established, staff will consider soliciting proposals for a new contract if market conditions improve. Staff will also evaluate the cost-effectiveness of adding additional Urban Forestry staff and equipment to accomplish the work in comparison to the contract cost. Staff confirmed with the Contractor’s State License Board that Davey has an active license on file. Davey has performed satisfactory work for the City on a similar multi-year contract established from 1999 to 2008 for power line clearing services. This contract is on the City’s General Services template, which permits the City to terminate without cause/for convenience by providing written notice to the contractor. In the event the City finds itself facing a challenging budget situation, and it is determined that City resources need to be refocused elsewhere, the City can terminate for convenience. Other options include termination due to non-appropriation of funds or amending the contract to reduce the cost, for example, by reducing the scope of work. Timeline Davey will begin the requested services within seven days of the City’s issuance of a Notice to Proceed. Resource Impact Funding for the first year of this contract is available in the Fiscal Year 2020 Electric Fund operating budget. Continued work and funding under this contract for Fiscal Year 2021 through Fiscal Year 2024 will be subject to Council approval of annual budget appropriations. The contractor’s rates for contract years 2-5 during the term include escalation as shown in the table below. FY2020 FY2021 FY2022 FY2023 FY2024 5 YR TOTAL Base Amount $2,598,990 $2,676,563 $2,756,827 $2,839,501 $2,924,364 $13,796,245 City of Palo Alto Page 5 Contingency $129,949 $133,828 $137,841 $141,975 $146,218 $689,812 Annual Contract Total $2,728,939 $2,810,392 $2,894,668 $2,981,476 $3,070,582 $14,486,057 Policy Implications The approval of this contract is consistent with existing policies. Stakeholder Engagement Stakeholder engagement is not applicable to this contract. Environmental Review The recommended action is exempt from review under the California Environmental Quality Act pursuant to CEQA Guidelines Section 15301(h) [maintenance of existing landscape]. Attachments: Attachment A - C20176920 Davey Tree Surgery Co. - Legal Reviewed05062020