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HomeMy WebLinkAboutStaff Report 3974 City of Palo Alto (ID # 3974) City Council Staff Report Report Type: Consent Calendar Meeting Date: 9/9/2013 City of Palo Alto Page 1 Summary Title: Approval of Sole Source Purchase Authority Title: Approval to Increase the Existing Sole Source Purchase Authority with National Meter and Automation, Inc. in the Amount of $150,000 a Year for Two Years for a Total Not to Exceed Amount of $900,000 to Purchase Additional Meters for the Large Water Meter Replacement/Repair Project From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council approve an increase to the existing sole source purchase authority with National Meter and Automation, Inc. in the amount of $150,000 per year for two years for a total not to exceed amount of $900,000, to purchase additional meters for the Large Water Meter Replacement/Repair Project. Since the original sole source purchase authority was for $600,000 over three years, approval of this increase will bring the total not to exceed amount of the sole source purchase authority to $900,000 over three years. Background Funds for this project have already been approved under Capital Improvement Project (CIP) WS-80015. This request is for the allocation of additional funds to the existing sole source purchase authority. During the normal course of business over many years, staff has observed that Badger water meters have a long life span, are accurate, relatively inexpensive, and problem free. Further, field staff are trained on both the repair and maintenance of Badger water meters. Different meters from different manufacturers would result in additional costs being incurred to maintain and manage adequate inventory stock for different types of meters; different types of calibration equipment; additional training for all field service technicians to repair and test different types of meters; and possible mis-reads by meter readers who would need to become accustomed to multiple types of dial layouts. City of Palo Alto Page 2 Standardizing metering equipment is a cost-effective way of reducing both inventory costs and meter repair and replacement costs by reducing the margin for errors and “re-works” in the field, that can otherwise be caused by a lesser familiarity with a piece of equipment. National Meter and Automation, Inc. is the Northern California distributor of Badger water meters. In January 2013, the City Manager’s Office approved the use of a sole source purchase National Meter and Automation, Inc., pursuant to Palo Alto Municipal Code Section 2.30.360(e). The approval for $200,000 per year ($600,000 total) is valid for three years (2012-2015). Since the amount of the original sole source purchase was within the City Manager’s approval authority pursuant to Palo Alto Municipal Code Section 2.30.210(b), Council approval was not requested. This request for an additional $300,000 over the next two years would increase the total amount of the sole source purchase to $900,000 for the three year term of the agreement, and requires Council approval. Note that because water meters are purchased as dictated by business need and inventory levels, and individual Purchase Orders are issued throughout the year as needed, there is no single Purchase Order number associated with this request. Discussion City of Palo Alto Utilities (CPAU) meter records indicate a substantial number of water meters are in need of replacement or repair. Replacing aged meters produces fiscal benefits by optimizing revenue recovery. CPAU plans to replace aged water meters with new meters that employ the latest technology to measure water flow without moving parts within the meter. To examine its meter records and to initiate an aggressive/accelerated meter maintenance and replacement program, in 2011-2012 CPAU contracted with a third party to conduct an audit of the City’s installed water meters. The audit recommended that, due to age, many of the large water meters (ranging from 3-inch to 8 inch-meters) were in need of replacement. Other smaller meters were recommended for replacement within the next few years, and it was recommended that all other meters be calibrated and when possible repaired. In reviewing the audit results and in light of staff’s training and familiarity with Badger water meters, staff again recommends that water meters be standardized through a single manufacturer to reduce inventory and maintenance costs and meter reading confusion. Based on the audit results, CPAU is pursuing an accelerated meter replacement and repair CIP, WS-80015 (Attachment A). The CIP includes meter purchases for new customers, upgrading meters for current customers, and replacing obsolete meters that are no longer repairable. The CIP also includes testing and calibration of certain water meters annually. An Invitation for Bids (IFB) for replacement, repair and calibration of large water meters has been published and a separate contract will be awarded for those services. This project will result in more accurate usage data and will reduce water losses caused by meters that no longer produce accurate reads. City of Palo Alto Page 3 The existing sole source purchase authority with National Meter and Automation, Inc. is sufficient for the course of regular business, but will not accommodate the additional meters needed to complete an “accelerated meter replacement and repair” capital improvement project. Based on the findings of the audit, approximately 100 meters of various sizes (3 inches to 8 inches) require replacement. Due to the large number of meters identified for replacement over the next two years, the amount approved under the original sole source request will be exceeded. This amended sole source request is for an additional $150,000 per year for two years, for a total not to exceed amount of $300,000. If approved, the amended sole source purchase authority will be for a total of $900,000 over three years, from December 2012 to December 2015. Staff recommends that Council approve an increase of $300,000 to the sole source purchase authority with National Meter and Automation, Inc. Resource Impact Funding for this request has already been approved under CIP Water Meters (WS-80015). Environmental Review Council’s approval of this sole source purchase authority does not meet the California Environmental Quality Act’s definition of a “project” pursuant to Public Resources Code Section 21065, thus environmental review is not required. Attachments:  Attachment A: Water Meters (WS-80015) (PDF)