Item 8JAGENDA ITEM # 8J
APRIL 12, 2010
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Equipment Procurement for Wastewater and TMDL Compliance Project
SUBMITTED BY: Donna Kaluzniak, Utility Director
DATE: Apri15, 2010
BACKGROUND: The City wishes to obtain high-quality, reliable wastewater equipment for the
TMDL wastewater plant upgrades at the best cost, with a delivery system most protective to the City.
After discussing concepts with staff and the City's engineers, the Preselection Process for equipment
selection is recommended. Using the preselection method, the City's engineers research equipment to
determine which manufacturer's can provide proven, quality equipment that meets the necessary
specifications for the project. Bids are solicited for the equipment through the City's standard
purchasing process. The bid price is guaranteed by the vendor for a minimum of one year.
The equipment with the lowest life-cycle cost is specified for the project, and the equipment's price is
included on the bid form prior to advertisement.
This method prevents sole sourcing or bundling of equipment while ensuring that only proven
equipment meeting the required specifications is included in the plant design. Preselection allows the
engineer to design the components that match the best-priced equipment.
Staff hopes to bid for construction of the project in the fall, so the equipment preselection process
needs to be completed as soon as possible to continue with engineering design.
BUDGET: The treatment plant upgrades to meet the TMDL are estimated at approximately $5.95
million, only a portion of which is for equipment.
RECOMMENDATION: Approve the recommended Preselection Process for wastewater
equipment for the wastewater treatment plant improvements to meet the TMDL requirements.
ATTACHMENTS: 1. Equipment procurement outline from J. Collins Engineering
2. Equipment list
REVIEWED BY CITY MANAGER: ~..Y
AGENDA ITEM # 8J
APRIL 12, 2010
City of Atlantic Beach
WWTP#2 - TMDL Upgade Project
Major Equipment Procurement
The project to upgade the City of Atlantic Beach's Wastewater Treatment Plant (WWTP) # 1 involves the
procurement of new major process equipment, such as aeration blowers, mixers, aeration diffusers, and
effluent filters. The City requires that equipment be competitively bid to ensure that ratepayers get the
best value. The best value is represented by the lowest life cycle cost for the equipment, not necessarily
the lowest capital (purchase) cost. Higher quality equipment with superior design and materials of
construction will typically have a higher initial cost and lower operating costs due to due to higher energy
efficiency and reduced maintenance.
The use of comprehensive specifications can ensure that certain minimum requirements for equipment are
met. However, it is a challenge to ensure that equipment supplied via the traditional design-bid process
will provide the best long-term value for the City. Negotiations between contractors and equipment
suppliers during bid preparation typically result in suppliers packaging multiple equipment systems,
which may include equipment that is not in the City's best interest. This activity is very difficult for the
City to control.
For example, the procurement of aeration blowers is an extremely important component of the City's
proposed project. The aeration blowers consume approximately 60 to 70% of all power used at the
WWTP #l, which represents approximately 25% of the total operating cost. The purchase of the most
energy-efficient blower system will have a continuing financial benefit to the City in the future, and needs
to be considered in the selection process. There is nothing in the process to motivate Contractors to
provide higher cost equipment that saves the City money in the future; in fact, a general contract awarded
on the lowest cost basis always motivates the Contractor to provide the lowest cost equipment, regardless
of the lifetime operating cost.
Different methods of procuring equipment have been developed to meet Owner's needs. Two approaches
include the pre-purchase orpre-selection of major equipment prior to the award of the main contract. The
equipment pre-selection process can be competitively managed by the City, which allows the City to fully
evaluate and select equipment that is most advantageous to the City and its ratepayers.
For the pre-selection process, two or more pre-qualified systems acceptable to the Owner/Engineer are
would be competitively bid. The bids would include capital cost information as well as guaranteed
minimum performance criteria that can be used in an evaluation and selection process. The evaluation
considers the initial equipment cost, associated installation costs, operating costs, maintenance costs and
other costs related to the equipment system. The lowest life cycle cost would be the major factor used to
select the equipment, but other factors may also be considered if life cycle costs are very close. By
following this approach, higher cost equipment that is more energy efficient and lower operating cost can
compete with. less costly but more inefficient equipment. The evaluations are done by the Engineer for the
City, with the factors that are most important to the City incorporated into the selection. process. The
process is competitive and transparent to the City officials.
AGENDA ITEM # 8l
APRIL 12, 2010
Equipment supplier bids must include a price guarantee that is valid for a minimum length of time -
usually long enough for the main contract with the General Contractor to be completed. Performance
data that are used in the proposal must be guaranteed using specified test procedures, and confirmed by
performance testing when the equipment is commissioned. There are financial penalties for the supplier
if the equipment does not meet the guaranteed performance criteria.
The best equipment proposals are accepted and the equipment costs are written into the main construction
bid proposal. All general contractors therefore bid using the same major equipment costs. They must
differentiate their bid based on the cost of work for which they are responsible. Contractors purchase the
equipment and hold the warranties until the project reaches substantial completion, at which point the
ownership passes to the City.
The advantages to this approach are as follows:
1. The Owner gets the equipment that best meets the Owner's quality criteria.
2. The Owner can control equipment selection via evaluations that consider more factors than
simply cost: for example, life cycle costs or lower maintenance costs.
3. The plant design can be customized for the preselected equipment for the project. This can result
in fewer design changes after the contract has been awarded and faster construction times.
J. Collins Engineering Associates, the City's Engineer for this project, recommends this process and
believes that it will provide the City's ratepayers with in a superior facility.
AGENDA ITEM # 8J
APRIL 12, 2010
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