Agenda Information Sheet
DEPARTMENT: Water Production
CM/ ACM: Jon Fortune, 349-8535
Date: May 22, 2017
SUBJECT
Title
Consider recommending adoption of an ordinance awarding a contract under the Buy Board program for the purchase of Liquid Caustic Soda for the Water Production Plants, City of Denton as awarded by the Texas Association of School Boards (TASB) Purchasing Cooperative Buy Board Contract # 526-17; providing for the expenditure of funds therefor; and providing an effective date (File 6458- awarded to Petra Chemical, LLC, in the annual not to exceed amount of $260,000 for a one year not-to-exceed amount of $260,000).
Body
BACKGROUND
The chemicals required to treat Denton’s drinking water and wastewater were bid annually through Request for Proposal 5725 (RFP 5725), awarding numerous vendors, contracts for various chemicals. Circumstances related to the manufacturing and supply of liquid sodium hydroxide has forced the market price for sodium hydroxide to go up dramatically and in-turn forced the suppliers to increase their price for sodium hydroxide. Due to these factors, in March 2017, when the contracted vendor was asked to renew their contract, they proposed a 34% price increase for this chemical alone. Under State Local Government Code 252.048, Change Orders, the original contract price may not be increased under this section by more than twenty-five (25%).
Water Treatment continues twenty four hours a day and Liquid Caustic Soda is part of this process for corrosion control. Therefore, quotes were obtained in an effort to enter into another contract for the next 11 to 12 months until a new Request for Proposal of Water Chemicals can be issued (as the term for RFP#5725 will expire in April 2018). Petra Chemical has the lowest price for the 50% Sodium Hydroxide at $0.2533/dry pound. Based on the total dry pounds purchased in fiscal year 2015-16 and adding additional shipments for increases in total water forecasted to be treated, a total of 1,000,000 dry pounds of chemical will be needed for the next 11 to 12 months until all chemicals are rebid and contracts approved.
OPTIONS
1. Approve the purchase of Liquid Caustic Soda as proposed using the TASB Buy Board Vendor and pricing for a one year not to exceed amount of $260,000.
2. Conduct a bid for purchase of Liquid Caustic Soda.
RECOMMENDATION
Staff recommends option 1 - Award a contract under the Buy Board Purchasing program to Petra Chemical, LLC in the amount of $260,000 for a one year term.
Option 2 is unlikely to provide better pricing for purchase of Liquid Caustic Soda and the time frame to bid and award the purchase is a problem for managing the current immediate need for this water treatment chemical.
ESTIMATED SCHEDULE OF PROJECT
After the receipt of a purchase order, Orders of Liquid Caustic Soda will occur within forty eight hours of an order.
PRIOR ACTION/REVIEW (Council, Boards, Commissions)
June 6, 2017
FISCAL INFORMATION
Funding for the drinking water treatment chemicals will come from Water Production Division’s Operating Budget account number 630100.6334.
BID INFORMATION
The lowest price option available is from a TSAB Buy Board Purchasing Program. Price quotations were also received from two other vendors and are shown in exhibit 1. The Buy Board vendor provides the lowest cost alternative and would meet the legal requirement for public bidding.
STRATEGIC PLAN RELATIONSHIP
The City of Denton’s Strategic Plan is an action-oriented road map that will help the City achieve its vision. The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public Infrastructure; Economic Development; Safe, Livable, and Family-Friendly Community; and Sustainability and Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal:
Related Key Focus Area: Public Infrastructure
Related Goal: 2.3 Promote superior utility services and facilities
EXHIBITS
1. Price Evaluations
Respectfully submitted:
Tim Fisher
General Manager of Water
Prepared by:
Randy Markham
Water Production Superintendent