Transcript DBO Service Contract for the Davis

Agenda Item 7:
DBO Service Contract for
the Davis-Woodland Water
Supply Project
Agency Board
October 10, 2013
Discussion Topics
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Background
CH2M HILL Proposal and Evaluation
Service Contract
Funding and Finance Plan
Legal Authority
Recommendation
Project Cost Reductions
Schedule
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Background
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Background
• April 18, 2013: Addendum No. 1 to RFP
• 70% competitive pricing and 30% open book for self-performed work
• Set maximum Design-Build Price and Net Present Value (NPV) price
ceilings
 Design-Build Price: Second 10% reduction in Engineer’s estimate
 NPV: 10% below Agency estimate
• June 20, 2013: Addendum No. 2 to RFP
 Revisions to accommodate Initial Concept Submittal suggestions
• July 15, 2013: Authorization from Board to negotiate with
CH2M HILL and confirm competitive negotiation process
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CH2M HILL Proposal
• Proposal received July 30th
• Proposal review and negotiation team:
• Facilities Procurement Committee (FPC): Dennis Diemer, Diane
Phillips, Doug Baxter, Jim Yost, Jerry Gilbert, Rhodes Trussell,
• Legal counsel: Richard Shanahan, Eric Petersen
• Other team members: West Yost staff, Trussell Technologies, Frisch
Engineering, Lionakis, Karl Stinson, Jacobs Associates, Raftelis,
TerraVerde
• Negotiation sessions and interaction with CH2M
HILL
• 6 FPC Meetings
• 7 Meetings with CH2M HILL
• Numerous conference calls and cost review meetings
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CH2M HILL Proposal Evaluation
TECHNICAL COMPLIANCE
• RFP requirements:
– Proven technologies
– Drinking water quality and delivery guarantees
– Compliance with present and anticipated future drinking water
regulatory standards
• CH2M Hill’s proposal is technically compliant with the
requirements in the RFP
• Requirements are included in the Service Contract
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CH2M HILL Proposal Evaluation
PRICE
• RFP maximum price ceilings:
• Capital: $151.5 million; Net Present Value: $234.1 million
• CH2M HILL negotiated final prices:
• Capital: $141.2 million; Net Present Value: $231.2 million
• Amount under cap:
• Capital: $10.3 million (7%)
• Net Present Value: $2.9 million (1%)
• CH2M HILL compliant with 70% competitive pricing
requirement
• Agency completed open book review of self-performed
work
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CH2M HILL Proposal Evaluation
NEGOTIATED PRICE
• Additions in Revised Proposal
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$219,000 – welding of all joints in steel finished water pipelines
$235,000 – modifications to proposed administration building
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$534,000 – increase in construction
QA/QC by CH2M HILL
$90,000 – increase in ozone generator sizing
$418,000 – items not contained in original price proposal:
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chemicals for plant commissioning
construction surveyor
coatings on a tank
construction trailer for Agency staff
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CH2M HILL Proposal Evaluation
NEGOTIATED PRICE
• Deductions in Revised Proposal
– (-$1,700,000) – construction and installation of
electrical work
– (-$135,000) – engineering design services
– (-$312,000) – concrete, dry wall, and earthwork
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CH2M HILL Proposal Evaluation
NEGOTIATED PRICE
•Changes to Operating Costs
– Reduction in caustic unit cost
– Historically large variation in chemical prices
• Group A Chemicals (pass-through): dose determined by Agency
• Group B Chemicals (included in Service Fee): dose determined by
operator for efficient operation
– Updates to Repair & Replacement Charge (R&R Charge)
• Increase filter media replacement frequency
• Moved from Service Fee to R&R Charge
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CH2M HILL Proposal Evaluation
ENERGY: Provisions and Requirements
• Goal: promote energy efficiency and realize energy cost
savings
• Energy Efficiency and Cost Savings Plan including off-peak energy use
• Maintenance activities during off-peak periods
• Guaranteed Maximum Electricity Utilization (GMEU) and Guaranteed
Maximum Electricity Demand (GMED)
• Included in NPV determination
• CH2M HILL pays for energy use above the guaranteed maximums
• Agency/CH2M HILL share of savings for electricity usage under the
guaranteed maximums
• Annual review of actual electricity use vs. guaranteed
maximums
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CH2M HILL Proposal Evaluation
ENERGY: CH2M HILL’s ENHANCEMENTS TO
BENCHMARK PROJECT
• Solids drying beds rather than mechanical dewatering
• Taking advantage of WAPA power rates by increased
pumping head at intake
• Ozone diffusion rather than side injection
• LEED equivalent Operations Building design
• Chlorine disinfection rather than UV
• Gravity filtration rather than membrane filtration
• Pipeline design based on lowest life cycle cost
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Service Contract
• Design criteria and drawings from Proposal incorporated
into Service Contract
• Key provisions of Service Contract:
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Performance-Based Contract
15-year operations period with a 5-year option to extend the term
Fixed Price for Operations at four defined flow rates
Partial Company Financing (10% of design-build price)
Operation Period Performance Guarantees (water treatment, water
delivery, production efficiency, and environmental)
Payments into a Maintenance, Repair and Replacement Fund
Provisions for Uncontrollable Circumstances
Acceptance Test must be passed before Operations period &
payments begin
Provisions for facilities to be returned to Agency with predetermined
remaining Service Life
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Service Contract
• Key provisions of Service Contract:
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Accommodation for future Ammonia addition (Chloramination)
Geotechnical and Subsurface Site Conditions risk allocation
Agency to secure/maintain necessary water rights
Company operates Raw Water Intake common and Agency facilities
Supplemental Facilities Site available for solids drying beds
– Legal Protections:
• Termination Rights of Agency and CH2M HILL
• Dispute Resolution Procedures
• Security- Performance, Payment and Operations Bonds; Parent Company
Guaranty; Insurance; Indemnification
• Subcontractors and Key Personnel must be pre-approved
• Contract cannot be assigned by CH2M HILL
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Service Contract
OPTIONAL: ADDITIONAL WOODLAND STORAGE
• 2.0 million gallons of storage and 4,000 gpm of pumping
capacity for an amount not-to-exceed $3.5 million
• Upon completion of design, actual price presented for
open-book review by Agency
• Agency, in consultation with Woodland, will have option
of selecting or rejecting this addition
• Decision to be made promptly after Contract execution
• Woodland will pay full cost of this addition
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Funding and Finance Plan
• Agency is relying on cities to fund the project
• Applying for low-interest SRF loan to fund DB Price
– Agency submitted application for $211 million to SWRCB
– Woodland submitted application for $143 million to
CDPH
• Woodland financing plan: $38M interim financing +
authorization for $155m long-term water revenue
bonds
• Davis financing plan: $16M interim financing +
rates in place to fund long-term financing
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Legal Authority
• CA Government Code Section 5956
– Authorizes Agency contract with CH2M HILL to study, plan,
design, construct, develop, finance, maintain, rebuild, improve,
repair, or operate a fee-producing water supply, treatment and
distribution Project
– Requires water system user fee revenue to be dedicated to
payment of CH2M HILL
– Requires competitive negotiation process
– Requires contract to incorporate CA prevailing wage law and
other public works related requirements in CA Labor Code
– Authorizes Agency to use private infrastructure financing as
supplemental revenue source
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Legal Authority
• California Environmental Quality Act (CEQA)
– City of Davis was lead agency under CEQA before formation of
Agency
– City of Davis prepared and certified EIR for the Project and
approved the Project (October 2007)
– Since its formation in 2009, the Agency has been lead agency
under CEQA
– Agency has approved four addenda to the EIR between 2011
and 2012
• Service Contract is consistent with Project as approved
in 2007 final EIR and later CEQA addenda
• No additional environmental review is required under
CEQA relating to the approval and performance of the
Service Contract
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Legal Authority
• Waiver of State Grant Funding requirement
– City Council Design/Construction Authorization contingent on
$16.7M State Grant for Joint Intake
– State Grant Funding of $10M secured; work continues for $6.7M
– City Councils authorized Agency Board to waive State Grant
Funding Condition
– Waiver included in Recommended Resolution
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Recommendation
Adopt Resolution approving Service Contract with
CH2M HILL in the amount of $141.2M for design
and construction of Capital Facilities plus
Operations-phase Payments for a 15 Year Period
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Project Schedule Milestones
Task
Completion By
Issuance of Final RFP for DBO Contract
December 2012
Approval of Project Final Engineering and Construction by
Each City
March 2013
Authorization to Proceed with Bond Financing by Each City
Sept/Oct 2013
Award of DBO Service Contract
October 2013
Complete 100% Design for Joint Intake Facility
November 2013
Advertise for Construction of Joint Intake Facility
December 2013
Obtain Remaining Environmental Permits
January 2014
Award of Joint Intake Facility Construction Contract
February 2014
Joint Intake Construction and Testing Completion
DWWSP Acceptance Testing Completion
April 2016
September 2016
Updated: 9/12/13
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