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Agency Board October 10, 2013 PowerPoint Presentation
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Agency Board October 10, 2013

Agency Board October 10, 2013

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Agency Board October 10, 2013

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  1. Agenda Item 7: DBO Service Contract for the Davis-Woodland Water Supply Project Agency Board October 10, 2013

  2. Discussion Topics • Background • CH2M HILL Proposal and Evaluation • Service Contract • Funding and Finance Plan • Legal Authority • Recommendation • Project Cost Reductions • Schedule

  3. Background

  4. 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

  5. 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

  6. 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

  7. 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

  8. CH2M HILL Proposal Evaluation NEGOTIATED PRICE • Additions in Revised Proposal • $219,000 – welding of all joints in steel finished water pipelines • $235,000 – modifications to proposed administration building • $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: • chemicals for plant commissioning • construction surveyor • coatings on a tank • construction trailer for Agency staff –

  9. 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

  10. 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

  11. 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

  12. 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

  13. Service Contract • Design criteria and drawings from Proposal incorporated into Service Contract • Key provisions of Service Contract: • 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

  14. Service Contract • Key provisions of Service Contract: • 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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

  21. Project Schedule Milestones Updated: 9/12/13