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HomeMy WebLinkAboutAgenda Report - October 19, 2011 I-01AGENDA ITEM 11001 &% CITY OF LODI COUNCIL COMMUNICATION Im AGENDA TITLE: Adopt Resolution Authorizing Recruitmentsto Staff the City's Water Treatment Plant and Appropriating Funds ($225,000) MEETING DATE: October 19, 2011 PREPARED BY: Public Works Director RECOMMENDED ACTION: Adopt resolution authorizing recruitmentsto staff the City's water treatment plant and appropriating funds in the amount of $225,000. BACKGROUND INFORMATION: At the March 15, 2011 Shirtsleeve Session, staff presented a proposed staffing plan for operation of the surface water treatment facilities currently under construction. The proposed plan was based upon the Technical Memorandum — Water Treatment Facility Staffing Assessment prepared by HDR, Inc., as part of the water treatment facilities project. At that meeting, City Council directed staff to investigate the option of entering into a public/private partnership as a means of operating the facilities. On May 19, 2011, staff issued requests for proposals (RFP) to six firms. The scope of work for the proposal was described as operation and maintenance of the City's water treatment plant facilities and the 26 groundwater supply wells. In other words, the contractor would be responsible for all the City's water production facilities. Under this program, the City would be responsible for operation and maintenance of the distribution facilities. The six firms are listed below. American Water Company CH2M-Hill Severn Trent Services Southwest Water Company Veolia Water North America United Water Two firms submitted proposals and they are Southwest Water Company (Southwest) and Veolia Water North America (Veolia). At the August 30, 2011 Shirtsleeve Session, a comparison of the two proposals and the City's staffing plan was presented to the City Council. Comments regarding the comparison included a claim that the information was biased toward the City's staffing plan and, conversely, biased toward the proposers' plan. This suggests staff was successful in its attempt to present an unbiased comparison. An overview of the comparison is provided below. The request for proposals was specific as to the required contents, and a listing of the scope of work items is provided in Exhibit A. A six-week period was allowed for the proposers to inspect the facilities, review maintenance records, and present questions prior to the proposal submittal date of August 1, 2011. A total of 110 questions were submitted and were responded to on July 19, 2011. APPROVED: " C8444-�rtlam, City Manager K:\WP\PROJECTS\WATER\SurfaceWaterPlant\CstaffingPlan101911.doc 10/11/2011 Adopt Resolution Authorizing Recruitments to Staff the City's Water Treatment Plant and Appropriating Funds ($225,000) October 19, 2011 Page 2 The two proposals received, as discussed at the Shirtsleeve, were not in full compliancewith the content requirements and, technically, should have been rejected. The primary areas of non-compliance are presented in Exhibit B. After deciding not to rejectthe proposals due to time constraints and staffs belief that acceptable terms and conditions could be reached through negotiations, the proposals were reviewed. It is the opinion of staff the Veolia proposal is the better of the two. The Veolia proposal met all proposal requirements except there was no cost proposal for the required two-year contract term with two three-year renewal options. Otherwise, the Veolia proposal was detailed in all aspects of operating and maintaining the water treatment plant and well facilities. In addition, Veolia spent significant time reviewing City maintenance records and researching the distribution facilities; this effort was reflected in the completeness of their proposal. The Southwest proposal was not informational inclusive to the point of making staff feel that a high level of contract managementwould be necessaryto implementthe operations and maintenance plan. The proposal was lacking detail in the following areas. A written scope of services was not submitted by virtue of Southwest's position the Scope of Work written by staff was complete and accurate. It is difficult to believe that Southwest would operate and maintain the facilities exactly as presented in the RFP. SouthWest's staffing plan indicates no more than three operators and no other personnel are required to operate the facilities insignificant contrast to both the Veolia plan (seven total) and the City plan (seven plus total). Interviews with persons knowledgeable of operations at similar type and size facilities affirmed that three operators with no support staff are not sufficient to operate and maintain the water plant and well facilities. The Southwest proposal did not include any subcontractors that would supplement the operations and maintenance staff. The Southwest proposal did not include the required information regarding the full compensation value for each position in the staffing plan intended to facilitate the comparison of the proposals to the City's staffing plan. The compensation informationwas eventually provided in a highly -abbreviated form. Finally, Southwest did not request to review maintenance records to understand the utility's operations prior to submitting their proposal. Exhibit C presents a comparison of the staffing levels and the proposed schedule to move the project through the Commissioning, Post Commissioning, Normalization and Optimization Phases. The exhibit presents the total time to reach the Optimization phase is eight months (Veolia), 15 months (Southwest) and 17 months (City). Veolia's proposal suggests they can successfully move the plant through the various startup phases but the staffing levels and costs do not substantially diminish within each operational phase, as with the Southwest and City plans. The City's staff numbers are greater in the Commissioning and Post Commissioning phases due to the inclusion of a full-time contract Grade 4 Treatment Operator with plant start-up experience. Both the Veolia and City plans include five full-time operators in the Optimization phase compared to three for Southwest. Based upon interviews with operators of similartype and size facilities, it might be possible for the City to drop one operator in addition to the contract operator after a year or two. A comparison of costs for three consecutive years is provided in Exhibit D. Labor costs listed are inclusive of all salary, overtime and benefits. The total costs presented are within the operations maintenance budget estimated during the preliminary and final design phase of the project. During discussion at the Shirtsleeve, the Veolia representative suggested the greatest value of a public/ private partnership is derived from risk transfer, cost containment, resources, and experience. Risk associated with operation and maintenance of a membrane water treatment facility is relatively low by virtue of the physical nature of the water treatment process. The principal treatment mechanism is membrane filtration that physically filters contaminants from the water stream. In contrast, wastewater K:\WP1PROJECTSIWATERVSurfaceWaterPtantlCStaffingPlan101911.doc 10/11/2011 Adopt Resolution Authorizing Recruitmentsto Staff the City's Water Treatment Plant and Appropriating Funds ($225,000) October 19,2011 Page 3 treatment is principally a biological operation and, therefore, the majority of public/private partnerships can be found in wastewater treatment operations. Cost containment is potentially over emphasized in the public/private partnership debate. As presented in Exhibit E, the total compensation by position does not significantly vary from plan to plan. As presented in Exhibit D, the Veolia and City plans are essentially the same cost. Resources available to private sector contractorsthat operate publicwater and wastewater facilities are equally available to public sector operators through subcontracting and consulting arrangements. The internal resources of companies like Veolia and Southwest would be made available to the City as part of the contract price but would add cost to the City's plan. Additional resource assets of the private sector contractors include volume purchasing of chemicals, supplies, equipment and tools. Costs of such purchases are approximately 10 to 15 percent of the annual operating cost and, if the net savings was 10 percent, the annual savings would be in the range of 1 to 1.5 percent of the total annual cost. Finally, experience has a value. That value only applies to the water treatment plant operations and is greatest during the initial two-year start-up period after which time the staff operating the plant will have obtained that same experience and value that a private contractorwould bring at the beginning. The City has successfully operated the wells for over 100 years. To compensate for the experience factor of the private contractor, the City's plan includes the hiring for a two-year period a specialist Grade 4 Treatment Operator to assist in the plant start up. This added cost is referred to in the resources discussion above. As a result of the information provided above, it is staffs recommendation the City Council authorize the recruitment of staff to populate the positions identified in the City's staffing plan and that funds be appropriated in the amount of $225,000 for Fiscal Year 2011/12. The initial position to be recruited will be the Plant Manager, with a budgeted annual total compensation of approximately $140,000. The Plant Manager (Grade 4 Treatment Operator)will be full-time and will be an active part of the plant assembly team. A contracted Transition Manager (Grade 4 Treatment Operator), with a budgeted annual compensation of approximately $150,000, will be part-time until the plant begins full operations. Alternatively, the City Council may direct staff to negotiate a contract with the staff -recommended proposer, Veolia Water North America, or the other proposer, Southwest Water Company. FISCAL IMPACT: There will be an increased cost for operating and maintaining water treatment plant facilities. FUNDING AVAILABLE: Requested Appropriation: Water Fund (180) - $225,000 �M Jordan Ayers Deputy City Manager/Internal Services Director F. Wally ndelin Public Works Director FWS/pmf Attachments K:\WP\PROJECTS\WATER\SurfaceWaterPlant\CStaf iingPlan101911.doc 10/11/2011 Exhibit A Scope of Work 1. Operations 24 Hours/Day and 7 Days/Week 2. Water Treatment Plant and All Wells 3. All Aspects of Facility Operation and Management 4. Vehicles and Trucks 5. Maintenance up to $50,000/Year 6. Chemicals up to $250,000/Year 7. Monitoring, Sampling, Testing, Analyses, and Reporting 8. Staffing and Organization Plan 9. Recommended Capital Maintenance Plan 10. Statements of Qualifications and Experience 11. Proposal Guarantee of $50,000 12. Eight -Year Schedule of Firm Cost (2 years/3 years/3 years) 13. Cost Proposal for RFP Plan and Alternative Plan (if desired) Exhibit B Comparison of Proposal Requirements Veolia SouthWest Written Scope of Services Yes No Provide Adequate Staffing Yes No List of Subcontractors Yes No Cost Proposal for Specified Plan No Yes Cost Proposal for Alternative Plan Yes Yes Annual Full Compensation Value by Position Yes No Exhibit C Month Veolia SouthWest City of Lodi 1 2 3 4 5 6 7 7 8 9 10 11 12 13 5 14 7.5 15 16 17 18 19 20 21 22 23 24 Legend # Employees Commissioning Post Commissioning Normalization Optimization K:\WP\PROJECTS\WATER\SurfaceWaterP lant\CStaffingPIan 101911_Exhibit C.doc EXHIBIT D Comparison of Proposal Costs Veolia Southwest City of Lodi Labor $703,491 $540,568 $800,396 Chemicals 250,000 250,000 250,000 Maintenance 50,000 50,000 50,000 -< Utilities 903,000 903,000 903,000 Other 40,000 40,000 260,000 O 0/1-1 &Profit 588,201 292,201 496,477 Total Price $2,534,692 $2,075,769 $2,759,873 Lodi Center Credit -$155,000 -$155,000 -$155,000 Adjusted Total Price $2,379,692 $1,920,769 $2,604,873 Percentage Difference -8.6% -26.3% Veolia Southwest City of Lodi Labor $712,285 $362,121 $750,629 Chemicals 275,000 275,000 275,000 Maintenance 55,000 55,000 55,000 -< Utilities 914,288 914,288 914,288 v Other 40,500 40,500 263,250 O/H & Profit 555,995 433,713 443,543 o Total Price 2,553,068 2,080,622 2,701,710 Lodi Center Credit -156,938 -156,938 -156,938 Adjusted Total Price 2,396,130 1,923,684 2,544,772 Percentage Difference -5.8% -24.4% Veolia Southwest City of Lodi Labor $721,188 $343,903 $763,942 Chemicals 302,500 302,500 302,500 Maintenance 60,500 60,500 60,500 ro Utilities 925,716 925,716 925,716 Other 41,006 41,006 112,767 O/H & Profit 534,070 321,860 449,088 Total Price $2,584,981 $1,995,486 $2,614,512 Lodi Center Credit -$158,899 -$158,899 -$158,899 Adjusted Total Price $2,426,082 $1,836,586 $2,455,613 Percentage Difference 1.2% -25.2% Exhibit E Comparison of Staff Compensation Title Veolia SouthWest city Plant Manager $136,815 $120,744 $129,117 Lead Operator $106,692 $109,055 $90,399 Shift Operator $90,424 $76,914 $88,317 Instrumentation Technician $123,948 N/A $137,393 Plant & Equip. Mechanic N/A N/A $93,336 Maintenance Worker $88,414 N/A $83,909 Administrative Assistant $45,302 N/A $38,000 1. AA# 2. JV# I V. I II ILLI I IQI JCI VIUCJ VC L. - L)UU CL WIVIJIUII 3. FROM: [RebeccaAreida-Yadav 15. DATE: 10/05/2011 4. DEPARTMENT/DIVISION: Public Works I JIJIJ# BUS. UNIT # ACCOUNT # /\C:COUIJI 11TLE AMOUNT A. 180 3205 Fund Balance $ 225,00000 SOURCE OF FII J 180 1 180461 _ 7100 OF 180 J 180461 7323 NCING Water Treatment Plant $ 108,000.00 Water Treatment Plant $ 117.000.00 'lease provide a description of the project, the total cost of the project, as well as justification for the aquested adjustment. If you need more space, use an additional sheet and attach to this form. kppropriation to staff the Surface Water Treatment Plant with a Plant Manager and a contract Transition Manager. Council has authorized the appropriation adjustment, complete the following: leeting Date 10/19/2011 Res No Attach copy of resolution to this form iepartment Head Signature Deputy City Manager/Internal Services Manager Date Submit completed form to the Budget Division with any required documentation. Final approval will be provided in electronic copy format. The City of Lodi Public Works Engineering firr ■ ■ firs • f ; _ F Water Treatment Plant Staffing Plan Agenda Item I - 01 October 19, 2011 N Operation Phases • Commissioning ➢ Startup by Contractor and Design Engineer ➢ 24/7 Operations • Post Commissioning ➢ Fully Certified Staff on Site ➢ 24/7 Operations ➢ Producing Quality Drinking Water • Normalization ➢ Unattended Operations/Reduced Staffing ➢ Operating Procedures Documented • Optimization ➢ Unattended Operations/Reduced Staffing ➢ Improve Treatment Efficiency, Chemical and Power Usage 1 1111 .�._.jot Y � Comparison of Staffing Month 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Veolia SouthWest City of Lodi N Year 1 Year 2 Year 3 Total — 3 Years Savings Percent Cost Comparison Veolia $2,379,692 $2,396,130 $2,426,082 $7,201,904 ($403,513) (5.3%) SouthWest $1,920,769 $1,923,684 $1,836,586 $5,681,039 ($1,924,378) (25.3%) City of Lodi $2,604,873 $2,544,772 $2,455,772 $7,605,417 0% i Mir?Z-771A Public/Private Partnership Issues 1. City responsible for safety of drinking water 2. 24/7 operation of water plant and 28 wells 3. Well operation by City staff for 100 years 4. Performance Standards set by the State 5. Resources of private contractors track/implement ever- changing regulations 6. Experience of private contractor can be matched for a cost ($150,000 for a couple years) 7. Private contractors strive for cost savings and profit that may affect the City's relationship with State regulator (CPHD) i mir?Z-771A Public/Private Partnership Issues 8. Contractors' economy of scale benefit is relatively small 9. Optimization of plant operations can be complex and continual 10. City's management effort of public/private partnership is unknown 11. Risk of running new equipment to failure 12. Preserving Pall Membrane warranty has high value - $4,000,000 13. Majority of the new staff could be the same — regardless 14. Potential cost savings under public/private partnership ift Minimum Staffing - Attended Operator Shift: 10 hour/day Labor Needed M — F: 2 Operators per shift = 100 hours Labor Needed Sa — Su: 1 Operator per shift = 20 hours Labor Availability: 86% or 34 hours/week/ staff member Staff Positions: 120/34 = 3.5 operators • Confirmation: California Public Health Department, Yucaipa Valley Water District, HDR, City of Kennewick, City of Bakersfield N iftCommunity of Mountain House • Water and Wastewater Operations • Water Plant — Conventional Pretreatment, Filtration and Disinfection • No Groundwater Wells • No Raw Water Pump Station • 8 Hours Weekdays and 2 Hours Weekends • Monitored Full Time • Shared Resources with Wastewater Recommendation -.. i Y � • Authorize Recruitment of Staff — Plant Manager (full time) — Transition Manager (part time) • Appropriate $225,000 for FY 2011/12 • Others Possible at Mid Year Budget Questions �r MEMORANDUM, City of Lodi, Public Works Department e, To: City Manager From: Public Works Director bate: October 18, 2011 Subject: Interview Notes In the course of evaluating the water plant staffing proposals provided by Veolia and Southwest, and in the context that staff has little experience in staffing a membrane water treatment plant, we contacted various individualsto increase our understanding of the issues related to a public/private partnershipfor staffing the Lodi plant. The attached notes from those conversations, an email, and a statement from Southwest are provided as requested. Please let me know if you have any questions. F. Wally Sandelin Public Works Director FWS/fws\ CC: City Clerk Attachments CM MEMO -WATER PLANTSTAFFING.DOT Confidential Telecon with BhupinderSahota (California Public Health Department) Subject: Private Public Partnership—WaterTreatment Plant Bhupinderdoes not support the idea of using a Public Private Partnershipto operate the City's new water treatment plant. He cannot go on record supporting either option for operating the new facility. Some of the points made during our conversation include: 1. Any public private partnershipwill require the oversight of a staff member that is knowledgeable of the operations of the water plant. 2. A public private partnership operations contract basically requiresthe contractorto produce the water at acceptable quality levels, perform or cause to have performed laboratorytesting, perform maintenance according manufacturers' recommendations and produce reports for submittal to the State. 3. The City of Lodi will be the official permit holder and any new State regulations, requirements, enforcement actions, or fines will be sent directly to the City. The City will have the option to prepare responses in-house or direct the contractor to prepare any responseto the State. 4. With a new water treatment plant, it cannot always be determined in advance the operating requirements, performance standards, testing requirements and all operations criteria of the water plant. 5. Itdoes not seem reasonable to expectto operate the water treatment plant with only three operators. 6. Optimization of plant operations looks at a number of operating parameters including treated water quality, chemical usage, power usage, utilization of WID banked water, regularwell exercising balanced with treated surface water production, frequency of backwash, and frequency of membrane cleaning cycles. These can belabor intensive exercises that can yield significant operations saving or not. The contractor is not likelyto engage expensive exercises with no return on their investment becausetheir fee is governed by the contract. Although, they would be a normal part of the City -operated plant it is almost impossibleto write a scoping requirement for optimization studies into a contract. You learn as you go. 7. There is inherent risk ofthe contractor not maintaining the facilities to the level demanded/expected by the City. A lack of proper maintenance might not become apparent for several years, especiallywith a newfacility. 8. Checking in on the operation of the water plant by a Treatment Plant Operatorthat could be assigned to multiple facilities is different from an Operator that take on ownership of the plant. By design PPP efficiencies rely upon the sharing of resources amongst multiple operations. Telecon with Chris Sheridan (Water Treatment Plant Operator HDR) Subject: Private Public Partnership —WaterTreatment Plant 1. We reviewed the Staffing Assessment he prepared and highlighted the following: a. The staffing assessment is not fat due to Chris' experience with them being highly scrutinizedfor a variety of reasons. b. The methodology was to prepare the assessment for the Lodi facility and then compare it to other operating facilities. c. He assumed the City would share existing electricians and maintenance staff already employed by the City. 2. We discussed the public private partnership proposal prepared by SWWC and their proposed staffing levels. His comments are summarized below: a. Chris is not opposed to private operations of publicly owned facilities. b. He cautioned about the difficulty of having enforceable performance standards properly structured within the agreement. The performance standard to meet operating permit standards is generally consideredto be a minimum. c. Condition assessments and advance maintenance efforts are pro -active operations proceduresthat are above the minimum performance standards. d. There are risks of running new equipmentto failure with a private contractor and a new facility. In the first years of operations, the contractor looks good because everything is running great. In the out years, equipment has to be replaced as a capital expenditure (paid by City) instead of maintained in the earlyyears (paid by contractor). e. It is difficult to understand how three operators can operate the plant with two operators on site for 10 hours/ day and 7 days per week for a total of 140 hours per week. There are only 120 hours (3x 409 = 120) available between the three operators and that does not accountfor any vacation, sick leave, holidays, or training. It might be they are assuming an 8 hour day operation but the Staffing Assessment clearly designates a 10 hour work day in the Optimization Period. Telecon with Richard Stratton (9/14/11) Subject: Private Public Partnership —Water Treatment Plant Optimized cleaning process is important to protection the Pall Membrane warranty. Coordination with the manufacturer, Pall, is important with regard to scheduling of the EFM cleaning. The minimum manufacturer's recommendation is once every three days. The membranes might require more frequent cleaning depending upon conditions. The contractor would have bias toward less frequent cleaningto control costs. A riskto damaging the warranty could result. Rich reviewed his conversation with Chris Sheridan, Water Treatment Plant Operator (HDR), regardingthe staffing levels at Yucaipa, CA (8 mgd) that has four operators and one chief operator. The calculated theoretical FTE requirement was 2.9 while the actual on site was five. At the Kennewick plan (10 mgd), there are three operators and one chief. The calculated theoretical FTE requirementwas 2.9 and there are actuallyfour on site. The theoretical FTE requirement for Lodi is 3.9 FTE Telecon with Patrick Garvey, District Engineer of Diablo Grande Water Distirct(9/13/11) Subject: Private Public Partnership— Water Treatment Plant 1. Veolia is the contract operator for this small system near Patterson. 2. Problems with chlorinated byproducts in the treated water was suspected to be related to the chlorine dosage. Attempts to get Veolia to change their operations protocol were not accepted and the plant continued to operate in violation of the the permit. Finally, the Veolia operators took direction from the District Engineer and the problemswere corrected. 3. The contract has not conditions requiring the Veolia operators to take direction and the CE could not go into the facility and make the changes. 4. The contract with Veolia is ending without renewal. Telecon with Joe Zoba (General Manager Yucaipa Valley Water District) Subject: Private Public Partnership— Water Treatment Plant Joe Zoba was contacted to discuss the start up and transition to the optimizing phase of operation of the Yucaipa Pall Membrane plant that is 8 mgd or about the same size as the Lodi water plant. His comments are summarized below. 1. They had not operated a membrane plant before and found the start upto be relatively straight forward for his staff. He was complimentaryof the support provided by Pall Membranes and SPI, a consultantthat assists in the start of newwater treatment plants. He stated severaltimes that his staff had little difficulty in learningto operate the plant. 2. Yucaipa also uses Pall Membranes in the tertiary phase of their wastewater treatment plant. They have cross trained 12 operatorsthat are able to work a t both the water plant and wastewater plant. Before the cross training, their staffing levelswere 8 — 9 persons on both the water and wastewater facilities. This allowed them to use fewer operators as they deal with the operatorstime away from the facilitiesfor vacation, holidays, sick leave, and training. 3. When asked if he thought we could run our plant with only three operators, he was quick to state that he runs his equal -sized plant with six operators. He does not see how it would be possibleto providethe operation of the plant and the well maintenancewith so few operators. 4. He commented that they shut down their plant the month of Februaryand rely upon their wells for supply. During this time they clean strainers, maintain the chemical feed pumps, paint equipment and do other work that is complicated by the plant being in operation mode. (This will be similar for the Lodi plant.) Wally Sandelin From: Stratton, Rich [Rich. Stratton@hdrinc.com] Sent: Friday, September 16,20116:48 AM To: Wally Sandelin Subject: RE: Telecon with BhupinderSahota.doc Wally, received some information from Gary Witcher with Cal Water who is in charge of operating two Pall membrane plants (22 mgd and 8 mgd) in the Bakersfield area. His contact information is: Gary Witcher, Cal Water (661) 872-6400 He shared the following information: Northeast Plant (22 mgd): This plant uses Pall memDranes ani has a plate settler for pretreatment and solids handling system. The plant is staffed 12 hours per day. They use 1 maintenance person and 5 operators. Northwest Plant (8 mgd): This is a Pall membrane direct filtration plant with no pretreatment system or solids handling (very similar to Lodi). They use 1 maintenance person and 3 to 4 operators. spoke with Chris Sheridan about the calculated FTEs versus actual FTEs for Yucaipa. He explained that the calculated number was based on his theoretical calculation methodology (best case) and the actual is the number of operators they actually use. Hopethis helps, RICHARD STRATTON P.E. HDR Engineering Senior Project Manager 23651 ro n Point Road, Ste 3001 Folsom, CA 95630 916.817.48191 c: 916.215.6722 Follow Us— Facebook I Twitter I YouTube i Linkedln From: Wally Sandelin [mailto:wsandelin@lodi.gov] Sent Wednesday, September 14,2011 8:20 AM To: Stratton, Rich Subject: RE: Telecon with BhupinderSahota.doc That would be great. City of Lodi, California SouthWest Proposal for Contract Operation & Maintenance Water Company' SWWC Cost Proposal Following is a table summarizing annual cost per staff member for staffing proposed for the new City of Lodi Surface Water Treatment Facility. Table 4: Annualized Salary for Facility Staff Staff Member Annualized Salary" Facility Manager $ 120,744 Assistant Facility Manager $ 109,005 Grade III Operator $ 105,665 Grade II Operator $ 76,914 * Annualized salary is the one-year equivalent cost of salary, wages, overtime pay, pay differential, longevity, unemployment compensation, medical coverage (including hospital, medical, dental and vision), workers compensation insurance, holiday pay, vacation leave, sick leave, meal allowance, education assistance, life insurance, Contractor contributions toward self-funded retirement and all other costs provided for each and every proposed staff of the Contractor and subcontractors (note: no subcontractor use is proposed for Lodi). The cost is also inclusive of overheads and profit. r - Jennifer Robison From: Bob Johnson - External Sent: Thursday, October 20, 201110:03 AM To: Randi Johl Subject: Fw: Southwest Water Company position paper. Attachments: SWWC letterto Lodi 10-18-2011(2).doc Page 1 of 1 ----- Original Message ----- From: William Schwarz Th: Phil katzakian : Alan4ssen anaol.com ; Bob Johnson: Ihansen(aDlodi.goy : jmounce lodi.gov Cc: Rad Bartlam : Wally Sandelin ; Chris Malinowski; Kathy Stone: Frank Mora'. Mike Buckley; Roaer Miachelbrink: Kelly VanderHeyden Sent: Tuesday, October 18,20113:13 PM Subject: Southwest Water Company position paper. Mr. Mayor and Honorable Council Members, Attached please find a "position paper"which addresses number of issuesthat are relevantto your item 1-01, adopting resolution authorizing recruitments to staff the City's water treatment plant and appropriating funds, listed on the agenda for tomorrow nights' meeting. This is a rather in depth document which is meant to clarify our position on many issues that are raised in the staff report, part of your agenda packet. Reading this tomorrow night at the meeting would not allow you to fully grasp the seriousness of these issues, so I believe sending this out ahead of time will allow you to review the material and better understand our position. Myself along with other Southwest Water Company employees will be attending the meeting and will be happy to address your concerns and issues. Thank you for taking time to review the attached document, and we look forward to seeing you tomorrow night. Thank you again for your consideration of our services. Respectfully, William William P. Schwarz Business Development Manager, CA Southwest Water Company 212 Hill View Lane, Coalinga, CA. 93210 Office/Mobile (559) 903-1597 Fax (559) 934-0185 E mail: wschwarz@swwc.com 10/20/2011 f Southwest Water Company October 18, 2011 To: Lodi Mayor and City Council Members From: William Schwarz, SWWC Business Development Manager Re: Staff report for water operations prepared by Public Works Director. Request to be considered as water plant operators Dear Mr. Mayor and Council Members, Southwest Water Company (SWWC) is pleased to be considered to be the operator of your new water treatment plant currently under construction. Our proposal offers the services requested by the City using a proven operations plan that will save the citizens of Lodi over $1.9 million. SWWC management and I have reviewed staffs report that is included in the City Council agenda packet. I would like to take this opportunity to address a number of issues that have been raised in the staff report to Council regarding SWWC's proposal. I believe it is in the best interest of all parties to circulate this information prior to the meeting tomorrow night in order to have an opportunity to review this information and be informed. Several SWWC employees, including myself, will be in attendance tomorrow night to answer any questions and address any other issues you may have. City staff made a determination that the SWWC proposal was "not in full compliance with the content requirements" and should have been rejected. (For your information, staff also recommended that the other bidding firm's proposal should have been rejected as well). These primary areas of non-compliance for Southwest Water Company were presented in the shirtsleeve meeting August 30th, exhibit "B", and are detailed below. SWWC will perform the Scone of Services reauested in the RFP document. 1). City staff claims that SWWC did not respond to the Written Scope of Services Section in the Request For Proposals. The question posed in the RFP was: "Describe the proposed scope of work and your firm's approach to completing the work with the intent being to describe how your scope and approach differs from Section III" Our response was: SWWC proposes to perform and fully meet all of the City of Lodi's needs as outlined by the RFP Scope of Work. We will also bring the added value of our experience in working with area surface water to produce the most appealing, in terms of taste and odor, treated water possible. We also have considerable expertise in tailoring treatment to minimize the potential problems of blending surface and well water. SouthWest I P Water Company We stated that we would "perform and fully meet all of the City of Lodi's needs as outlined by the RFP Scope of Work", instead of simply re -copying the 35 items that are listed in the RFP (pages 31 - 36) which provide specific detail on what services will be required for the operation of the water plant and water producing facilities. SWWC will perform the Scope of Services listed in the RFP. On this same issue, in the staff report to Council, page two, paragraph three, the following is written; "[I]t is difficult to believe that Southwest would operate and maintain the facilities exactly as presented in the RFP". This statement has no basis and is without merit or fact, and even makes an accusation that we are dishonest. We strongly object to any inference that we don't do what we say we will do. On the contrary, we expect to fully comply with the requirements of the RFP. As a check and balance to the City, any failure to comply with the obligations of the contract would serve as a breach to the agreement and the City would have the right to terminate the agreement in the event the breach cannot be rectified or corrected. 2). 1 n exhibit B, staff indicates we do not comply with the information regarding vehicles and truck inventory. Again, I reference page 31 of the RFP, number 3, which states "[F]urnish and maintain vehicles and light-duty service trucks to carry on daily operations". The RFP does not ask for the number of trucks, types, colors, year, size, or specific information. This information was eventually provided to City staff however, the rating of "no" in this area was not changed to'yes". 3). City staff claims that SWWC did not provide a capital improvement program and again received a rating of "no" in exhibit B. I reference page 35 of the RFP, item number 29 which states the operator "[P]rovide the City, at least annually, a capital improvement program recommendation, identifying needed facility repairs and other expenditures in excess of $5,000 each (excluding the cost of labor of individuals assigned by the contractor to work at the City site an average of 30 or more hours per week in each six month period and the cost of Contractor supervision of these or any other individuals or contractors hired or assigned to undertake such repairs) that will be necessary for the water facilities in order to restore, maintain, replace, or upgrade the equipment and other aspects of the water facilities for efficiency, safety, function, and/or compliance with current and anticipated regulatory or customer growth requirements". That is exactly what we intend to do, again, comply with the requirements of the RFP. I f we had intended to recommend something different, we would have indicated that in our response, but we do not intent to do anything differently that what is stipulated' in the RFP. Much, if not all of the capital improvement program, will evolve from close communication and coordination between the City and SWWC as the project unfolds to include well facilities. A Staffina Plan of 3 Operators Can Reliably Perform the Work Reauired. I n the staff report to Council, it states that SWWC's staffing plan "indicates no more than three operators and no other personnel are required to operate the facilities in significant contrast to both the Veolia plan (seven total) and the City plan (seven plus total)". The report also references "interviews with persons knowledgeable of operations at similar type and size facilities affirmed that three operators with no support staff are not sufficient to operate and maintain the water plant and well facilities". I would like to take this opportunity to defend our staffing proposal. 2 IVSouthWest Water Company First of all, the City's own technical memorandum from HDR, "Water Treatment facility Staffing Assessment", dated August 5, 2010, provides the following information. On page 8, two benchmark comparisons to similar facilities are shown. One in Keenewick WA with a capacity of 10mgd, and one in Yucaipa, CA with a capacity of 8mgd, very similar to the Lodi facility. They are staffed with 3 and 4 operators respectively. The report goes on to recommend that the Lodi facility, once optimization of the facility is achieved, can be operated with a calculated FTE equivalent of 3.9 operators, or a staff of 5 (alternative 3, optimized operations). Our proposal mirrors the one recommended by HDR. A key fact supporting our proposal is that we are currently operating a surface water treatment plant in Mountain House that is twice the size of Lodi's with a staff of three, with one operator being out in the field most of the day conducting meter reads, turn on and turn offs, and other field duty requirements. It is one thing to say we can operate a facility with limited staff, it is another to actually show that we already do it. At the shirtsleeve meeting on August 30, 2011 those in attendance were given a letter of reference from Mountain House Operations and Maintenance Director Harpal Singh verifying our capabilities and exemplary service. We invited staff and Council members to visit the Mountain House treatment plant. Three Lodi Council members were able to see our operations and tour the facilities. Two of water plant operators, including our proposed Chief Operator, recently attended a Pall membrane training seminar in Sacramento. The proposed Chief Operator will be traveling to Texas soon to be a part of a start up and commissioning process for a similar facility to the one being built here in Lodi (pall membrane facility). Operating and maintaining membrane treatment plants with 3 operators is not limited to SWWC. I n San Antonio Texas, United Water operates an 11 million gallon per day surface water treatment plant with only three operators. It has been in service for 11 years and has been operated and maintained impeccably since start up. Our proposal is the only one that identifies the name of the Chief Operator at the time of the RFP submission. He is not someone who comes to the area for a year to get the plant running and then leaves, as indicated by our competitor at the shirtsleeve meeting. He is also a Lodi resident. He is solely dedicated to the Lodi facility. For clarification, our proposal (page 12 of the RFP) indicates only a 12 month period between commissioning and optimization, not 15 as reported by staff. I f it would make the City feel more comfortable, in regards to the number of operators working at the plant, SWWC would be pleased to provide an additional operator for $100,000 per year above our previously submitted bid. This added expense would still provide a savings to the City of over 1.6 million dollars. This is something that can be addressed in the contract negotiations phase. As optimization is achieved and if this operator is not required, the savings would be passed back to the City. 3 IVSouthwest Water Company Keepin—c Costs Down By Usina Subcontractors As Needed. SWWC utilizes subcontractors on an "as needed basis". One of the ways we keep our costs down is to draw from a pool of subcontractors and operators we use across Northern California. Because we have numerous contracts in the area, there is no need to have a full time instrumentation technician, electrician, plumber, administrative clerk, if there is not a demand for that service 40 hours per week. This eliminates thousands of dollars in expenses to clients which are passed along to our clients in savings. I f selected, all efforts will be made to provide a list of subcontractors from start up through commissioning, post commissioning, normalization, and optimization periods. Annual Full Compensation Values by Position. Conversations were had with City staff to explain why this information was limited. This is protected confidential information and is not divulged to perspective clients in order to protect Southwest Water Company in its' efforts to remain competitive in the business. SWWC Understands the Maintenance Needs. Staff reports SWWC did not review maintenance records and did not research the distribution facilities. During the City tour, staff indicated that the well sites that were visited reflected the City's facilities as a whole, and that nothing varied from those sites visited to any significant degree. Specific well facility maintenance did not impact the proposal submitted by SWWC to warrant any substantial increase in labor not already covered in the proposal. Hiring SWWC Brings Additional Benefits. Included in our price are several additional items that the City of Lodi can benefit from that will ensure dependability, reliability, safety, oversight, and compliance. • Safety and Compliance—SWWC initiated the EHS department in 2007 to ensure compliance and improve our company safety and environmental compliance. SWWC has 3 safety officers with extensive CaIOSHA training and interface experience. Nationally, we have four members of our EHS team that are Certified Safety Officers. Currently, their duties include reviewing communications with governmental agencies and operator reports, internal QA/QC for safety and compliance, running the safety program, set up specific trainings such as confined space, defensive driving, etc., perform third party internal audits (were safety, compliance and operations excellence, as well as appearance are rated) and provide operational experience and problem solving. I n California particularly, SWWC has set up more aggressive programs to watch compliance of all state and federal laws, as California has a more monetarily punitive approach to enforcement than many other states. • SOPS (Standard Operating Procedures) —The EHS Department has written a basic network of SOPs for treatment facilities, as well as distribution 4 SouthWest Water Company and collection systems. I n California, the region has produced a network of SOPs that are tailored for each facility and routinely trains operators on these SOPS. SAP—SAP is an all-inclusive management system that has modules for accounting, maintenance, labor tracking, etc. that is unified and speaks to itself. It can send out invoices and also track routine maintenance as a CMMS (Computerized Maintenance Management System). It produces work orders and service orders so that maintenance will proactively can be tracked and ordered. Audit Program—SWWC currently has an internal QA/QC program that runs audits of our facilities. They have developed modules for safety, maintenance, operations (water and wastewater), contract compliance, collections systems, lift stations and distribution systems. We are currently developing modules for reuse water, wastewater nutrient removal and cross -connection control. It is our firm's goal to internally audit all the facilities we operate and own within the next five years. There currently is a group of fifteen auditors who perform these functions nationwide, An Antero Maintenance Program will be implemented from start up and commissioning to ensure proper work orders are generated, completed, sent to the City and a extremely high level of maintenance is expected to be completed with close coordination with the City staff. Summary. So what is the bottom line here? The bottom line here is about reliability, dependability, transparency, trust, and the savings of millions of dollars to the tax payers of this community, It is also about efficiency and delivering safe good quality water to the residents of Lodi. I n a public private partnership there has to be an element of oversight and trust from both parties in order for it to be successful. It is more than a partnership, it is a relationship. This has been a new process for the City of Lodi and SWWC wants the Council to feel comfortable in moving forward with any agreement. Part of the contract negotiation phase allows both parties to address concerns and issues that each may have. This may include staffing level assessment, well facilities operations, more information regarding maintenance and operations to ensure extended life for treatment process and equipment, and a variety of other items. SWWC has been more than willing to assist the city in this process providing initial savings estimates, meeting with staff to discuss the project, submitting what we felt was a quality RFP document, and reaching out to both staff and elected officials in order for them to make an informed decision about this project. Our proof is in what we say, and more importantly, what we do. This is what we do, it is all we do. Our Company has an excellent safety record, outstanding references from surrounding communities, and we have received many awards for our service. Our proposal will save the City over 1.9 million dollars over the first three years of the project alone. Our ability to provide excellent service and deliver superb water quality to the citizens of Lodi will be realized with the awarding of this project to Southwest Water Company. We are a reliable and dependable water A SouthWest Water Company treatment Company. We would appreciate being considered as the operator of your new water treatment facility. Thank you for the opportunity to address these issues and I look forward to seeing you all Wednesday evening. Respectfully Submitted, William Schwarz L r-2 (i)VEOLIA WATER October 14,2011 Mayor Bob Johnson City of Lodi 221 West Pine Street Lodi, California 95240 Subject: Partnershipfor the Operation and Maintenance of the Lodi Water Treatment Plant and MunicipalWell Facliities Dear Mayor Johnson: We understand City staff will recommend Veolia Water as the City's preferred private partnerfor operating the Citys new surface water treatment facility and related wells. This letter summarizes the benefits Lodi residents and businesseswill receive through a partnership with Veolia Water. As staff outlined in their report, Veolia Water has a track record of success in California and developed a comprehensive proposal that saves you money with minimum risk. Our cost proposal includes several major factors that you should consider in making your decision. These include: • Responsible staffing. We built a responsible staffing plan that is led by Mike Greene, P.E., a water expert with over 33 years of water treatment experience. Our project team will be supported by Marvin Gnagy, a water membrane treatment/process expert with over 30 years of experience. Our plan ensures adequate staffing for 24/7 operations and coverage during emergencies when outside assistance could be days or weeks away if the City relies on consultants. More importantly, our overall compensation for critical staff members is very competitive in the Lodi region, which will assist in the recruitmentand retention of qualified personnel. • The largest network of partnership projects and water experts at your doorstep. Veolia Water is the only proposerthat has five municipal operations and its regional headquarterswithin 1.5 hours of the City of Lodi. Our partnership will provide the City access to more than 50 local technical experts to ensure your facility's objectives are met at no additional costs. VEOLIA WATERWE8T OPERATING SERVICES, INC. 2300 Contra Costa Boulevard, SuXe350. Pleasant Hill, Califon ia94523 TELEPHONE: (925)771-7207 •- FAX (925) 681-0236 Vtn lawatoma.com Mr. Bob Johnson, Mayor City of Lodi Water O&M Proposal Page 2 • Cost Control. With Veolia Water you know what the cost to run your operations will be for the term of our partnership. There are no surprises. If we need assistance we will engage our vast network of experts and resources, wherever in the world they may reside, at no cost to the City. This saves the City from hiring consultants, temporary help, and other unforeseen costs associated with a highly technical facility. More importantly, foreseeable increases in health and retirement costs are already included in our price. Additionally, we committed in our proposal to an energy usage cap and chemical procurement program designed to further lower your facility costs, savings you can pass onto residents and businesses. • No change orders. Veolia Water's proposal is a firm -fixed price. We do not underbid projects to win. We will commit to our price and the City's contract language prohibiting change orders. • Proactive maintenance. We will implement an industry leading asset management program. Essentiallywe work with your staff to catalog all your assets and develop a maintenance program that is proactive, minimizing emergency situations and eliminating deferred maintenance. Our program protects your investment and saves money. • No subcontractors. We do not subcontract our core functions to third parties. We believe in hiring high quality operators, maintenance workers, and support staff to work at your project site. • Risk transfer, A partnership with Veolia Water will transfer risks associated with maintenance, operations, environmental compliance and other items to us. This service is provided at no extra cost and is extremely valuable in the face of ever increasing regulatory requirements. When the City is responsible for operations, any equipment or maintenance problems are the City's costs and any related expenses are borne by ratepayers. Track record of success in California. Since 1972, the longest of any private water operator, we have built our California operations on trust and meeting our client's expectations. For almost 40 years, we have grown our business with local agencies, the State of California, and the Federal Government/Department of Defense. We will work everyday to make sure the water you drink is clean and safe. • No confusion in responsibilities. In all the agreementswe enter into, Veolia Water acts as an extension of the public works/utility department. We take direction and work with City staff to ensure projects are completed on-time and in budget, and facility YEOUA W;,Mi Mr. Bob Johnson, Mayor City of Lodi Water O&M Proposal Page 3 information is transparent. We attend City Council meetings and neighborhood meetings as requested and help out beyond our scope when needed. In addition to the value added services outlined above, we would agree to two additional commitments if the City Council moves forward with a partnership with Veotia Water: • Direct Investment in Lodi: Veolia Water holds an annual safety conference for 120 senior managers and their guests in the Western United States. We would commit to hosting the next safety conference in Lodi if the City entered into a partnership with Veolia Water. Our conference consists of over 400 room night reservations, transportation, catering, rentals, meeting space, supplies and evening activities for attendees and guests or more than $200,000 indirect local investment. • Hiring locally: Veolia Water knows the best employees are ones who work and play in the communities we serve. We will commit to hiring qualified Lodi residents first to fill positions at your facility. We look forward to the opportunity to work with Lodi residents and businesses as your O&M services partner. Please contact me if you have any questions or need any additional information. Sincerely, 8 -Z I , �. Q=- Shilen Patel Business Development Manager Veolia Water West Operating Services, Inc. Cc: Lodi Mayor Pro Tempore Joanne Mounce Lodi City Councilmember Lary D. Hansen Lodi City Councilmember Phil Katzakian Lodi City CouncilmemberAlan Nakanishi Lodi City Manager Rad Bartlam PublicWorks DirectorWally Sandelin W VEOLIA XATCA Page 1 o f2 Jennifer Robison From: Bob Johnson - External Sent: Thursday, October 20,201 110:03 AM To: Randi Johl Subject: Fw:10/19/2011 Lodi City Council Agenda Item: Res. 1-1 ----- Original Message From: Ed Miller To: anakanishiO)Iodi.gov : Bob Johnson: JoAnne Mounce; Ihansen&?odi.gov Phil Katzakian; rbartlam(Mlodi.gov; sschwabauer(c)-lodi.gov Cc: Kim Pariqoris- Lodi Citizens In Action ; Maggie Creamer Sent: Monday, October 17,20114:23 PM Subject: 10/19/2011 Lodi City CouncilAgenda Item: Res. 1-1 10/20/2011 Southwest Veolia city cost: 1 3 2 Delivery 2 1 3 Quality 1 1 3 Score 4 5 8 10/20/2011 Southwest Veolia City Labor, years 1-3 $1,246,592 $2,136,964 $2,314,967 O/H & Profit, years 1-3 $1,047,774 $1,678,266 $1,389,108 Total: $2,294,366 $3,815,230 $3,704,075 Delta: --- $1,520,864 $1,409,709 10/20/2011 Page 2 of 2 Time to "Normalization" in months 1 15 1 8 1 17 10/20/2011