For Water Subcommittee Meeting October 23, 2024
TO: Honorable Water Subcommittee Members
APPROVAL: John Rossi, Interim Utilities Director
FROM: Toyasha Sebbag, Assistant to the City Manager
...Title
Advanced Metering Infrastructure (AMI) Project Bidding Issues (ACTION)
RECOMMENDATION
Staff recommends that the Water Subcommittee provide feedback on RWS-Veolia Recommendation and Approaches 1 and 2:
1. RWS-Veolia Recommendation: Award a contract to USG Water for a total amount of $8,730,796.75.
2. RUA Approach 1: Direct RWS-Veolia to prepare a Final Construction Work Authorization (FCWA) with USG and award a contract to USG for a total amount of $7,734,339.
3. RUA Approach 2: RWS-Veolia’s bidding preparation for the AMI project does not appear to have met prudent industry standards. Their approach has made it challenging for direct comparison of all three vendors. After staff discussion with the City/RUA legal counsel, this could pose grant compliance challenges. Provide feedback that staff negotiate a City/RUA-initiated project with Aqua-Metrics who appeared to be the original lowest and responsive bidder.
4. Provide alternative feedback.
...Body
BACKGROUND
On March 27, 2012, the City Council and Rialto Utility Authority (RUA) took several actions related to the approval of a Concession Agreement (CA) with Rialto Water Services, LP, (RWS), as operated by Veolia West Operating Services, Inc. (Veolia). This public-private partnership assigned the operation and maintenance of the City’s water and sewer/wastewater utilities to RWS. Pursuant to Article XII “Water Facility Improvements and Capital Projects” of the CA, certain capital projects were identified by the CA for implementation by RWS. Implementation of the utility capital projects identified in the CA is carried out pursuant to the process outlined in Article XII of the CA.
ANALYSIS/DISCUSSION
The City of Rialto (City) and Rialto Utility Authority (RUA) have secured $8 million in grant funds to implement the Advanced Metering Infrastructure (AMI) Project: $6 million from the Department of Water Resources Urban Community Drought Relief Grant and $2 million was secured from the U.S. Department of Interior, Bureau of Reclamation.
In December 2023, Veolia requested sealed bids for the supply and installation of an Advanced Metering Infrastructure System for RWS. Several vendors requested an extension, and an addendum was added with the due date of February 2, 2024, as well as adding a grant signage requirement to the Request for Proposal (RFP). Following the bid opening, Veolia informed staff that three (3) bids had been received, and Veolia determined that only one bid was complete. Therefore, Veolia re-bid the project.
On March 15, 2024, Veolia released a second RFP soliciting bids from qualified vendors with a history of performing similar work for AMI. The bids were due on April 12, 2024.
On April 5, 2024, Veolia released Addendum No. 1, which included answers to bidder's questions and an Excel spreadsheet with service location addresses.
On April 12, 2024, the bid closed.
On April 19, 2024, Veolia released Addendum No. 2 extending the RFP due date to May 6, 2024 and waiving the bidder's union requirement.
On May 6, 2024, four (4) bids were received with the following vendor ranking cost proposal:
On September 5, 2024, staff, RWS, and Veolia met and concluded that the lowest responsive bidder was Aqua-Metrics and that staff recommendation at the September 11, 2024, Water Subcommittee meeting was for RWS-Veolia to enter final negotiations with Aqua-Metrics to finalize the amounts necessary for a Final Construction Work Authorization (FCWA).
On September 9, 2024, after the Water Subcommittee Meeting Agenda was posted, Veolia’s AMI Project Manager received an email from one of the proposed vendors, who reduced their bid and expressed gratitude, as well as support for the City/RUA to proceed with their decision.
On September 11, 2024, staff presented the ranking results to the Water Subcommittee, along with the intent to finalize negotiations with RWS-Veolia on project fees. During the meeting, RWS instead recommended awarding the contract to USG at $8.2 million (including first-year setup costs and annual recurring fees), plus Veolia’s 20% procurement fee of $1.6 million, for a total contract award of $9,828,950. Veolia's cost increase to USG’s contract includes allowances for unknown field conditions.
Historically, Veolia’s project fees have been categorized with the following percent of a project cost and have been adjusted based on the amount of effort involved under each fee category.
Following the Water Subcommittee Meeting and after receiving Veolia’s recommendation to prepare an FCWA for USG for $9.8 million, staff discussed the AMI project during the RUA/RWS-Veolia monthly OPS Meeting held on September 18th. In that meeting, RWS presented three options to move the AMI project forward, which were confirmed in an email later that day to staff as follows:
1. Approve the FCWA for Veolia to begin work with USG.
2. Have the City/RUA take over the project with Aqua-Metric as the vendor.
3. Re-bid the AMI project as Addendum No. 3 and present it to the Council on November 12, 2024, for award.
RWS-Veolia Contract Award Recommendation
On September 27, 2024, without final authorization from the City/RUA, Veolia released Addendum No. 3 to the AMI project due on October 11, 2024.
The top three vendors were solicited to respond to Addendum No. 3 to provide an opportunity to clarify the scope of work, discover cost gaps/omissions from their first bid, and re-bid areas requiring further refinement. Below is a summary provided by RWS-Veolia of the results:
RWS-Veolia is requesting that staff support a total bid and contract award to USG for an amount of $8,730,796.75, which includes Veolia’s FCWA fee of 15% and allowance for field conditions at $507,900.
RUA Approach 1
With the approval of RWS-Veolia as the project lead, an approach for consideration is to award the contract to USG for $7,734,339 for the AMI Project:
Staff made the following modifications to USG’s Add in itemized costs estimates:
In addition, staff made the following modifications to USG’s allowances for unknown conditions cost estimates:
ENVIRONMENTAL IMPACT
Section 21084 of the California Public Resources Code requires Guidelines for the Implementation of the California Environmental Quality Act (CEQA). The Guidelines are required to include a list of classes of projects which have been determined not to have a significant effect on the environment and which are exempt from the provisions of CEQA. In response to that mandate, the Secretary for Resources identified classes of projects that do not have a significant effect on the environment and are declared categorically exempt from the requirement for the preparation of environmental documents. In accordance with Section 15301 “Existing Facilities”, of the CEQA Guidelines, a Class 1 project consists of the operation, repair, maintenance, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency’s determination. The replacement of existing water meters is considered a Class 1 project and is categorically exempt from CEQA.
GENERAL PLAN CONSISTENCY
Approval of the proposed action also complies with the following City of Rialto Guiding Principles, General Plan Goals and Policies:
Our City government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
Approval of this action also complies with the City of Rialto General Plan Goal and Policy:
Goal 3-6: Require that all developed areas within Rialto are adequately served with essential public services and infrastructure.
Policy 3-8.4: Advocate regular evaluation of the entire water supply and distribution system to ensure its continued adequacy, reliability, and safety.
LEGAL REVIEW
The City Attorney’s Office has reviewed the staff report.
FINANCIAL IMPACT
Operating Budget Impact
By implementing an AMI meter system, it is anticipated that there will be a reduction in Veolia’s field service staff due to significantly reduced field visits. The exact reduction will be calculated during the 2024-2027 Labor Reset of the Concession Agreement for Water and Wastewater with Rialto Water Services.
Capital Improvement Budget Impact
Depending on feedback from the Water Subcommittee, the Project will be partially funded through $8 million in grant funds to implement the Advanced Metering Infrastructure (AMI): Department of Water Resources Urban Community Drought Relief Grant Funds for $6,000,000 and the U.S. Department of Interior, Bureau of Reclamation Grant Funds for $2,000,000.
The balance in cost between the recommendations and the grant funds will be funded through the remaining FIP monies. The grants will go before the City Council for acceptance of the grant monies at the same time that the contract is awarded to a vendor for the AMI project.