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SR-10-13-2015-3N City Council Report City Council Regular Meeting: October 13, 2015 Agenda Item: 3.N 1 of 5 To: Mayor and City Council From: Edward King, Director, Big Blue Bus, Transit Maintenance Subject: Second Modification for Supply and delivery of Liquid Natural Gas Fuel to the Big Blue Bus Recommended Action Staff recommends that the City Council: 1. Authorize the City Manager to negotiate and execute a second modification to contractual services agreement #9832 in the amount of $3,700,000 with Clean Energy®, a California-based company, for the purchase and delivery of Clean Energy Redeem™ Renewable Liquid Natural Gas (RLNG). This would result in a five-year amended contract with a new total amount not to exceed $16,200,000, with future year funding contingent on Council budget approval; 2. Authorize the Director of Transit Services to issue any necessa ry changes to complete additional work within contract authority. Executive Summary The Second Modification to contract agreement #9382 would increase the contract amount by an amount not to exceed $3,700,000 for the continued purchase and delivery Clean Energy Redeem™ Renewable Liquefied Natural Gas (RLNG). The fuel is used in the City’s fleet of 196 natural gas-powered transit buses and City service vehicles that fuel at BBB’s 5th and Olympic Street fuel station. The continued purchase of Clean Energy Redeem™ RLNG would be at specific unit prices plus applicable sales tax. The total expenditure for the five-year term would be an amount not to exceed $16,200,000 (July 1, 2011 through June 30, 2016). Background In 2002, BBB built a Liquid/Compressed Natural Gas (LCNG) fuel farm and fuel island that has the capability to dispense Liquid Natural Gas (LNG) and Compressed Natural Gas (CNG). The LCNG fuel farm system converts the state of LNG from a low pressure 2 of 5 liquid to a high pressure vapor commonly called CNG, and the CNG fuel is then stored in six storage vessels and available for dispensing. In 2009, BBB developed a strategic bus replacement plan that included the retirement of all diesel operated buses. The plan also called for transitioning the entire revenue service fleet to Compressed Natural Gas (CNG). After careful maintenance analysis of the BBB fleet, by fleet and fuel performance, staff recommended a migration from LNG to CNG fuel. CNG buses obtain slightly better fuel mileage performan ce, and LNG fuel is susceptible to leakage once it is transferred from the fuel station to the bus. In preparation for the conversion of the fleet to CNG, in 2011, BBB upgraded the LCNG fuel farm to enable the fast fueling of CNG-powered transit buses. On June 14, 2011, Council approved an award to Clean Energy® for a one-year period with four additional one-year renewal options. At that time, BBB operated 99 LNG buses and 26 CNG buses. In addition, 15 new 40- foot CNG buses were due for delivery in December 2011. BBB retired all diesel buses by December 2013 and purchased Compressed Natural Gas buses in their place. On January 12, 2015, the First modification of Agreement #9382 was fully executed. The first modification was at cost parity to the City but allowed for the purchase and delivery of Clean Energy Redeem™ Renewable Liquid Natural Gas, a natural gas product derived from the harvest of methane gas from landfills. The use of the Redeem™ Renewable Natural Gas significantly reduces harmful Green House Gases and further reduces the City’s emission of harmful pollutants. BBB currently operates 196 buses powered by Redeem™ Renewable Liquid Natural Gas (RLNG). Discussion The City of Santa Monica is a nationally recognized leader for its sustainab ility policies 3 of 5 and actions. BBB has progressively contributed to the City’s sustainability narrative through its use of alternative fuel and ultimate phasing out of diesel fueled motor coaches. As of January 2015, BBB’s entire fleet of motor coaches is powered by clean burning and Renewable Natural Gas that is harvested and processed locally. Big Blue Bus has been fueling its Liquefied Natural Gas and Compressed Natural Gas fleet of motor coaches with Liquefied Natural Gas supplied by Clean Energy®, a California Corporation since 2012. On January 12, 2015, the City and Clean Energy® modified its original agreement to include the supply of Liquefied Natural Gas or Renewable Liquefied Natural Gas known as Redeem™. Renewable Liquefied Natural Gas is non-fracked methane harvested from landfills. This gas has historically been burned off in to the atmosphere. However, with advances in renewable technology, the gas is now harvested through a series of membranes implanted in the ground of landfills. Renewable Methane Gas is processed through a filtration and refining process and transported via pipeline to end users. As a result of the harvesting and filtration process, it is found that Renewable Methane Gas has fewer impurities than conventional Natural Gas and, thus, is a cleaner burning fuel source. The addition of Redeem™ is a natural next step and addition to BBB’s and the City’s sustainability portfolio. This, together with the retirement of diesel-powered buses and the purchase of Compressed Natural Gas buses, the usage of RLNG has significantly increased. The current average RLNG dispensing is 304,000 gallons per month or 70,000 gallons per week. The weekly cost to purchase fuel at $1.01 per gallon is $70,700 per week or approximately $3,676,400 per year as explained in the attached cost analysis. To continue the uninterrupted operation of the BBB revenue service fleet at the current budgeted miles and hours, staff recommends that Council authorize a second modification to agreement #9382 to increase the award by $3,700,000 for a not to exceed total of $16,200,000. Currently, staff has submitted specifications to the Purchasing Agent for the purchase and delivery of renewable natural gas for one year with four additional option years. This modification solely increases the existing contractual services agreement to 4 of 5 provide services until the contract expires in June 2016 and a new contract is awarded. Vendor/Consultant Selection A Request for Proposals (RFP) for the supply and delivery of LNG fuel was issued on March 9, 2011. Two bids were received and publically opened and read on March 23, 2011, per Attachment A. The bids were evaluated based on the criteria in SMMC 2.24.072, including competitive pricing, bid response time, vendor experience and references. Based upon these criteria, Clean Energy® was recommended as the best bidder. On January 12, 2015, the First modification of Agreement #9382 was fully executed. The first modification was at cost parity to the City but allowed for the purchase and delivery of Clean Energy Redeem ™ Renewable Liquid Natural Gas, a natural gas product derived from the harvest of methane gas from landfills. The use of the Redeem™ Renewable Natural Gas significantly reduces harmful Green House Gases and further reduces the City’s emission of harmful pollutants. BBB currently operates 196 buses powered by Redeem™ Renewable Liquid Natural Gas (RLNG). Financial Impacts and Budget Actions The contract modification to be awarded to Clean Energy® is $3,700,000, for an amended contract total not to exceed $16,200,000. Funds are available in the FY 2015-16 budget in the Big Blue Bus Department. The agreement will be charged to account 41654.522974. Future year funding is contingent on Council budget approval. Prepared By: Getty Modica, Transit Maintenance Officer Approved Forwarded to Council 5 of 5 Attachments: A. Clean Energy Second Mod Attachment -A B. Cost Analysis     Reference:    Amended Agreement NO. 9944   (CCS)