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SR 05-24-2016 3H City Council Report City Council Meeting: May 24, 2016 Agenda Item: 3.H To: Mayor and City Council From: Martin Pastucha, Director, Public Works, Water Resources Subject: Sole Source Purchase of Water Treatment Chemical Analyzer Equipment, Instruments and Reagents Recommended Action Staff recommends that the City Council authorize the Purchasing Services Manager to issue a blanket purchase order with Hach Company, a Colorado-based company, for water treatment chemical analyzer equipment and reagents. This recommended award is made as an exception to the competitive bidding process pursuant to Section 2.24.080 (d) and is for a total amount not to exceed $350,000 over a five-year period ending June 30, 2021 with future year funding contingent on Council budget approval. Executive Summary The Arcadia Water Treatment Plant and Charnock Well Field are equipped with 48 Hach analyzers to measure water quality and chemistry for groundwater treated and delivered to Santa Monica customers via the City's potable water system. City treatment plant operators and chemists use Hach instruments and reagents to measure the accuracy of analyzers and perform daily water quality testing in order to both meet federal, state and local regulations and satisfy Santa Monica water customer expectations for taste, odor, appearance and other aspects of water quality. Hach Company is the sole source manufacturer and distributor of these products. Since July 2013, $127,140 has been spent through May 2016 under sole source purchase orders. Staff recommends Council approve an additional purchase order award with Hach Company for water treatment analyzers, instruments and reagents used by staff to measure potable water quality and chemistry for a five-year period ending June 30, 2021 not to exceed $350,000. Background The Hach Company is a long-established firm headquartered in Loveland, Colorado, which manufactures and distributes analytical instruments and reagents for water testing and water quality analysis. To assist in monitoring the water quality and chemistry of groundwater sourced from the Santa Monica Basin being treated and supplied to Santa Monica customers via the City's potable water system, 48 Hach analyzers have been installed at the Arcadia Water Plant (1228 S. Bundy Drive) and Charnock Well Field (11375 Westminster Avenue). These analyzers measure various aspects of water quality and chemistry including pH, ammonia, chloramines, chlorine, conductivity, fluoride, sulfides, turbidity and other properties. City water treatment plant 1 of 3 operators and chemists use Hach instruments and reagents to calibrate testing equipment and perform daily water quality testing. The analyzers provide staff with the data needed to make adjustments at various steps during the water treatment process in order to deliver potable water that meets or exceeds federal, state and local requirements as well as satisfy customer expectations for taste, odor, appearance and other characteristics. The majority of the analyzer equipment was purchased from Hach Company in 2011. Repair and maintenance costs have increased each year, corresponding with the aging of the system. In addition, while each analyzer has an expected lifespan of approximately 10 years, staff has had to replace a small number of analyzers over the past three years. Should analyzers fail in the future, replacements would cost approximately $10,000 to $20,000 apiece. Since July 2013, $127,140 has been expended under sole source purchase orders approved under the City Manager's purchase authority: FY 2013-14 - $38,644 FY 2014-15 - $45,512 FY 2015-16 - $42,984 as of May 2016. Discussion In order to keep the Arcadia Water Plant and Charnock Well Field Hach analyzers in adequate operating condition to measure and ensure proper water quality and chemistry, staff recommends continuing purchases of parts, instruments and reagents from Hach Company for a five-year period ending June 30, 2021 in a not to exceed amount of $350,000. Vendor Selection Staff recommends Hach Company to furnish and deliver water treatment chemical analyzer equipment and reagents as an exception to the competitive process per SMMC Section 2.24.080 Exception to Competitive Bidding Section. Hach analyzers were installed by Black & Veatch in 2011 as part of plant upgrades bid through a competitive process. Hach Company is the sole authorized manufacturer and direct distributor for all Hach-branded instrumentation and chemistry. Replacement of Hach analyzers with another brand would be currently cost-prohibitive at an estimated replacement cost of $500,000; however, should individual analyzers become inoperable, the City would consider alternative models from other manufacturers that do not require consumable reagents for testing and calibration. Replacement analyzers from other manufacturers would require additional staff training for proper operation. Should the Water Resources Division discontinue use of Hach analyzers or should 2 of 3 Hach Company begin licensing its products for re-sale, this purchase order would be terminated. Financial Impacts and Budget Actions The blanket purchase order to be awarded to Hach Company is for an amount not to exceed $350,000. Funds in the amount of $70,000 are included in the FY 2016-17 Proposed Budget in the Public Works Department. The blanket purchase order will be charged to account 25671.544010. Future year funding is contingent on Council budget approval. Prepared By: Kevin Nagata, Senior Administrative Analyst Approved Forwarded to Council 3 of 3