Submitted By: Marie Brooks
presenter
Presentation By: Doug Peebles
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Department: Electric Utility
STAFF RECOMMENDATION (Motion Ready):
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Approve additional funds required on contract for transformer supply and delivery services with Gresco Supply, Inc. in the estimated amount of $2,677,562
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OCALA’S RELEVANT STRATEGIC GOALS:
Operational Excellence, Fiscally Sustainable
PROOF OF PUBLICATION:
N/A
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BACKGROUND:
Transformers are used daily by the Electric Department for the repair, maintenance, and expansion of our electric system. It is vital that adequate transformer inventory levels are maintained to support daily operations and development projects within the Ocala Electric Utility (OEU) territory. Maintaining adequate inventory levels supports the council's strategic goals of quality of place and operational excellence by ensuring system reliability.
On March 7, 2023, the Council approved the first one-year renewal under the Agreement for Transformer Supply and Delivery Services (Contract No. ELE/190961) between the City of Ocala and Gresco Supply, Inc. (“Gresco”) with an estimated aggregate expenditure amount of $2,000,000. This contract is utilized for the purchase and stock of Ester oil-filled single and three-phase transformers.
OEU continues to experience increased demand for transformers. The high demand is attributable to a combination of large development projects along with the need to replace aging equipment currently in the system. Expenditures made to meet this demand have resulted in the depletion of previously approved funds.
FINDINGS AND CONCLUSIONS:
The demand for distribution transformers has surged due to ongoing new development and construction projects. Our annual customer growth has increased from a historical 1 percent increase to 3 percent in the last 12 months.
Increases in overall demand, manufacturing capacity limits, price increases, and material and labor shortages have led to unprecedented supply chain challenges affecting both current requirements and future forecasts. As such, additional funds above the amount approved for Contract No. ELE/190961 are needed to aid OEU in maintaining adequate inventory stock levels.
OEU has transformers slotted for delivery at a fixed cost of $449,513.46. The noted price increases have impacted transformers on existing, unfilled purchase orders in the amount of $786,802.79. Projected customer growth results in the need for an additional $1,441,246.38 to satisfy future transformer stock requirements through the March 2024 contract term.
Based on the foregoing, staff is seeking approval to increase previously authorized expenditures by $2,667,561.63.
FISCAL IMPACT:
Items are purchased on inventory and will be accounted for using 457-141-000-000-41-14100. The department will adhere to budgeted funds when items are issued for maintenance and projects.
PROCUREMENT REVIEW:
These goods were procured in compliance with the City’s Procurement Policy.
LEGAL REVIEW:
The underlying agreement was reviewed and approved as to form and legality by former City Attorney, Robert W. Batsel, Jr.
ALTERNATIVE:
• Approve with Changes
• Table
• Deny