Submitted By: Lisa M. Crouthamel
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Presentation By: Doug Peebles
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Department: Electric Utility
STAFF RECOMMENDATION (Motion Ready):
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Approve the pricing amendment and final two-year renewal of the piggyback/cooperative purchasing agreement between the City of Ocala and Osmose Utility Services, Inc. for utility wood pole inspection and treatment with an aggregate expenditure of $400,000
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OCALA’S RELEVANT STRATEGIC GOALS:
Operational Excellence
PROOF OF PUBLICATION:
N/A
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BACKGROUND:
Ocala Electric Utility has an ongoing need for wood pole inspection and groundline treatment services. In 2007, the City of Ocala implemented its Wood Pole Inspection and Treatment Program (the “Program”) in response to Florida Public Service Commission rules on utility storm hardening. Regular inspections and treatment under the Program stop and/or prevent wood pole decay and helps wood poles to retain design strength as they age. The Program increases the useful life of the City’s wood poles thereby reducing system maintenance costs and increasing system reliability.
Under the Program, Ocala Electric Utility will inspect and treat approximately 36,000 wood poles over an eight-year period. It is estimated that through the Program, the City of Ocala is able to defer approximately $500,000 annually in pole replacement costs.
FINDINGS AND CONCLUSIONS:
After a competitive solicitation process, Gainesville Regional Utility (“GRU”) awarded GRU Contract No. 2016-038 for wood pole inspection and ground line treatment services to Osmose Utilities Services, Inc. (“Osmose”) on October 1, 2016 for a term of four (4) years through and including September 30, 2020.
On February 7, 2017, after evaluation of GRU’s wood pole inspection and ground line treatment solicitation and the bid offered by Osmose in response, Procurement staff determined that the use of an intergovernmental cooperative purchasing method would maximize best value to the City and the City entered into a piggyback agreement with Osmose to benefit from the terms of GRU’s agreement with Osmose. Pursuant to the terms of the piggyback agreement, price adjustments are negotiated annually based on the Consumer Price Index (CPI) or Producer’s Price Index (PPI) and are memorialized via formal amendment.
On October 1, 2020, GRU Contract 2016-038 was renewed for the first of two available two-year renewal terms, through September 30, 2022. Ocala Electric Utility desired to continue to benefit from the terms of GRU’s agreement with Osmose and Procurement staff processed a renewal piggyback agreement on July 29, 2021.
GRU Contract 2016-38 has now been renewed for the final two-year renewal term available, through September 30, 2024. Ocala Electric Utility wishes to continue to benefit from the terms of GRU’s agreement with Osmose and staff requests approval to proceed with a renewal piggyback agreement for the final renewal term and to adopt price adjustments negotiated between the parties based on the CPI and PPI.
Ocala Electric Utility’s anticipated work plan for Fiscal Year 2023 and Fiscal Year 2024 are as follows:
• FY23 Substation: Sharpes Ferry - 791 wood distribution poles & Enzian - 3035 wood distribution poles
• FY24 Substation: Richmond- 1806 wood distribution poles & Baseline- 2117 wood distribution poles
FISCAL IMPACT:
Funds are encumbered to cover FY22 expenses. Additional funds will be included in the FY23 budget to support the estimated annual cost of $200,000 in account 457-032-231-531-53-34010. The total projected inspection and treatment cost over eight years will be $1,600,000. Estimated deferred maintenance costs due to the extended life of OEU poles are approximately $500,000 annually or $4.38 million over the eight-year inspection cycle.
PROCUREMENT REVIEW:
The underlying agreement was competitively procured and awarded in compliance with the general requirements of the City’s Procurement Policy.
LEGAL REVIEW:
This Amendment for Renewal will be reviewed and approved for form and legality by City Attorney, Robert W. Batsel, Jr.
ALTERNATIVE:
Deny or table.