Submitted By: Marie Brooks
presenter
Presentation By: Doug Peebles
end
Department: Electric Utility
STAFF RECOMMENDATION (Motion Ready):
title
Approve the purchase of a 2500kVA ProLec transformer from Irby Utilities Inc. in the amount of $163,750
end
OCALA’S RELEVANT STRATEGIC GOALS:
Operational Excellence
PROOF OF PUBLICATION:
N/A
body
BACKGROUND:
After a competitive solicitation, the City of Ocala awarded a three-year contract (ELE/190961) for the supply and delivery of ester oil filled single and three-phase transformers to Gresco Supply Company on March 17, 2020. ELE/190961 is currently in the second and final one-year renewal term and will expire March 2, 2025. Since the City's original contract award, the marketplace has experienced volatility due to pricing increases, rising demand, transformer shortages, extended lead times, and heightened storm activity. The City of Ocala has also experienced unprecedented growth with an increase in the number of large-scale development projects requiring transformers. These factors have made it increasingly difficult for the City to acquire the transformers required to maintain adequate stock levels in a timely manner and to meet the needs of its citizens.
Ocala Electric Utility (OEU) was approached by the Ocala Metro Chamber and Economic Partnership (CEP) to confirm its capacity to support several potential large-scale developments. These developments include increasing electric service capacity at existing buildings and greenfield sites, necessitating additional electric infrastructure and capacity enhancements. These projects are scheduled to materialize within the next 12 to 24 months. Given the unpredictable transformer market and the lengthy lead times for large load transformers, it is imperative to secure the distribution of these transformers now to guarantee the City's capacity to fulfill the requirements of these economic developments. Economic developments of this type bring substantial tax revenue and other benefits to the City of Ocala.
Under the City’s existing transformer contract with Gresco, three phase pad mount 2000 kVA and above transformers are currently $69,647.36 but will not be available for 156 weeks, or three years, with no guarantee of slot availability from the manufacturer, Ermco. Additional competitive quotes were obtained by city warehouse staff from Jake Rudisill Associates and Wesco for 2000 kVA and 2500 kVA units from JST Power Equipment and Hitachi Energy with the following results:
JST Power Equipment:
2000 kVA Model Price and Lead Time - $87,756 - 32 Weeks (8 Months)
2500 kVA Model Price and Lead Time - $102,566 - 32 Weeks (8 Months)
Hitachi Energy USA Inc:
2500 kVA Model Price and Lead Time - $159,905 - 156-158 Weeks (3 Years Two Weeks)
FINDINGS AND CONCLUSIONS:
On March 27, 2024, Irby Utilities (Irby) advised that a ProLec 2500 kVA transformer was nearing completion and would be available to ship within 4-6 weeks at a cost of $163,750. On the basis of urgent operational need, OEU submitted a request to procure the Irby unit outside of the formal procurement process to procure the Irby unit.
Procurement Policy PRO-050 requires formal, sealed bids for purchases greater than $50,000. Procurement Policy PRO-060 grants the City Manager the authority to authorize purchases greater than $50,000 without competitive bid where the purchase qualifies as an “emergency or critical purchase.” A purchase is deemed to be an “emergency or critical purchase” when following the standard procurement process will: (1) cause a disruption of essential operations; (2) interfere in the City’s ability to protect and preserve public properties; (3) cause a threat to public health, welfare or safety; or (4) create a significant loss to the City by loss of public funding, grant funding, or the loss of desirable business development. Such purchases shall be exempted from the requirements of the competitive bidding process, but competitive formal quoting should be used whenever possible. Once approved, the subject purchase must be calendared as an agenda item at the next available Council meeting.
Based on the information provided and documents attached to OEU’s exception request, the Procurement and Contracting Officer approved the exception to policy for the purchase of the ProLec 2500 kVA transformer from Irby on the grounds that failure to do so would lead to the loss of desirable business development for the City of Ocala. In compliance with PRO-060, pricing information was obtained from at least two prospective vendors (JST Power Equipment and Hitachi Energy) and, when viewed in juxtapose with the extremely long lead times of less expensive comparable units, the Procurement and Contracting Officer determined that procuring the Irby unit from ProLec constituted best value for the City. These findings were reviewed with Chief Financial Officer, Janice Mitchell, and Chief of Staff, Chris Watt, who authorized the purchase.
FISCAL IMPACT:
Inventory items are purchased by the warehouse and will be accounted for in account 457-141-000-000-41-14100. User department(s) will adhere to budgeted expenditures for items issued through the Utility Services Warehouse.
PROCUREMENT REVIEW:
These goods were procured in compliance with the City’s Procurement Policy.
LEGAL REVIEW:
N/A. The City’s standard and approved Purchase Order terms and conditions shall govern this purchase. Any conflicting terms and conditions offered by the suppliers will be reviewed for form and legality by City Attorney, William E. Sexton.
ALTERNATIVE:
• Approve with Changes
• Table
• Deny