REPORT TO THE CITY COUNCIL December 14, 2017 FROM: THOMAS C. ESQUEDA, Director Department of Public Utilities THROUGH: BUD TICKEL, Water System Manager Department of Public Utilities - Water Division BY: RUSSELL B. GUILLIAMS, Water System Supervisor-SWTF Department of Public Utilities - Water Division SUBJECT ..Title Award a requirements contract to Air Products and Chemicals, Inc., for Bulk Liquid Oxygen in the amount of $132,161.40 annually, for a term of three years with the possibility of two one-year extensions. Bid File 9419 (Citywide) ..Body RECOMMENDATION Staff recommends that City Council award a requirements contract in the amount of $132,161.40 to Air Products and Chemicals, Inc., for Bulk Liquid Oxygen (LOX), and authorize the Director of Public Utilities or designee to execute a three-year contract with provisions for two one-year extensions. EXECUTIVE SUMMARY The Department of Public Utilities - Water Division (Division) utilizes LOX to disinfect water for protection against viruses and bacteria pursuant to the California Department of Public Health regulations. The City's Northeast Surface Water Treatment Facility (NESWTF) produces up to 30 million gallons of drinking water per day. Ozone is produced on-site utilizing LOX to achieve disinfectant. Without LOX, production of ozone cannot occur, and the NESWTF cannot operate, as LOX is necessary for NESWTF to produce potable drinking water. By executing a requirements contract with one supplier, it establishes a firm price for a specified time allowing the City to make purchases as needed. This contract is secured through the competitive bidding process, and funding for this contract is included in the FY2018 Water Enterprise Fund operating budget. Staff recommends award of a requirements contract to Air Products and Chemicals, Inc., in the amount of $132,161.40. BACKGROUND The NESWTF produces up to 30 million gallons of drinking water per day. To protect the public against viruses and bacteria, California Department of Health regulations require that the water is disinfected. As a primary disinfectant, ozone, and Bulk LOX is utilized on-site to generate ozone. Without Bulk LOX, the Division cannot produce ozone, and consequently the NESWTF will not be able to produce potable drinking water. A Notice Inviting Bids was published on August 18, 2017, per the City of Fresno Charter Section 1208. Ten Building Exchanges were faxed Notice Inviting Bids, and 12 specifications were distributed to proposed bidders. The bid opening was September 12, 2017, and two bids were received ranging from $132,161.40 to $176,215.20. Air Products and Chemicals, Inc., of Allentown, Pennsylvania submitted the lowest bid price in the amount of $132,161.40, and is considered the lowest responsive and responsible bidder. City Attorney has reviewed and approved to form. ENVIRONMENTAL FINDINGS By the definition provided in the California Environmental Quality Act Guideline Section 15378, the award of this requirements contract does not qualify as a "project" and is therefore exempt from the California Environmental Quality Act requirements. LOCAL PREFERENCE Local Preference was not applied because neither of the bidders were local businesses pursuant to FMC 4-108. FISCAL IMPACT The General Fund is not impacted by this citywide expenditure, as the appropriations for the purchase of LOX are included within the FY2018 Water Enterprise Fund operating budget. A total of $87,100 will be encumbered to cover the treatment requirements for the balance of the fiscal year. Attachments: Bid Evaluation (Attachment 1) Sample Contract (Attachment 2)