FORM CM-36 CITY OF GLENDALE CALIFORNIA REPORT TO CITY COUNCIL AGENDA ITEM Report: Proposals Received for Glendale Water & Power's Inspection and Overhaul of the Grayson Power Plant Unit 2 Turbine-Generator and Approval to Award Contract to Edison ESI 1. Motion awarding a contract to Edison ESI for a fatal amount of $1,683,466 plus 20% contingency and rejecting the proposal from GE International, Inc. COUNCIL ACTION Public HearingdI Approved f';l Ordinance I I Consent Calendar I x I Action Item I I Report Only I J./ '1" '/e:>j'calendar /7 / ADMINISTRATIVE ACTION Submitted Daniel W. Waters, Interim Director of Glendale Water & Power Prepared Ned F. Bassin, Power Management Administrator K,.;!':::l-"IL~'J-f-J..J1J.~hL-./0?: 8.. _~_';', - Guillermo Espinosa, Sf. Mechanical Engineer -& ~.: -:$ ~J;4---. < Camilo A. RUiz, Mechanical Engineer II r:: ~4 /1. t?<7;fi /?ld-.6--., Approved James E. Starbird, City Manager.-::"==1~~W Reviewed Scott Howard, City Attorney.. " 5
Contract Award 10 Edison ESI-lnspectioniOverhaul of Grayson Unit #2 Turbine-Generator Page 2 ot 5 RECOMMENDATION It is recommended that the contract to furnish labor, equipment and materials for the inspection and overhaul of the Glendale Water & Power (GWP) Grayson Power Plant Unit 2 steam turbine-generator be awarded to Edison ESI for a total amount of $1,683,466 plus 20% conlingency. It is turther recommended that the proposal from General Electric (GE) be rejected. SUMMARY GWP issued a Request for Proposals (RFP) approved by the City Council for the inspection and major overhaul of the Grayson Unit2 steam turbine-generator. There were five contractors who attended the mandatory job walk. GWP received two proposals. Three of the recipients of the RFP respectfully declined to bid due to their inability to accommodate project requirements or schedule. Based on the revised Scope of Work (Phase II - Item No.6 was deleted), GWP staff recommends that Edison ESI, having the lower responsive proposal, be awarded the contract for the base fixed Scope of Work (Phases I, II [excluding Item 6], III [Items 1 through 9J, and Phase'IV) for $1,072,287, and other anticipated repairs as itemized under the Phase III Scope of Work -Item 10, for a price not to exceed $611,179, and that the GE proposal be rejected. The anticipated repairs under the Phase III Scope of Work are optional with each item to be implemented only after the turbine-generator has been opened and inspected and the repair determined to be necessary. Phase 1ft, Items 1 though 9 are identified optional repair work in the RFP based on Glendale's recent experience with the overhaul of Unit 4. Since Unit 2 is older, the contractors were requested to provide additional anticipated repair items under Phase III, Item 10 based on their experience overhauling units of this vintage. GWP recommends inclusion of these items in the award 10 secure a more competitive pricing now rather than later when Glendale has less leverage with the contractor after the opening and inspection of the unit. In addition, a contingency of $336,700 (approximately 20 percent of the total price) is requested to cover indeterminate additional repairs that maybe discovered after opening and inspecting the turbine-generator. Inspection of the generator is included with this work. Specifications for a separate overhaul will be issued for bids should the inspection reveal the need for the overhaul of the generator. This project is exempt under the California Environmental Quality Act. FISCAL IMPACT Funds for the Grayson Unit 2 steam turbine-generator overhaul are available in the GWP budget for FY 2008-09 in a total amount of $1,683,466 plus 20% contingency under Account No. 43111, Fund No. 553, Organization No. 921, Capital Improvement Project!.D. No. 12522, and Activity No. UP010. On October 2, 2007, the City Council approved a resolution of appropriation to budget funds for the Unit 2 steam turbine overhaul. BACKGROUND The Unit2 steam turbine-generator had its last major inspection and overhaul in 1992 and has now accumulated 93,000 operating hours. It is typical practice in the industry to perform major inspections and
Contract Award to Edison ESI- Inspection/Overhaul of Grayson Unit #2 Turbine-Generator Page 3 of 5 overhauls of large steam turbines aher approximately 50,000 hours of operation. However, during the California experiment on electric deregulation, GWP deferred the cycle of conducting a major overhaul on its units pending the study on the fate of the Grayson Power Plant. With the City's resolve to keep the Grayson Power Plant rather than abandon its local generation and recoup its stranded assets, GWP replaced its old simple cycle gas turbine Units 6 and 7 with the new state-of-the-art GE LM 6000 unit and commenced later with the cycle of overhauling the steam turbine units. At the hme, steam turbine Units 2, 4, and 5 all had about 60,000 hours of operation and were all overdue for overhauls. Overhauls and major repairs were scheduled to be performed sequentially and as soon as possible given the need to prepare detailed specifications, perlorm other outage related maintenance and maintain Grayson Power Plant operation capability. The overhaul of the Unit 2 steam turbine-generator was scheduled to follow the overhauls of Units 4 and 5 steam turbines and the rewind of the Unit 4 generator. Work on Unit 4 and 5 has been completed, and the rewind of the Unit 4 generator was completed earlier in fhe fiscal year than originally scheduled, providing an opporlunity fa perlorm the Unit 2 overhaul in FY 2007-08. These inspections and overhauls usually take eight to twelve weeks, during which time the steam turbine is unavailable for service. The Scope of Work for the inspection and overhaul consists of the following: Phase I Phase II Phase III Phase IV Disassembly and detailed inspection Repair and replacement of items identified during previous inspections, or otherwise known to require repair Repair replacement of items identified during this inspection that need to be replaced to ensure reliable operation until the next planned inspection and repair (approximately 50,000 hours of operation) Reassembly and festing to refurn the steam turbine to service The RFP is structured such that contractors will submit proposals for each of the four phases. The City reserves the right in the Request for Proposal to award phases separately, or to terminate the contract at the conclusion of any phase. The third phase involves the repair items that are as yet unknown and will be identified during the first phase, inspection. Therefore, once the inspection report is prepared and necessary repair work identified, the City can determine whether it is in its best interest to award the identified repairs to the same contractor who perlorms the inspections, or to rebid that work. The contractors' proposals will be guided by inspection and overhaul report that Glendale had prepared during the last overhaul and by their experience overhauling steam turbine units similar to GWP's Unit 2. Although the steam turbine-generator has not shown any operational malfunctions, repair decisions were made during the last overhaul with the anticipation that another inspection and repair would be performed after approximately 50,000 hours of operalion. Five contractors attended fhe preliminary meeting and job walk for GWP's inspection and overhaul of the Grayson Unit 2 turbine-generator. Three companies declined to bid since their current work schedule could not accommodate this project. We received two proposals on November 21, 2007 and the revised Edison ESI Proposal (deleted Phase II -Item 6) on December 20,2007 as summarized in Table 1 below. Table 1 shows the price comparison between Edison ESI and GE, and indicates that ESI's proposal is the lower price for the fixed work and RFP-listed optional work. The proposals are compared line item to line item, and added to arrive at a total cost. The trend shows that ESI's costs are lower. In Phase III-llem 10,
Contract Award to Edison ESI - Inspection/Overhaul of Grayson Unit #2 Turbine-Generator Page 4 of 5 ESI provided a comprehensive list of potential repairs with estimated cost of labor and materials. GE did not provide a list of potential repairs. Because the turbine has operated for considerably more hours than originally anticipated since its overhaul in 1992, it is expected that there will be additional items needing repairs beyond those specitically identified in the last overhaul. For that reason, Phase III - Item 10 was included in the RFP to establish the likely scope and pricing for potential required additional work. Table 2 summarizes the estimated pricing for potential additional work. Edison - ESI provided a detailed and extensive pricing list for 66 items. GE did not provide a price list for Phase III-Item 10. It is recommended that the list of potential additional work and an allowance for the cost of that work be included in the Contract authorization. These work items will only be pertormed it inspection shows that repairs are required, and only after evaluation by GWP technical and management personnel. A copy of the Edison-ESI proposal is available for inspection at the GWP Administration office. Table 1- Base ProDosal Proposer Edison-ESt GE International, Inc. 7300 Fenwick Lane 3633 E. Inland Empire Blvd. Westminster, CA 92683 Suite 800 Ontario, CA 91764 Base Scope of Work, Fixed Phases I, II & IV I (Phase II - Item 6 deleted) $ 1,008,687.00 $1,122,774.41 Optional Work Listed in RFP Phase III - Items 1-9 $ 63,600.00 $122,725.00 Proposal Price Comparison Total Base Price Phases I, II, IV & III (liems 1- $1,072,287.00 $1,245,499.41 9) - Firm Prices Table 2 - Phase III Options Additional Pricing Estimates for Potential Additional Work $611,179.00 No cost provided Phase III -Item 10 Based on 68 Items I (including all taxes) Comparable Scope Additional Pricing Estimates for Potential Additional Work Phase III-Item 10 ESI cost was used as basis Scope cannot be compared I (including all taxes) for overall cost because cost was not orovided
Contract Award to Edison ESI - Inspection/Overhaul of Grayson Unit #2 Turbine-Generator Page 5 of 5 Table 3 - Recommended Contract Authorization Base Price $1,072,287.00 Phases I, II, IV & 1IIIItems 1-91 - Firm Prices Estimate tor Potential Additional Work $611,179.00 Phase IlIlIem 10 Ootional work if reauired Sub-total $1,683,466.00 Continaencv at 20 percent $336,700.00 Recommended Contract Authorization $2,020,166.00 The proposals were evaluated and final selection made based on the following criteria: a. Price (total and unit prices) b. Experience and qualifications c. Completeness of the proposal d. Completion period 40% 25% 15% 20% Edison-ESI submitted a very responsive proposal including an extensive list of anticipated work to be done (Phase III - Item 10). GE's proposal did not provide a list of anticipated work (Phase III-liem 10). Based on the toregoing. it is recommended that the Contract be awarded to Edison ESL EXHIBIT(S) None
MOT!ON Moved by Council Member _ seconded by Council Member that the proposal submitted by Edison ESI for the inspection and overhaul of the Grayson Power Plant Unit 2 Turbine-Generator, is hereby approved and accepted for the total slim of $1,683,466. All other proposals are hereby rejected. The Council f1ll1her approves a reserve for contingencies in the amount of $336,700. The City Manager is authorized to execute an agreement with Edison ESI for the work identified in the proposal as: Phase I, Phase II (excluding Item 6), Phase ill and Phase IV, The agreement shall be subject to approval by the City Attorney. Vote as follows: Aycs: Noes: Absent: Abstain: DATE i/l1f2-""8 I G 1