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Exhibit 1 - Agenda Information Sheet - Formal Amendment 2City of Denton _____________________________________________________________________________________ AGENDA INFORMATION SHEET DEPARTMENT: Procurement ACM: Cassey Ogden DATE: March 7, 2023 SUBJECT Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation, ratifying the emergency approval of a second amendment to a contract between the City of Denton and Techline, Inc., amending the contract approved by the City Council on September 18, 2018, in the not-to- exceed amount of $11,000,000.00; amended by Amendment 1 approved by City Council; said second amendment to provide additional spend authority for transformer purchases for the Denton Municipal Electric Department; providing for the expenditure of funds therefor; and providing an effective date (IFB 6778 – providing for an additional second amendment expenditure amount not-to-exceed $1,000,000.00, with the total contract amount not-to-exceed $14,750,000.00). The Public Utilities Board recommends approval (4 - 0). INFORMATION/BACKGROUND As a result of supply chain issues, transformer prices continue to rise, affecting previously placed orders and requiring an amendment to contract 6778. The increase exceeds the 25% limit on the contract price per Section 252.048 of the Texas Local Government Code. The Declaration of Emergency covers the price increase on transformers purchased under contract 6778. Section 252.022 of the Texas Local Government Code provides exemptions associated with purchasing requirements which include (1) a procurement made because of a public calamity that requires the immediate appropriation of money to relieve the necessity of the municipality’s residents..., and (2) a procurement necessary to preserve or protect the public health or safety of the municipality’s residents. Denton’s current inventory of transformers is at levels reserved for normal, daily electric service operational responsibilities and emergency response. For new construction, DME prioritizes transformers on a project first come, first ready basis for customers and developers that have inspections and permits complete. DME has notified customers and developers that the utility may not be able to provide immediate service due to the low inventory of transformers and the current supply chain issues. Supply chain issues for distribution transformers continue to be a challenge. Major shortages are being experienced nationwide of critical electric utility equipment such as electric distribution transformers, underground cables, substation equipment, and other equipment necessary to maintain and provide electric service in Denton. The need for this Declaration of an Emergency stems from the production of transformers being delayed and Howard Industries establishing a 16.5% price increase on transformers that were not currently in manufacturing. Failure to declare an emergency would cause DME to have to cancel these City Hall 215 E. McKinney Street Denton, Texas www.cityofdenton.com orders under contract 6778. If these orders are canceled, then a new order must be placed under the new contract 8064 which has a 270% price increase from the original 6778 contract prices. Approval of a Declaration of an Emergency, with a one-time spend authority of $1,000,000, allows DME to purchase the remaining transformers on order under contract number 6778, no further purchases will be made on this contract. PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) On September 18, 2018, City Council approved a contract with Techline, Inc., in the not-to-exceed amount of $11,000,000.00 (Ordinance 18-1478). On June 28, 2022, City Council approved Amendment No. 1, with Techline, Inc., in the not-to-exceed amount of $2,750,000, for a total not-to-exceed amount of $13,750,000 (Ordinance 22-1247). On February 27, 2023, this item will be presented to the Public Utilities Board (PUB) for consideration. RECOMMENDATION Award Amendment No. 2 with Techline, Inc., to provide additional spend authority for transformer purchases for the Denton Municipal Electric Department, in a not-to-exceed amount of $1,000,000, for a total amended contract amount of $14,750,000. PRINCIPAL PLACE OF BUSINESS Techline, Inc. Fort Worth, TX ESTIMATED SCHEDULE OF PROJECT This contract will expire on September 17, 2023. FISCAL INFORMATION These items are funded out of DME’s Capital Budget. Requisitions will be entered on an as-needed basis. The total amended amount of this contract is $14,750,000. EXHIBITS Exhibit 1: Agenda Information Sheet Exhibit 2: Original Ordinance and Contract Exhibit 3: Ordinance and Amendment 1 Exhibit 4: Declaration of Emergency Exhibit 5: Ordinance and Amendment 2 Respectfully submitted: Lori Hewell, 940-349-7100 Purchasing Manager For information concerning this acquisition, contact: Randy Key, 940-349-7665. Legal point of contact: Marcella Lunn at 940-349-8333.