Loading...
Exhibit 1- Agenda Information SheetCity of Denton _____________________________________________________________________________________ AGENDA INFORMATION SHEET DEPARTMENT: Procurement ACM: Cassey Ogden DATE: June 27, 2023 SUBJECT Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation, ratifying the expenditure of funds by the City Manager with Turbo Systems US Inc., for the repair and replacement of damaged turbos for the Denton Energy Center; providing for the expenditure of funds therefor; and providing an effective date (File 8199 - awarded to Turbo Systems US Inc., in the not-to- exceed amount of $1,051,444.84). STRATEGIC ALIGNMENT Pursue Organizational Excellence and Collaborative and Respectful Leadership Foster Economic Opportunity and Affordability INFORMATION/BACKGROUND Recently, DME declared an Emergency purchase for repair services and replacement components of turbos due to subsequent failure caused by foreign object debris (FOD). A FOD was introduced into the exhaust stream and tried to pass through the turbos causing damage to the turbo nozzle and blades. During the first occurrence, a complete inspection and root cause analysis was performed determining what the cause of failure was. The investigation determined that the cylinder head was damaged by a camshaft component failure. The camshaft failure resulted in damage to the cylinder head and resulted in foreign material debris being introduced into the exhaust causing the subsequent turbo failure. The forced outage was minimal as all parts were in inventory on-site to complete the necessary repairs. Damaged turbo components once removed were sent to the manufacturer for repair & replacement evaluation. While the parts were at the manufacturer’s being inspected, we experienced a second head component failure on another unit, also causing damage to that unit’s turbos. We had one turbo onsite in inventory for repair and the other at the manufacturer being inspected for refurbishment. In order to promptly return the unit to service for high energy demands and to fulfill our ERCOT obligations, the purchase of another turbo was necessary to reduce the outage timeframe from 60 days to 4 days by overnighting a turbo replacement from the manufacturer. Turbo Systems Inc. (ABB) is the Original Equipment Manufacturer for the turbocharger as well as the only authorized sales and service representative of our turbos. Turbo Systems US Inc. was able to provide the needed turbocharger, delivery, and assembly onsite. The Complete turbo cost is $354,160.13 and $57,098.80 for the freight cost. The turbocharger order in total was $411,258.93. City Hall 215 E. McKinney Street Denton, Texas www.cityofdenton.com Turbos Systems US Inc. will also repair and return the failed turbochargers to the DEC. The total repair cost was quoted at $694,401.30. After applied discounts, the total is lowered to $640,185.91 for the repairs to ensure parts are onsite to reduce unit downtime ensuring availability for dispatch. The discount total is $54,215.39 and repair/delivery time for the first 2 turbos is 7-30 days and the remaining turbos being repaired and delivered within 30-120 days from the fully accepted order. Description Estimated Expenditure Repair Services for 4 Turbos $694,401.30 Complete Replacement Turbo $354,160.13 Freight Cost $57,098.80 Discount Applied ($54,215.39) Total $1,051,444.48 PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) On June 26, 2023, this item will be presented to the Public Utilities Board (PUB) for consideration. RECOMMENDATION Award an ordinance with Turbo Systems Inc., for repair and replacement of damaged turbos for the Denton Energy Center, in a Declaration of Emergency one-time purchase not-to-exceed amount of $ 1,051,444.84. SUSTAINABILITY MEASURES The engines of the Denton Energy Center cannot operate without a turbo and if not maintained will affect the unit performance and emissions output due to improper air/fuel mixture therefor, replacement and making the necessary repairs are critical for having the units available during high market prices to use as a hedge and to also ensure peak performance and efficiency is maintained. Currently, the turbos are in great working order and performing as intended however the failures have triggered a complete investigation looking for a solution to prevent the premature failure of the cylinder head components and prevent the subsequent turbo failures due to foreign debris being introduced into the turbo. We are currently in the process of conducting root cause analysis with the engine manufacturer for the failed head components as well as with a third-party firm to determine the exact cause of the premature failures. PRINCIPAL PLACE OF BUSINESS Turbo Systems Inc. Cary, North Carolina ESTIMATED SCHEDULE OF PROJECT This is a single purchase processed as an Emergency Deceleration to return the units from a forced outage once all on-hand parts were exhausted. The service took place immediately to repair the unit and the parts requiring rebuild were sent to the manufacturer. Delivery of the items will occur within 120 days after receipt of the order. FISCAL INFORMATION These items will be funded from Denton Energy Center account 600105.6525.5500. Requisition #159003 has been entered into the system as a single one-time purchase. The budgeted amount for this item is $1,051,444.48. EXHIBITS Exhibit 1: Agenda Information Sheet Exhibit 2: Declaration of Emergency Exhibit 3: Ordinance Respectfully submitted: Lori Hewell, 940-349-7100 Purchasing Manager For information concerning this acquisition, contact: Jason Brown, 940-349-7140. Legal point of contact: Marcella Lunn at 940-349-8333.