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1997-287 O D ANCE NO AN ORDINANCE ACCEPTING A COMPETITIVE SEALED PROPOSAL AND AWARDING A CONTRACT FOR THE PURCHASE OF MATERIALS, EQUIPMENT, SUPPLIES OR SERVICES, PROVIDINa FoR rUE EXPENDmr OF F DS mEREFORE, PROVIDING FOR AN EFFECTIVE DATE WHEREAS, the City has soh¢lted, received and tabulated competmve sealed proposals for the purchase of necessary materials, equipment, supplies or services ~n accordance vath the procedures of state law and City ordinances, and WHEREAS, the City Manager or a designated employee has reviewed and recommended that the hereto descnbed proposals are the best responsible proposals for the materials, eqmpment supphes or services as shown ~n the "Proposals" submitted therefor, and WHEREAS, the City Council has provided m the City Budget for the appropriation of funds to be used for the purchase of the materials, eqmpment, supplies or services approved and accepted herein, NOW, THEREFORE, THE cOLrNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the numbered items m the followung numbered bids for materials, eqmpment, supplies, or se~vices, shown in the "Proposals" attached hereto, are hereby accepted and approved as being the best responsible proposal for such items RFSP ITEM ~ NO_ VENDOR AMOIrNT 2086 ALL R W BECK, INC $34,500 00 ~ That by the acceptance and approval of the above numbered items of the submitted proposals, the City accepts the offer of the persons submimng the proposals for such items and agrees to purchase the matenals, eqmpment, supplies or services in accordance wath the terms, spemfieauons, standards, quanuues and for the specified sums contained in the Invitations, Proposals, and related documents SEG. TIDI~III That should the City and persons submatung approved and accepted items and of the submitted proposals wtsh to enter into a formal written agreement as a result of the acceptance, approval, and awarding of the proposal, the C~ty Manager or his designated representaUve is hereby anthonzed to execute the written contract which shall be attached hereto, provided that the written contract m m accordance wath the terms, condmons, specifications, standards, quantities and specified sums contained in the Proposal and related documents herein approved and accepted SECTION IV That by the acceptance and approval of the above numbered ~tems of the subnutted proposals, the Caty Council hereby anthonzes the expenditure of funds therefor m the amount and m accordance vath the approved proposal or pursuant to a written contract made pursuant thereto as authorized hereto ~ That flus ordrnanee shall become effective umnedmtely upon ~ts passage and approval PASSED A~D A~PROVED ~sA*~ of ~ ~997 ATTEST JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY 2 DATE SEPTEMBER 23, 1997 CITV COUNC. IL REPORT TO Mayor and Members of the City Council FROM Kathy DuBose, Assistant City Manager of Finance SUBJECT RFSP # 2086 - ELECTRIC SERVICE FUNCTIONAL UNBUNDLING ELECTRIC COST OF SERVICE AND ELECTRIC RATE DESIGN ~: We recommend Phase I of the above referenced RFSP be awarded to R W Beck, Inc in the amount of $34,500 00, and that Phase II be considered at a later date SUMMARY This RFSP IS to conduct an electric cost of service/function unbundhng in Phase I and a rate design study m Phase II This study is required to support overall Electric Strategic Planning The study ~s intended to provide the detailed analysis of functional and customer cost necessary to redesign rates Phase I consists of the following tasks Forecast Revenue Requirements for a three year period Conduct a Functional Unbundhng of costs, to include at a minimum generation, transmission, distribution and admlmstratlve costs Conduct a Cost of Servme study which allocates costs to each appropriate customer class, as determined by the Consultant Review the applicability of current cost accounting methodology and make recommendations for improvements Project future electrm revenue reqmrements over a minimum of three years, giving consideration to potential deregulation of the industry Analyze and identify short and long run marginal costs and their components The study contract has been divided into two phases to allow delay of the rate design effort until a review of Electric strategias has been completed Phase I is scheduled to be completed within 75 days of contract award (early December, 1997), and the award of Phase II may be delayed up to 90 days (to early March, 1998) if necessary This two-phase approach gives the City slgmfieant flexiblhty to match the Phase II rate design with any revisions in strategies The City has also reserved the right to not award Phase II of the contract PROGRAM~.. DEPARTMENTS OR GROUPgAF_EECTED: City of Denton Utdmes ~ISEAL2~EAC~ Funds for Phase I oftbas study are available from 1996/97 budget funds Account # 610-105-1057-9300-8502 Attachment List of Respondents Memorandum from R E Nelson to Council dated September 23, 1997 Respeptfully submitted K~thX_.BuB~ Oe - Assistant City Manager of Finance Title Purchasing Agent 933 AGENDA 3 THE FOLLOWING FIRMS RESPONDED TO THE RFSP # 2086 Reed-Stowe and Co, Inc Bums & McDonnell R W Beck, Inc Black and Veatch 4 CITY of DENTON, TEXAS MUNICIPAL BUILDING, 215 E McKINNEY · DENTON, TEXAS 76201 (817) 566 8200 · DFW METRO 434 2529 To Mayor and Members of the City Council Through' Ted Benavldes, City Manage~l~ From Sharon Mays, Director, Electric Utility Date September 19, 1997 Subject CONTRACT WITH R W BECK FOR AN ELECTRIC COST OF SERVICE/FUNCTIONAL UNBUNDLING RATE STUDY Four consulting firms submitted proposals to perform the electric utility cost of service/functional unbundllng and rate design study, separated into two phases The two highest priced proposals were reviewed and eliminated after determining the services to be provided were obtainable at lower costs from the remaIning two iow bidders A recommendation to award the bid to R W Beck versus Black & Veatch was made after reviewing the proposals in detail and discussing themr technical emphasis and approach to Denton's needs with the Public Utility Board The request for proposal clearly stated the technical proposal submItted would be given primary consideration in awarding the contract Staff and the Public Utility Board are in agreement that Denton would be best served using R W Beck Ma]or areas of comparison with comments between the R W Beck and Black & Veatch proposals are discussed below by functional categories Price Phase 1 Phase 2 R W Beck $34,500 $23,600 Black & Veatch $37,400 $15,800 Key Personnel The R W Beck team has much greater electric utility experience than B&V's team Beck will utilize electric regulatory and cost of service/rate design staff with extensive electric utility backgrounds, specialists in deregulation and rate design B&V placed members on their team, including the client llalson, with ma]or backgrounds in water/wastewater utility services Familiarity Issues Beck worked on the Greenville transmission cost of service filing, and is extremely familiar with the deregulatory environment in Texas B&V's familiarity is national in scope, with little specific exposure to the Texas environment Beck has designed an Electric Reliability Council of Texas (ERCOT) "Dedtcated to Quahty Servtce" assessment model which forecasts the impact of deregulation This · nformatlon wall be available for use in the Denton analysis Revenue Requirement Beck proposed to take into account the impact of deregulation and retail wheeling scenarios tn developing revenue requirements B&V proposed no analys~s of deregulation or retail wheeling scenarios Functional Unbundlang Beck's proposal was more complete and detailed in identifying functional categories that need to be unbundled an the study Several additional cost unbundllng functions were identified that will enable Denton to obtain a better analysis of the current service costs in place B&V took a more traditional approach, based on the way things have been done in the past Cost Accounting Methodology Beck discussed activity based cost accounting and emphasized the need to utilize activity based accounting for cost analysis in the current environment Beck will review all electric utility cost documents and provide comments on their recommended utilization and/or additional ~mplementatlon plans B&V dad not address this issue other than one sentence, which indicated their approach would not meet Denton's needs Marginal Costs Beck has proposed providing a spreadsheet program for utilization in this area, and which we can continue to utilize as conditions change Beck will develop marginal costs with existing facilities and loads as well as w~th new facilities or other arrangements to serve additional loads Th~s cost information will be extremely valuable ~n pricing electric services under varying environmental conditions B&V will provide a more limited analysis of marginal costs based upon existing condltaons during the three year forecast period Rate Design Beck will develop and provide a computer model utlllzang the current on-line billing records during their rate design process to ensure there are no surprises after rate implementation Rates will be designed in con]unction with our marketang strategy, strategic plans, and the competitive environment Comparisons will be provided for other public and private utilities ~n the area and state B&V will develop rates but were not as complete in their discussion of what would be provided or their willingness to ~nclude Denton staff input throughout the process Software Availability Both firms will provide all software, with Beck providing one day of training using their models and marginal cost spreadsheet PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES PERTAINING TO DENTON MUNICIPAL ELECTRIC UTILITY COSTS S'I"%rE OF TEXAS COUNTY OF DENTON § THIS AGREEMENT zs made and entered ~nto as of the 23rd day of September , 1997, by and between the City of Denton, a Texas Municipal Corporatzon, w~th zts principal office at 215 E McKlnney Street, Denton, Texas 76201 (hereinafter ,,OWNER") and R W BECK, a Corporation, w~th its office at Bank One Buzld~ng, Suzte 1900, 1125 Seventeenth Street, Denver, Colorado, (hereznafter "CONSULTANT") acting herein, by and through their duly authorized representatives WITNESSETH, that an conslderatzon of the covenants and agreements herein contained, the partles hereto do mutually AGREE as follows EMPLOYMENT OF CONSULTANT The OWNER hereby contracts wzth CONSULTANT, as an lndependent contractor, and the CONSULTANT hereby agrees to perform the services herezn ~n connectmon wzth the Project as stated in the artzcles to follow, w~th d~llgence and in accordance with the h~ghest professional standards customarily obtazned for such services ~n the State of Texas The professzonal services set out here~n are in connectzon w~th the following described project Consultzng Servmces Pertalnzng To Denton Municipal Electric Utll~ty Costs-Phase I (the "Pro3ect") ARTICLE II SCOPE OF SERVICES The CONSULTANT shall perform the following services in a professmonal manner A To perform all those servlces set forth in CONSULTANT'S proposed "Scope of Work" which is attached hereto and Incorporated herewith by reference as Attachment A B CONSULTANT shall perform all those servlces set forth ~n any lndlvldual task orders which shall be attached to th~s Agreement and made a part hereof for all purposes as separate agreements C If there is any conflict between the terms of thzs Agreement and the Attachments attached to thzs Agreement, the terms and conditions of this Agreement will control over the terms and condltlons of the Attachments or task orders ARTICLE III PERIOD OF SERVICE This Agreement shall become effective upon execution by the OWNER and the CONSULTAI~T and upon zssuance of a notzce to proceed by the OWNER, and shall remain in force for the per~od which may reasonably be required for the completion of the Pro~ect, and any required extensions approved by the OWNER This Agreement may be sooner terminated ~n accordance w~th the provisions hereof T~me · s of the essence in thms Agreement The CONSULTANT shall make all reasonable efforts to complete the servzces set forth here~n as expedlt~ously as posszble and to meet the schedule established by the OWNER, acting through its Cmty Manager or h~s deszgnee PAGE 2 ARTICLE IV COMPENSATION A COMPENSATION TERMS "Direct Non-Labor Expense" is defined as that expense (based upon actual cost) for any assignment incurred by the CONSULTANT for air fare, taxi fare, lodging, meals while traveling, parking fees, tolls, automobile rental (when required), ground transportation, long-distance telephone charges, printing and reproduction costs, and other incidental expenses incurred in connection with the Project B BILLING AND PAYMENT For and in consideration of the professional services to be performed by the CONSULTANT herein, the OWNER agrees to pay based on the cost estimate detail at an hourly rate shown in Attachment B, which is attached hereto and incorporated by reference herewith, a total fee including reimbursement for direct non-labor expense not to exceed $34,500 00 Partial payments to the CONSULTANT w~ll be made on the basis of detailed monthly statements rendered to and approved by the OWNER through its City Manager or his designees, however, under no circumstances shall any monthly statement for services exceed the value of the work performed at the time a statement is rendered The OWNER may w~thhold the f~nal 10% of the contract amount until completion of the Project Nothing contained ~n this Article shall require the OWNER to pay for any work which is unsatisfactory as reasonably determined by the City Manager or his designee or which is not submitted in compliance with the terms of this Agreement The City shall not be required to make any payments to the CONSULTANT when the CONSULTANT is in default under this Agreement PAGE 3 It ls specifically understood and agreed that the CONSULTANT shall not be authorized to undertake any work pursuant to th~s Agreement which would require additional payments by the OWNER for any charge, expense or reimbursement above the maximum not to exceed fee as stated w~thout f~rst having obtained written authorization from the OWNER C PAYMENT If the OWNER falls to make payments due the CONSULTANT for services and expenses w~th~n forty-five (45) days after receipt of the CONSULTANT'S undlsputed statement thereof, the amounts due the CONSULTANT will be ~ncreased by the rate of one percent (1%) per month from the said forty-flfth (45th) day, and in add~tlon, the CONSULTANT may, after g~vlng seven (7) days' wrltten not~ce to the OWNER, suspend services under th~s Agreement until the CONSULTANT has been paid ~n full all amounts due for services, expenses and charges Provided, however, nothlng herein shall require the OWNER to pay the late charge of one percent per month (1%) as set forth here~n, ~f the OWNER reasonably determines that the work ~s unsat~mfactory, in accordance w~th th~s Article IV, Compensation OBSERVATION AND REVIEW OF THE WORK The CONSULTANT w~ll exercise reasonable care and due d~llgence d~scover~ng and promptly reporting to the OWNER any defects or def~clencles ~n the work of the CONSULTANT or any subcontractors or subconsultants PAGE 4 ARTICLE VI OWNERSHIP OF DOCUMENTS Ail documents prepared or furnished by the CONSULTANT (and CONSULTANT's subcontractors or subconsultants) pursuant to this Agreement are instruments of service and shall become the property of the OWNER upon the termination of this Agreement The CONSULTANT is entitled to retain copies of all such documents The documents prepared and furnished by the CONSULTANT are intended only to be applicable to this pro3ect and OWNER'S use of these documents in other projects shall be at OWNER'S sole risk and expense In the event the OWNER uses the Agreement ~n another project or for other purposes than specified herein any of the information or materials developed pursuant to this agreement, CONSULTANT is released from any and all liability relating to their use an that project ARTICLE VII INDEPENDENT CONTRACTOR CONSULTANT shall provide servzces to OWNER as an zndependent contractor, not as an employee of the OWNER CONSULTANT shall not have or claim any r~ght arising from employee status ARTICLE VIII INDEMNITY AGREEMENT The CONSULTANT shall ~ndemnlfy and save and hold harmless the OWNER and its officers, agents, and employees from and against any and all l~ablllty, claims, demands, damages, losses and expenses, including but not l~mlted to court costs and reasonable attorney fees incurred by the OWNER, and including w~thout lzmltatlon damages for bodily and personal zn3ury, death and property damage, resulting from the negligent acts or omissions of the CONSULTANT or · ts offzcers, shareholders, agents, or employees in the execution, operatzon, or performance of thzs Agreement PAGE 5 Nothzng mn thzs Agreement shall be construed to create a llabzllty to any person who ls not a party to this Agreement and nothzng herein shall waive any of the party's defenses, both at law or equzty, to any clazm, cause of actzon or lztzgatlon fzled by anyone not a party to thls Agreement, including the defense of governmental immunity, whzch defenses are hereby expressly reserved ARTICLE IX INSURANCE During the performance of the Services under this Agreement, CONSULTANT shall maintain the following insurance with an ~nsurance company l~censed to do business in the State of Texas by the State Insurance Commission or any successor agency, that has a rating w~th Best Rate Carriers of at least an "A-" or above A ComprehensIve General L~ab~lmty Insurance w~th bodily zn]ury l~m~ts of not less than $500,000 for each occurrence and not less than $500,000 in the aggregate, and w~th property damage limits of not less than $100,000 for each occurrence and not less than $100,000 in the aggregate B Automobile L~ab~l~ty Insurance with bodily zn]ury l~mzts of not less than $500,000 for each person and not less than $500,000 for each accident and wzth property damage l~mlts for not less than $100,000 for each accident C Worker's Compensation Insurance zn accordance wzth statutory requirements and Employers' Liability Insurance w~th l~mlts of not less than $100,000 for each accident D Professional L~ab~lity Insurance with l~mlts of not less than $1,000,000 annual aggregate E The CONSULTANT shall furnish znsurance cert~fzcates or insurance polzczes at the OWNER's request to evzdence such PAGE 6 coverages The insurance polacles shall name the OWNER as an addltaonal znsured on all such pollcaes to the extent legally posszble, and shall contaan a prov~saon that such ~nsurance shall not be canceled or modlfaed w~thout 30 days przor written notice to OWNER and CONSULTANT In such event, the CONSULTANT shall, prior to the effectzve date of the change or cancellation of coverage, serve cop~es of any substztute polacles furnzshlng the same coverage to OWNER ARTICLE X ARBITRATIONANDALTERNATE DISPUTE RESOLUTION The parties may agree to settle any d~sputes under thzs Agreement by submitting the dispute to arbztratlon or other means of alternate d~spute resolution such as medzat~on No arb~trataon or alternate daspute resolution arising out of or relatang to, this Agreement lnvolvang one party's disagreement may include the other party to the disagreement w~thout the other's approval ARTICLE XI TERMINATION OF AGREEMENT A Notwzthstand~ng any other provzs~on of thzs Agreement, e~ther party may terminate by glvlng thzrty (30) days advance written notice to the other party B Thas Agreement may be termanated zn whole or zn part an the event of either party substantzally faalzng to fulfill oblagatlons under thzs Agreement No such termanataon wzll be affected unless the other party as g~ven (1) written notace (delivered by certified mall, return receapt requested) of antent to termznate and settzng forth the reasons specifying the nonperformance, and not less than 30 calendar days to cure the failure, and (2) an opportunity for consultatzon w~th the termanat~ng party prior to termanat~on C If the Agreement zs termanated praor to completaon of the ser- PAGE 7 vices to be provided hereunder, CONSULTANT shall immediately cease all services and shall render a final bill for services to the OWNER within 30 days after the date of termination The OWNER shall pay CONSULTANT for all services properly rendered and satmsfactor~ly performed and for remmbursable expenses to termination ~ncurred prior to the date of termination zn ac- cordance with Article IV, Compensation Should the OWNER sub- sequently contract w~th a new CONSULTANT for the continuation of services on the Project, CONSULTANT shall cooperate in providing information The CONSULTANT shall turn over all documents prepared or furnmshed by CONSULTANT pursuant to this Agreement to the OWNER on or before the date of termznatlon but may malntaln cop~es of such documents for lts use ARTICLE XII RESPONSIBILITY FOR CLAIMS AND LIABILITIES Approval by the OWNER shall not constztute nor be deemed a release of the responsibility and llabllzty of the CONSULTANT, its employees, associates, agents, subcontractors and subconsultants for the accuracy and competency of their designs or other work, nor shall such approval be deemed to be an assumption of such responsibility by the OWNER for any defect in the design or other work prepared by the CONSULTANT, its employees, subcontractors, agents and subconsultants ARTICLE XIII NOTICES All notices, communications, and reports required or permitted under this Agreement shall be personally delivered or mailed to the respective partmes by depositing same in the Unzted States mall at the address shown below, certified mazl, return receipt requested unless otherwise speclfled hereln Mailed notices shall be deemed communicated as of three days mamllng PAGE 8 To CONSULTANT To OWNER R W Beck City of Denton Attn Attn Ted Benavldes 1125 Seventeenth Street Title Clty Manager Bank One Bldg Suite 1900 215 E McKlnney Denver, CO 80262-2615 Denton, Texas 76201 All notices shall be deemed effective upon receipt by the party to whom such notice is given or within three days mailing ~RTICLE XIV ENTIRE AGREEMENT This Agreement consisting of thirteen (13) pages and two (2) Attachments constitutes the complete and final expression of the Agreement of the parties and is intended as a complete and exclusive statement of the terms of their agreements and supersedes all prior contemporaneous offers, promises, representations, negotiations, discussions, communicatIons and agreements which may have been made in connection with the subject matter hereof ARTICLE XV SEVERABILITY If any provision of this Agreement is found or deemed by a court of competent jurlsdlctlon to be invalid or unenforceable, it shall be considered severable from the remainder of this Agreement and shall not cause the remainder to be invalid or unenforceable In such event, the party shall reform th~s Agreement to replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the intention of the stricken provisIon ARTiClE XW COMPLIANCE WITH LAWS The CONSULTANT shall comply w~th all federal, state, local PAGE 9 laws, rules, regulations, and ordinances applicable to the work covered hereunder as they may now read or hereafter be amended ARTICLE XVII DISCRIMINATION PROHIBITED In performing the services required hereunder, the CONSULTANT shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap PERSONNEL A The CONSULTANT represents that it ha~ or will secure at its own expense all personnel required to perform all the services required under this Agreement Such personnel shall not be employees or officers of, or have any contractual relations with the city CONSULTANT shall inform the OWNER of any conflict of interest or potential conflict of Interest that may arise during the term of this Agreement B Ail services required hereunder will be performed by the CONSULTANT or under its supervision All personnel engaged in work shall be qualified and shall be authorized and permitted under state and local laws to perform such services ASSIGNABILITY The CONSULTANT shall not assign any interest in this Agreement and shall not transfer any interest in this Agreement (whether by assignment, novation or otherwise) without the prior written consent of the OWNER PAGE 10 ARTICLE XX MODIFICATION NO waiver or modification of th~s Agreement or of any covenant, condztion, l~m~tatlon herein contained shall be valid unless in writing and duly executed by the party to be charged therewith No evidence of any waiver or modlfmcatlon shall be offered or received in evidence in any proceedIng arising between the parties hereto out of or affecting this Agreement, or the rights or obligations of the parties hereunder, and unless such waiver or modlflcat~on is in writing, duly executed, and, the part~es further agree that the provisions of th~s section w~ll not be waived unless as herein set forth MISCELLANEOUS A The following Attachments are attached to and made a part of this Agreement 1 Attachment A - Scope of Work 2 Attachment B - Fee Schedule B CONSULTANT agrees that OWNER shall, until the explratzon of three (3) years after the f~nal payment under this Agreement, have access to and the right to examine any d~rectly pertinent books, documents, papers and records of the CONSULTANT involving transactions relating to th~s Agreement CONSULTANT agrees that OWNER shall have access during normal working hours to all necessary CONSULTANT facilities and shall be provided adequate and appropriate working space in order to conduct audits in compliance with th~s section OWNER shall give CONSULTANT reasonable advance not~ce of Intended audits C Venue of any suit or cause of action under th~s Agreement shall lie exclusively ~n Denton County, Texas This Agreement shall be governed by and construed ~n accordance w~th the laws of the State of Texas PAGE 11 D For the purpose of this Agreement, the key persons who will perform most of this work hereunder shall be Joseph A Manclnelll, Project Director However, nothzng herein shall limit CONSULTANT from using other qualified and competent members of their fzrm to perform the services required herein E CONSULTANT shall commence, carry on, and complete any and all projects with all applicable dispatch, in a sound, economical, efficient manner, and, in accordance with the provisions hereof In accomplzshlng the Project, CONSULTANT shall take such steps as are appropriate to ensure that the work involved is properly coordinated with related work being carried on by the OWNER F The OWNER shall assist the CONSULTANT by placing at the CONSULTANT's disposal all available information pertinent to the project, including previous reports, any other data relative to the Project and arranging for the access to, and make all provisions for the CONSULTANT to enter in or upon, public and private property as required for the CONSULTANT to perform services under this Agreement G The captions of this Agreement are for informational purposes only and shall not in any way affect the substantive terms or conditions of this Agreement IN WITNESS WHEREOF, the City of Denton, Texas has caused this Agreement to be executed by its duly authorized C~ty Manager, and CONSULTASVf has executed this Agreement~ through itemized undersigned officer on th~s the ~/~ day of 1997 "CITY" CITY OF DENTON, TEXAS TED BENAVIDES, CITY MANAGER PAGE 12 ATTEST JENNIFER WALTERS, CITY SECRETARY APP AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY "CONSULTANT" R ~, a Corporat~o~/~/ Name 40seph A_ ~nc~n.11~ T:tle Executive Analyst ATTEST PAGE 13