2012-041ORDINANCE NO. 2012-041
AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY
MANAGER TO EXECUTE A THIRD AMENDMENT TO A PROFESSIONAL AND
PERSONAL SERVICES AGREEMENT WITH KEMA, INC., A CORPORATION, FOR
FURTHER ENGINEERING AND CONSULTING SERVICES RESPECTING REGULATORY
COMPLIANCE FOR THE DENTON MUNICIPAL ELECTRIC SYSTEM WITH THE TEXAS
REGIONAL ENTITY ("TRE") AND THE NORTH AMERICAN ELECTRIC RELIABILITY
COUNCIL ("NERC"); AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR 1N
AN AMOUNT NOT-TO-EXCEED AN ADDITIONAL $23,000; AND PROVIDING AN
EFFECTIVE DATE (FILE NO. 4412— AGGREGATING NOT-TO-EXCEED $318,940),
WHEREAS, the City Council deems that it is in the public interest to continue to engage
KEMA, Inc., a Corporation ("KEMA"), to provide personal and professional services pertaining
to the compliance of Denton Municipal Electric ("DME") with the standards set by state and
federal regulatory agencies including the Texas Regional Entity ("TRE") and the North
American Electric Reliability Council ("NERC"). KEMA is a global engineering firtn, systems
integrations firm, as well as a global management firm who in this continued engagement will
assess compliance to the national standards as well as identifying areas for improvement in these
processes;and
WHEREAS, these services are necessary to be performed by an outside specialty firm to
gauge and audit compliance with the industry standards; and City Staff has selected this firm
because of its high reputation in the electric industry, as several other Texas cities have. City
Staff has determined that the firm is competent and the fees under the Agreement are fair and
reasonable, and are consistent with and not higher than the recommended practices and fees
published by the applicable associations applicable to KEMA's profession, and that such fees do
not exceed the maximum provided by law; and
WHEREAS, the City Council has previously determined that there is a"critical business
need," in Ordinance No. 2009-189, approved on September 1, 2009; in that the services
described hereinabove are to be used on electric production, transmission, distribution and
station systems, and the requested services are a procurement for personal services or highly
technical services and are additionally a procurement necessary to protect the competitive
position of Denton Municipal Electric; and
WHEREAS, the City staff has reported to the City Council that there is a substantial need
for the above-referenced personal and professional services, and that limited City staff cannot
adequately perform the highly specialized services and tasks with respect to NERC/TRE
compliance with its own personnel, as outside personnel are necessary to determine compliance;
and
WHEREAS, after a recommendation of approval by the Public Utility Board, the City
Council adopted Ordinance No. 2009-255 at its meeting of October 6, 2009 which pertained to
the "Professional and Personal Services Agreement for TRE/NERC Compliance Consultant"
which approved the retention of KEMA for the services referenced hereinabove in the original
not-to-exceed amount of $169,580; and
WHEREAS, there were two later amended agreements regarding the City and KEMA;
regarding professional and personal services needed by the City; the First Amendment received a
recommendation of approval of the Public Utility Board, and was approved by the City Council
on August 3, 2010, by Ordinance No. 2010-187, in the additional amount of $86,360; and the
Second Amendment received a recommendation of approval of the Public Utility Board, and was
approved by the City Manager, within his delegated signature authority in the additional amount
of $40,000 on Apri125, 2011; and
WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional
Services Procurement Act." generally provides that a City may not select a provider of
professional services on the basis of competitive bids, but must select the provider on the basis of
demonstrated competence, knowledge, and qualifications, and for a fair and reasonable price;
and; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The preamble to this ordinance is incorporated herewith for all purposes.
SECTION 2. The City Manager is hereby authorized to execute a"Third Amendment to
Professional and Personal Services Agreement for KEMA, Inc." (the "Third Amended
Agreement") with KEMA, Inc., a Corporation, in an amount not-to-exceed an additional $23,000
(aggregating $318,940) for continued professional and personal services, pertaining to the TRE
and NERC compliance of Denton Municipal Electric; in substantially the form of the Third
Amended Agreement attached hereto as Exhibit "A" which is incorporated herewith by
reference.
SECTION 3. The award of this Third Amended Agreement by the City is on the basis of
the demonstrated competence, knowledge, and qualifications of KEMA and the demonstrated
ability of KEMA to continue to perform the services needed by the City for a fair and reasonable
price.
SECTION 4. The expenditure of funds as provided in the attached Third Amended
Agreement is hereby authorized.
SECTION 5. This Ordinance shall become effective immediately upon its passage and
approval.
�
PASSED AND APPROVED this the� day of Fel�,iary, 2012.
A� BURR�JGHS,�MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By:
APP VED A TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
By: �
4-ORD-Fil 412
STATE OF TEXAS §
COUNTY OF DENTON §
THIRD AMENDMENT TO
PROFESSIONAL AND PERSONAL SERVICES AGREEMENT WITH KEMA 1NC.
(FILE #4412)
This further Change Order made and entered into as of the �/'—��day of February, 2012,
by and between the City of Denton, Texas, a Texas municipal corporation, with its principal
office at 215 East McKinney Street, Denton, Denton County, Texas 76201, hereinafter called
"OWNER;" and KEMA Inc., a Corporation, with its corporate office at 4377 County Line Road,
Chalfont, Pennsylvania, hereinafter called "KEMA" each acting herein, by and through their
duly authorized officials, officers and representatives.
This is a Third Amendment to Professional and Personal Services Agreement (hereafter
"Third Amendment") with KEMA, INC. for engineering and consulting services, respecting
regulatory compliance by Denton Municipal Electric, and is made in accordance with Section
252.022(a)(4) of the Texas Local Government Code, and is therefore exempt from the
requirements of competitive bidding; and is further made in accordance Section 252.048 of the
Texas Local Government Code, as a change order to the previous three (3) agreements
heretofore entered into by and between the City and KEMA, beginning with the original
agreement, approved by Council on October 6, 2009 in Ordinance No. 2009-255 in the amount
of not-to-exceed $169,580; being a First Amendment thereto being approved by Council on
August 3, 2010 in Ordinance No. 2010-187 in the further sum of $86,360; being a Second
Amendment thereto recommended approved by the Public Utilities Board in April 2011, and
approved within the City Manager's signature authority on April 25, 2011 in the further sum of
$40,000; with the original agreement and the two previous amendments aggregating $295,940;
and
It is necessary for KEMA to continue work on a part of KEMA Proposal No. 11-3384 for
Denton Municipal Electric regarding an ERCOT compliance assessment regarding Transmission
Operator ("TOP") certification, as the City does not have specialized Staff to evaluate, audit, and
monitor its transmission operations, and it accordingly requires additional services from KEMA
at this time to assist it in the approval and certification process; Staff is of the opinion that an
additional not-to-exceed $23,000 is necessary in order to compensate KEMA for its professional
and personal services rendered on said Proposal; and
WITNESSETH, that in consideration of the covenants and agreements herein contained,
the parties hereto do mutually agree to amend the terms of the original "Professional and
Personal Services Agreement for TRE/NERC Compliance ConsultanY' for the third time (the
"Third Amendment") as follows:
ARTICLE I
EMPLOYMENT OF CONSULTANT
Delete the 2"d paragraph of Article I of the Agreement entitled "Employment of
Consultant" and substitute the following:
"The Project shall now include, without limitation, highly technical professional and
personal services to advise the City of Denton/Denton Municipal Electric regarding assistance
with the transition in the DME NERC Compliance Department, as outlined more specifically in
Proposal No. 11-2847 Rev. 1 and part of Proposal No. 11-3384 regarding an ERCOT compliance
audit."
ARTICLE II
COMPENSATION
In Paragraph 3, line 5 of Article V. of the Agreement delete the total amount following
the First Amendment of "$295,940" and instead substitute the following language: "not to
exceed an additional sum of $23,000 for this Change Order, aggregating the total sum of
$318,940."
ARTICLE III
NOTICES
The provisions of Article XIV of the Agreement are amended to add the following two
persons regarding the sending of notices as regards the OWNER:
To OWNER:
City of Denton, Texas
George C. Campbell, City Manager
215 East McKinney Street
Denton, Texas 76201
City of Denton, Texas
Phil Williams, General Manager
1659 Spencer Road
Denton, Texas 76205
Phone: 940 349-8487
ARTICLE IV
EFFECT OF THIS THIRD AMENDMENT
CONSULTANT AND OWNER hereto agree, that except as specifically provided for by
this Third Amendment, that all of the terms, covenants, conditions, agreements, rights,
responsibilities, and obligations of the Parties, set forth in the Agreement and the First and
Second Amendments, shall be and will remain in full force and effect.
Page 2 of 3
IN WITNESS HEREOF, the City of Denton, Texas has executed this Agreement to be
executed by its duly authorized City Manager; and CONSULTA�T has executed this Agreement
through its duly authorized undersigned officer on this the �/ `— day of February, 2012.
"OWNER"
THE CITY OF DENTON, TEXAS
A Texas Municipal Corporation
:
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By; �
AP VED AS TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
By:
"CONSULTANT"
/ /
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:
KEMA,INC.
A Corporation
B � � � �? t
y:
Its S� m � c � i�fza�T r i�l i,�t , t�
Page 3 of 3
November 10, 2011
Galen Gillum
DME Compliance Manager
Denton Municipal Electric
1701 C Spencer Rd
Denton, TX 76205
Subject: KEMA Proposal No: 11-3384 — Compliance Program Support
Dear Galen:
KEMA, Inc. is pleased to submit this letter proposal to Denton Municipal Electric (DME) in
response to verbal conversations and a DME email. The requested services from the email are:
1. ERCOT compliance assessment
2. Retrieval, storage of archival documents to help strengthen our compliance trail back to
2007
3. Some sort of Trigger Event Guide or summary to gather together the events that lead to
a compliance-related task — parsed out by job position
4. SharePoint training both on how to do tasks in SharePoint and in how KEMA set up the
programs to be used in SharePoint
5. Audit evidence structure for several standards, including PRC-023
6. TOP certification prep — TRE should be on-site early next year for the TOP assessment
7. Ongoing admin support for monthly compliance checks
Scope of Work
ERCOT Compliance Assessment
Reference KEMA Proposal No. 11-3291. The proposed cost is included in the table below.
Duration will be two KEMA personnel on-site for 3 days.
Retrieval, storage of archival documents
KEMA is proposing an analysis per TO, TP, DP and LSE requirement to identify the current
state of compliance and populate the compliance repository with available evidence of
compliance and update the compliance database links.
KEMA, Inc., 4377 County Line Road, Chalfont, PA 18914 U.S.A.
Tel: +1 215.997.4500 Fax: +1 215.997.3818 info.consulting@kema.com www.kema.com
November 10, 2011
Page 2
Related tasks are:
• Two engineers on-site for one week to work with SMEs and Compliance Staff to identify
what evidence exists in SharePoint, personal PC folders, hard copies and email
archives.
• Upload electronic versions of evidence of compliance
• Identify compliance excursions for DME to consider
• Document any action items
• Populate SharePoint Compliance database with findings to be used for continued
monitoring and future RSAW submittals
Trigger Event Guide
KEMA is proposing updating the Compliance Task List that was designed to identify compliance
related tasks plus any related instructions per task. This is the list the Compliance Monitor uses
each month to determine what evidence is expected to appear, what tasks are coming up and
who the SMEs are associated with each task. Much of this process can be performed remotely
using lessons learned from existing compliance monitoring functions. The training task will cover
the required transference of knowledge plus any DME suggested improvements.
SharePoint training
KEMA is proposing training the Compliance Department and potentially SMEs on the use and
maintenance of the existing Compliance Tools. Training will include:
1. Basic layout and navigation
2. Compliance Task List
3. Compliance database
4. Evidence repository
5. Procedure database
Audit Evidence Structure
KEMA is proposing the restructuring of the evidence repository to match the requirements and
expectations of DME management and SMEs. Specific attention will be given to:
1. Protection System evidence
2. Vegetation management records
3. Reports
November 10, 2011
Page 3
TOP certification prep
KEMA is proposing preparation for Texas RE's TOP Certification Audit. Tasks include:
1. Review of TOP processes and procedures (1+ days)
2. Analyze Control Center status and produce necessary implementation plans (1/2 day)
3. Analyze Backup Control Center status and produce necessary implementation plans
(1/2 day)
4. Analyze compliance status of TOP requirements and produce necessary implementation
plans (4 days)
5. Analyze compliance with cyber requirements and produce necessary implementation
plans (1+ days)
6. Prepare Operators for auditor interviews using KEMA's list of auditor questions (2 - 1/2
day sessions)
7. Assist with TOP RSAWs and evidence folders for submittal to Texas RE. (5.5 days)
Compliance Monitor
KEMA understands that DME desires to have a compliance monitoring contract with KEMA.
Related tasks are:
1. Monitor and facilitate the review of process and methodology documents
2. Monitor that the required on-going recording for each process is being stored in the
correct repository
3. Monitor training and event logs and alert associated management if expected activity is
missing
4. Produce a monthly report documenting:
• Upcoming Compliance Activities
• Compliance Activities Completed
• Open Compliance Items
• Events
KEMA is proposing the services of Tracy Wolfgang to perform this task. It is assumed Tracy will
use KEMA's existing Iogin to DME's SharePoint for the duration of the service.
November 10, 2011
Page 4
Requested Compensation and Schedule
KEMA proposes to conduct the above 7 tasks on a mixture of not-to-exceed time & material and
fixed price components (travel included in both) using the table below.
Invoicing will occur monthly and will be payable on a net 30 days basis.
No
1
2
3
4
5
6
7
Exhibit 1: Cost Schedule
Task
ERCOT compliance assessment
Retrieval, storage of archival documents
Trigger Event Guide
SharePoint training
Audit evidence structure
TOP certification prep
Compliance Monitor
Fixed Price
Time and Material
Fixed Price
Fixed Price
Time and Material
Time and Material
Fixed Price
Total T&M
Total FP
Unused Budget
Additional Budqet
Dollars
�23.000
720
340
840
100
000
140
060
241
959
For Time and Material Tasks, travel will be billed at cost and KEMA's 2011 hourly rates for
potential staff are:
Exhibit 2: Hourly Rates
Professional Labor Rates Hourl Rates
Ra mond Gilb $250
David Cart $225
Josh Venden $160
Trac Wolf an $70
The proposed schedule below puts priority on the TOP certification due to Texas RE's timeline.
DME will need to submit RSAWs 30 days prior to Texas RE's certification audit date.
Exhibit 3: Proposed Schedule
No Pro osed Schedule Start Duration
6 TOP certification prep Dec-11 2 months
5 Audit evidence structure Dec-11 1 da
Retrieval, storage of archival
2 documents Dec-11 1 week
3 Tri er Event Guide Dec-11 1 da
4 SharePoint trainin Jan-12 1 da
7 Com liance Monitor Jan-12 1 ear
1 ERCOT compliance assessment Feb-12 3 da s
November 10, 2011
Page 5
KEMA looks forward to working with DME on this important work. If you have questions, please
contact me (phone: 215-997-4500 ext. 41270 or email: sam.brattini@us.kema.com) or
Raymond Gilby (phone: 267-441-9498 or email: raymond.gilby@us.kema.com).
Sincerely,
�� ���
,
Samuel Brattini
Executive Consultant
NERC Compliance Services
cc: Bimal Mukherjee
Ron Willoughby
Raymond Gilby
Chamaine Duerr