HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/01/2019 - RESOLUTION 2019-094 APPROVING THE PURCHASE OF TWOAgenda Item 7
Item # 7 Page 1
AGENDA ITEM SUMMARY October 1, 2019
City Council
STAFF
Link Mueller, Utilities Special Projects Manager
Jason Graham, Water Reclamation/Biosolids Manager
Cyril Vidergar, Legal
SUBJECT
Resolution 2019-094 Approving the Purchase of Two Biogas Powered Generator Sets from Woodward, Inc. as
an Exception to the Competitive Purchasing Process.
EXECUTIVE SUMMARY
The purpose of this item is to approve an exception to the competitive purchasing process for the purchase of
two biogas powered combined heat and power (CHP) generator sets for the Drake Water Reclamation Facility
(DWRF) in support of the City’s climate action plan (CAP) goals. Woodward has been collaborating with City
staff and consultants for several years working in the design of a cost-efficient combined heat and power
(CHP) system that can utilize biogas produced at DWRF. Purchasing the CHP generator set through
Woodward provides the most economical procurement while allowing Woodward to leverage equipment
provided by the company, its vendors, and clients.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BACKGROUND / DISCUSSION
The purpose of this agenda item is to request an exception to the competitive purchasing process per Section
8-161(d)(1) b. of the City Code. Purchase of these CHP systems through any other source will result in
approximately four times higher costs to the City, based on cost analysis conducted during the design.
The City of Fort Collins operates two wastewater treatment facilities: Mulberry Water Reclamation Facility
(MWRF) and Drake Water Reclamation Facility (DWRF). One component of wastewater treatment is the
stabilization of sludge through anaerobic digestion to produce biosolids. The DWRF stabilizes all wastewater
sludge from both the MWRF and DWRF through 4 anaerobic digesters. As treatment occurs, biogas is
naturally produced by the microorganisms used in the digestion process. On average, about 50% of the
annual volume of biogas produced is beneficially reused for process heat and facility building heat with the
remaining 50% wasted by flaring it off. The installation of the Woodward CHP systems and associated
equipment would provide the necessary infrastructure to beneficially reuse 100% of the biogas produced under
normal operating conditions.
Founded in 1870, Woodward Inc, is a locally based international firm that provides control solutions for
equipment that produces electricity using conventional and renewable energy sources. In 2016, Woodward
met with City staff and a concept was hypothesized where utilizing Woodward’s engine systems expertise and
contacts, an economical combined heat and power system could be designed to utilize DWRF’s biogas. In
May 2017 this partnership was formalized in an agreement between the City and Woodward where support of
Woodward in the design of the City CHP systems, Woodward gains a local facility to highlight and showcase
its engine control systems. Woodward, the City, and the City’s consultants and contractors have been
Agenda Item 7
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successfully collaborating on these systems to the point where the next step is to finalize a purchase
agreement and begin fabrication.
CITY FINANCIAL IMPACTS
Section 8-161 (d)(1) b. of the City Code authorizes the Purchasing Agent to negotiate the purchase of supplies
and materials without utilizing a competitive process where the Purchasing Agent determines that although a
particular material or service is available from more than one (1) responsible source, a competitive process
cannot reasonably be used, or, if used, will result in a substantially higher cost to the City, will otherwise injure
the City’s financial interests or will substantially impede the city’s administrative functions or the delivery of
services to the public. Purchases under this section that exceed $200,000 require City Council approval.
During the preliminary design process prior to involvement with Woodward, the City’s contractor solicited
budgetary quotes from industrial generator set suppliers. The following chart summarizes the comparison to
Woodward’s current proposal:
Supplier CHP system size (kW) Budgetary Cost (Date) Cost per kilowatt
Supplier A 400 $798,000 (2016) $1,995
Supplier B 300 $860,000 (2016) $2,866
Woodward 440 (220 x 2) $368,000 (2019) $836
BOARD / COMMISSION RECOMMENDATION
On September 19, 2019, the Water Board voted unanimously to recommend adoption of this Resolution.
(Attachment 1)
ATTACHMENTS
1. Water Board Minutes, September 19, 2019 (Draft) (PDF)
Excerpt from Unapproved DRAFT MINUTES - WATER BOARD
REGULAR MEETING
September 19, 2019, 5:30 p.m.
222 Laporte Avenue, Colorado River Community Room
09/19/2019 – Excerpt from Unapproved DRAFT MINUTES Page 1
o Competitive Process Exception, Woodward
Cogeneration Systems
(Attachments available upon request)
Special Projects Manager Link Mueller summarized staff’s request for an
exception to the competitive purchasing process for the purchase of two biogas-
powered combined heat and power (CHP) generator sets for the Drake Water
Reclamation Facility (DWRF) in support of the City’s Climate Action Plan (CAP)
goals. Woodward has collaborated with City staff and their consultants for
several years working in the design of a cost-efficient combined heat and power
(CHP) system that can utilize biogas produced at Drake Water Reclamation
Facility (DWRF). Purchasing the CHP generator set through Woodward provides
the most economical procurement by allowing Woodward to leverage equipment
provided by the company, its vendors and clients.
Discussion Highlights: Board members commented on and inquired about
various related topics including the showcase part of the agreement (reasonable
notice to visit site, etc.); details of the generator sets and heat exchangers; and
clarification on the reason for exception from competitive process.
Board Member Steve Malers moved that the Water Board recommends to City
Council approval of the resolution for an exception to the competitive purchase
process for the purchase of two biogas-powered cogeneration systems and their
associated engineering services from Woodward, Inc.
Board Member Phyllis Ortman seconded the motion.
Discussion on the motion: None
Vote on the Motion: it passed unanimously, 8-0
ATTACHMENT 1
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RESOLUTION 2019-094
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROVING THE PURCHASE OF TWO BIOGAS POWERED GENERATOR SETS
FROM WOODWARD INC. AS AN EXCEPTION TO THE COMPETITIVE
PURCHASING PROCESS
WHEREAS, Section 8-161(d)(1)(b) of the City Code authorizes the Purchasing Agent to
negotiate purchases of supplies and services without utilizing a competitive bidding or proposal
process where the Purchasing Agent determines that although there may be more than one
source, the competitive process cannot reasonably be used, or if used will result in a substantially
higher cost to the City, will otherwise injure the City’s financial interests or will substantially
impede the City’s administrative functions or the delivery of services to the public; and
WHEREAS, the City operates two wastewater treatment facilities, Mulberry Water
Reclamation Facility (MWRF) and Drake Water Reclamation Facility (DWRF), through which
municipal wastewater is collected and passed through DWRF, where it is stabilized via
equipment including anaerobic digestors to break down and consume organic material; and
WHEREAS, anaerobic digestion of wastewater solids occurs with help from natural
microorganisms, which produce biogas, about 50% of which is currently beneficially reused at
DWRF and the remaining 50% is expired by flaring off; and
WHEREAS, in 2016, the Fort Collins Wastewater Utility (“FCU”) began construction
and capital improvements at MWRF and DWRF, including studying co-generation systems; and
WHEREAS, in 2017, the City and Woodward Inc. entered into an agreement to leverage
Woodward’s engine expertise and industry contacts to design an economical combined heat and
power project to reuse biogas to offset public electric power demands at DWRF; and
WHEREAS, Woodward recently identified a two-generator set custom system design
through which it can provide FCU an economical biogas-powered combined heat and power
(CHP) system at DWRF which also advances City climate action goals; and
WHEREAS, the estimated total cost for the (220kW x 2) 440 kW Woodward CHP
system is $368,000, approximately $836/kW of generation capacity, represents a significant cost-
saving per kilowatt of power generation, based on budgetary competitive quotes obtained in
2016 for similar self-contained systems at up to four times the cost of Woodward’s design; and
WHEREAS, FCU staff has concluded Woodward’s CHP generator set provides the most
economical and complete option available, leveraging proprietary equipment from Woodward,
its vendors, and clients in a customized utility-scale application that can also serve as a public-
private partnership to showcase community co-generation solutions; and
WHEREAS, FCU staff has recommended contracting with Woodward to provide a
biogas CHP system solution at DWRF, based on the cost-savings and the mutual benefits
available through selecting a local vendor; and
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WHEREAS, the City’s Purchasing Agent has determined that although there may be
more than one source for CHP system solutions, the competitive process, if used, will result in a
substantially higher cost to the City based on the availability of the option Woodward is offering,
would injure the City’s financial interests by jeopardizing community benefits available through
a long-term collaboration with Woodward, and would otherwise substantially impede the City’s
administrative functions or delivery of services to the public by delaying the DWRF project; and
WHEREAS, on September 19, 2019, the City’s Water Board voted unanimously to
recommend City Council approve staff’s recommendation to purchase a CHP system solution
through Woodward; and
WHEREAS, City Council appropriated $4.7M in prior and current budget cycles for
capital improvements at the City wastewater facilities, and $2.95M of which appropriation
remains unexpended; and
WHEREAS, Section 8-161(d)(3) of the City Code requires prior approval of this
purchasing method by the City Council for all procurements which exceed $200,000.
NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
Section 2. That the City Council hereby approves the purchase of a combined heat
and power system solution from Woodward Inc., as an exception to the City’s competitive
purchasing process requirements, for the reasons set forth herein, and authorizes the Purchasing
Agent to negotiate and execute a purchase agreement.
Section 3. That the Purchasing Agent may use this approval, as authorized in City
Code Section 8-161(d)(4), as the basis for negotiating the additional purchase of services from
Woodward Inc. at any time within a period of five (5) years from the date of this Resolution.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 1st
day of October, A.D. 2019.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk