HomeMy WebLinkAboutStaff Report 4.A 01/22/20074.A
CiTY OF PETALUMA, CALIFORNIA January 22, 2007
AGENDA BILL
Agenda Title: Discussion and Action Regarding Reconstruction and Meeting Date:
Replacement of Petaluma Municipal Airport Fuel Tank System: Adopting a January 22, 2006
Resolution Making Specified Findings, Rejecting All Bids, Approving a
Revised Budget and Directing and Authorizing the City Manager of the City Meeting Time: lg] 3:00PM
of Petalun1a to Negotiate and Execute a Contract for Reconstruction and D 7:00PM
Replacement of the Existing Fuel Delivery System at the Petaluma
Municipal Airport in an Ammmt Not to Exceed $900,000.00.
Category: D Presentation 181 Con~ent Calendar D Public Hearing D Unfinished Business D New Business
a
(/
DeQartment: Directo : :A.Jt/ Contact Person: Phone Number:
Public Works Vincent ~ngo ;tZ
Larry Zinmler/Jeanne 776-3672
Miche
Cost of ProQosal: $ 1,098,000.00 (Total Project Cost) Account Number:
3299-54151-Cl 00106
Amount Budgeted: $ 734,000.00 (Construction Contract) Name of Fund:
$ 850,000.00 (Total Project) General Fund
Transit Fund
FAA Airport hnprovement Project
(AlP) f1mding
Attachments to Agenda Packet Item:
1. Resolution Making Specified Findings, Rejecting All Bids, Approving a Revised Budget and Directing and
Authorizing the City Manager of the City of Petaluma to Negotiate and Execute a Contract for
Reconstruction and Replacement of the Existing Fuel Delivery System at the Petaluma Municipal Airport in
an Alnow1t Not to Exceed$ 900,000.
2. City Fire Marshal's Order to Comply, dated December 20, 2006.
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Summary Statement:
On May 4, 2005, the Petaluma Airport Commission recommended that the City proceed with design and bidding
of a reconstructed airport fuel delivery system using above ground tanks to bring the airport fuel system into
compliance with State and local requirements. Staff has designed and solicited bids for the work. The existing
system was installed about 1984 and does not comply with current underground tank and vapor recovery
requirements. The project was advertised on October 9, 2006, and the bids due on November 8, 2006. A single
bid for $1,582,530.00 was received from Paradiso Petroleum Inc., which was more than double the engineer's
estimate. The project includes replacing three underground tanks with an above ground fueling system that meets
all applicable regulatory requirements. The project work includes tank installation, piping, monitoring and
electrical controls, landscaping, fencing, concrete and asphalt work. The bid response is inadequate because
specialty portions of the work can only be performed by a limited number of qualified firms; some qualified firms
have booked work to the limits of their bonding capacity and are therefore unable to bid; a 5 year maintenance
obligation in the Citys' RFP was unattractive to the specialty contractors; and some specialty contractors who
were expected to bid perform most of their work for private firms and were uncertain about costs to comply with
federal bidding requirements, all of which resulted in the high single bid received. On December 20, 2006, the
City Fire Marshal issued a new Order to Comply requiring shut down of the system if it is not repaired and/or
reconstructed by July 1, 2007, making time a critical factor. With the revised budget recommended by staff, and
deferral of the existing underground tank removal to a later date, as permitted by Fire Code, staff believes that it
will be possible to negotiate with a prime contractor familiar with public works and federal bid requirements and
permit that contractor to subcontract only the specialty portions of the work related to the tanks and fuel system,
resulting in substantial cost savings to the City and a contract price within the revised budget. Because of the
result of the original competitive bidding process, and because sole source negotiation in the manner described is
expected to result in significant cost savings and will better serve the public interest, it is the City Attorney's
opinion that the proposed manner of proceeding is permitted by the common law exception to competitive
bidding requirements established in Graydon v. Pasadena Redevelopment Agency (1980) I 04 Cal.App.3d 631,
636 and FAA contracting policies.
Recommended City Council Action/Suggested Motion:
Reject all bids received in response to the City's RFP for the airport fuel tank reconstruction project, adopt
findings as recommended and authorize the City Manager to negotiate and execute a contract for a revised
reconstruction project within the revised budget, in an amount not to exceed $900,000.00.
Reviewed by City Attorney: Appro ed)J;JV'Citv Manager:
Date: Date: o./1'!
I
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CITY OF PETALUMA, CALIFORNIA
JANUARY 22,2007
AGENDA REPORT
FOR
DISCUSSION AND ACTION REGARDING RESOLUTION MAKING SPECIFIED
FINDINGS, REJECTING ALL BIDS, APPROVING REVISED BUDGET AND DIRECTING
AND AUTHORIZING THE CITY MANAGER OF THE CITY OF PETALUMA TO
NEGOTIATE AND EXECUTE A CONTRACT FOR RECONSTRUCTION AND
REPLACEMENT OF THE EXISTING FUEL DELIVERY SYSTEM AT THE PETALUMA
MUNICIPAL AIRPORT, IN AN AMOUNT NOT TO EXCEED $900,000.00.
1. EXECUTIVE SUMMARY:
On May 4, 2005, the Petaluma Airport Commission recommended that the City proceed
with design and bidding of a reconstructed airport fuel delivery system using above
ground tanks to bring the airport fuel system into compliance with State and local
requirements. Staff has designed and solicited bids for the work. The existing system was
installed about 1984 and does not comply with current underground tank and vapor
recovery requirements. The project was advertised on October 9, 2006 and the bids due
on November 8, 2006. A single bid for $1,582,530 was received from Paradiso
Petroleum Inc., which was more than double the engineer's estimate. The project
includes replacing three underground tanks with an above ground fueling system that
meets all applicable regulatory requirements. The project work includes tank installation,
piping, monitoring and electrical controls, landscaping, fencing, concrete and asphalt
work. The bid response is inadequate because specialty portions of the work can only be
performed by a limited number of qualified firms; some qualified firms have booked
work to the limits of their bonding capacity and are therefore unable to bid; a 5 year
maintenance obligation in the Citys' RFP was unattractive to the specialty contractors;
and some specialty contractors who were expected to bid perform most of their work for
private firms and were uncertain about costs to comply with federal bidding
requirements, all of which resulted in the high single bid received. On December 20,
2006, the City Fire Marshal issued a new Order to Comply requiring shut down of the
system if it is not repaired and/or reconstructed by July 1, 2007, making time a critical
factor. With the revised budget recommended by staff, and deferral of the existing
underground tank removal to a later date, as permitted by Fire Code, staff believes that it
will be possible to negotiate with a prime contractor familiar with public works and
federal bid requirements and permit that contractor to subcontract only the specialty
portions of the work related to the tanks and fuel system, resulting in substantial cost
savings to the City and a contract price within the revised budget. Because of the result
of the original competitive bidding process, and because sole source negotiation in the
manner described is expected to result in significant cost savings and will better serve the
public interest, it is the City Attorney's opinion that the proposed manner of proceeding
is permitted by the common law exception to competitive bidding requirements
established in Graydon v. Pasadena Redevelopment Agency (1980) 104 Cal.App.3d 631,
636 and FAA contracting policies.
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2. BACKGROUND:
The City currently operates an underground fuel storage tank facility at the Municipal
Airport consisting of three (3) tanks. The first tank is Jet A fuel which is a bottom
loading tank where fuel is transferred from the tank to a Jet A refueling truck. The second
tank dispenses A vgas from an island on the tarmac for small planes and the third tank
dispenses unleaded gasoline for city vehicles. The existing tank system has three (3)
twelve thousand (12,000) gallon double wall fiberglass underground tanks, with single
wall piping in a trench liner.
The system was installed about 1984 and does not comply with current underground tank
and vapor recovery system requirements. Underground fuel tank regulation changes have
caused the airport fueling system to be out of compliance with State regulations, and on
November 2004 the Airport Commission was so informed by the City Fire Marshal, who
enforces State underground tank regulations within the City. At that time the "three fuel
tanks" were "substantially out of compliance." There are deficiencies in the monitoring
system, vapor recovery systems and piping due to recent changes in regulations. Some of
the deficiencies were repaired and the operating permit was renewed with the
understanding that the system needed to be upgraded or a new tank system installed. The
original deadline for compliance was October, 2006.
The Airport Commission recommended that staff complete a design for an above ground
fuel storage system and prepare drawings and specifications for competitive bids. The
project was advertised on October 9, 2006, and the bids due on November 8, 2006. A
single bid for $1,582,530 was received from Paradiso Petroleum Inc., including the base
bid of$1,268,800 and the added alternate of tank removal of$263,730.
The urgency of the work is due to the fact that the fuel system is in violation of State
regulations. The intention of this project is to address these deficiencies by
reconstructing the whole system, with above ground fuel tanlcs, and bring it into
compliance with all current health and safety regulations. However, due to the bidding
climate predicated by the specialty contractor's limited availability, only one bid was
received after a 30 day bidding period.
Work includes replacing three existing underground fuel tanks and fueling system witl1
an above ground fueling system comprised of three, 12,000 gallon tanks: 1) an unleaded
gasoline tank for fueling city vehicles, 2) a Jet A bottom loading tank, and 3) an avgas,
aviation fuel tank. The project work includes tank installation, piping, monitoring,
electrical, controls, landscaping, fencing, concrete and asphalt work to provide a
complete working system. The project construction package was prepared by RHL
Design Group, Inc. and was advertised on October 9, 2006. A mandatory pre-bid
conference was held on August 25, 2006, which was attended by six contractors.
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3. ALTERNATIVES:
A. Reject the bid for the Airport Fuel Tanks Upgrade, direct City Manager to proceed
with letting a negotiated contract and approve a revised budget.
B. Award bid to Paradiso Petroleum for $1,582,530.
C. Do not repair or reconstruct the fuel delivery system and discontinue fuel service, a
major source of operating income, at the airport after July 1, 2007.
4. FINANCIAL IMPACTS:
Table 1
Budget
FY Proposed
6/07Budget Expenditures
Design $ 8,000 $ 69,000
Construction Management 8,000
and Soil Testing 50,000
Construction 734,000 900,000
Contingency 100,000 79,000
Total Approved Budget $850,000 $1,098,000
The proposed budget for the Airport Fuel Tanks Upgrade project is to be funded as
follows:
• $500,000 of the General Fund, $375,000 of which has been previously approved
• $50,000 ofthe Transit Fund (previously approved)
• $178,000 from the 2003 Certificate of Participation (COP) debt proceed
• $60,000 from an agreed-upon, but not used increase to AlP 12
• $300,000 of the future $450,000 AlP 18, which should be payable March 2008
The project will be funded through an interfund loan between the General Fund and
the Airport Fund to be amortized over five years and paid from airport revenues at
3% interest.
5. CONCLUSION:
Reconstruction of the Petaluma Municpal Airport fuel tanks and fuel delivery system is
urgently needed to comply with State regulations to avoid shutdown of the system, but
the existing project budget has insufficient funds to award and construct the proposed
improvements using the single bid received.
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6. OUTCOMES OR PERFORMANCE MEASUREMENTS THAT WILL IDENTIFY SUCCESS OR
COMPLETION:
Reconstruction of the Petaluma Municipal Airport fueling system to comply with State
regulations.
7. RECOMMENDATION:
Reject the Paradiso Mechanical, Inc. bid, approve a revised budget and direct and
authorize the City Manager to negotiate and execute a contract for the work in an amount
not to exceed $900,000.
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ATTACHMENT #1
RESOLUTION MAKING SPECIFIED FINDINGS, REJECTING ALL BIDS,
APPROVING REVISED BUDGET AND DIRECTING AND AUTHORIZING THE CITY
MANAGER OF THE CITY OF PETALUMA TO NEGOTIATE AND EXECUTE A
CONTRACT FOR RECONSTRUCTION AND REPLACEMENT OF THE EXISTING
FUEL DELIVERY SYSTEM AT THE PETALUMA MUNICIPAL AIRPORT, IN AN
AMOUNT NOT TO EXCEED $900,000.00.
Project# 3299-54151-C100106
WHEREAS, City staff has worked diligently with RHL Design Group, Inc. to prepare
construction bid documents and advertise for construction of this Project; and
WHEREAS, in accordance with the requirements of 49 CFR part 26, Regulations of the
U.S. Department of Transportation, California Public Contract Code Section 20688.2, the City
Charter of the City of Petaluma and other applicable Jaw, City staff solicited bids for the Project;
and
WHEREAS, the project was bid on November 8, 2006, and one (1) bid was received and
opened in accordance with applicable Jaw; and
WHEREAS, the lowest bid for the Project was from Paradiso Mechanical, Inc. for
$1,532,530.00; and
WHEREAS, the sole bid received was more than $600,000 in excess of the Engineer's
estimate for the work; and
WHEREAS, federal, State and local funds budgeted and available for the project are not
sufficient to pay for the work as bid by the sole bidder; and
WHEREAS, the existing airport fuel system is currently in violation of State water
quality and air quality regulations because of deficiencies in the monitoring system, vapor
recovery systems and piping; and
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WHEREAS, the City intends to meet regulatory requirements and deadlines by replacing
the existing system with a reconstructed system of the same capacity and for the same use as the
existing system, which will comply with all applicable regulations; and
WHEREAS, the relevant regulatory authorities had previously granted the City through
October, 2006, to resolve the compliance issues by way of repair and reconstruction of the
system; and
WHEREAS, on December 20, 2006, the City Fire Marshal issued an Order to Comply
requiring the City to bring the airport fuel system into compliance on or before July 1, 2007, or
have the system shut down; and
WHEREAS, noncompliance with applicable regulations could expose the City to fines
and penalties; and
WHEREAS, a functioning system which delivers fuel to airport users m the same
manner and capacity as the existing system is essential for continued operation of the Petaluma
Municipal Airport and protection of City revenue received from airport users and airport leases;
and
WHEREAS, City staff has surveyed parties who received bid packets on the original
request for proposals and, on the basis of information obtained, believes that a second bidding
process will not result in responses substantially different from the single response received to
the original request for proposals; and
WHEREAS, the regulatory deadline for installation of a replacement system of July I,
2007, could not realistically be met if a second competitive bidding process were conducted; and
WHEREAS, based on preliminary inquiries, City staff has determined that significant
cost savings and compliance with the July I, 2007, regulatory deadline can be achieved by
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negotiating with a pnme contractor, who would perform non-specialty work directly and
subcontract only for the specialized work related to fuel tank removal and installation of
replacement tanks, vapor recovery systems and specialty piping; and
WHEREAS, because further competitive bidding of the airport fuel tank replacement
project would result in the public incurring additional expense, including, but not limited to
additional costs, failure to realize cost savings, potential exposure to fines and penalties and/or
loss of airport revenue, all as described above, further competitive bidding of the work would not
produce an advantage for the public; and
WHEREAS, a well-recognized exception in common Jaw to the competitive bidding
requirement for public entities " exists where the nature of the contract is such that competitive
proposals would be unavailing or would not produce an advantage, and the advertisement for
competitive bid would thus be undesirable, impractical or impossible." (See Graydon v.
Pasadena Redevelopment Agency (1980) 104 Cal.App.3d 631, 636; and
WHEREAS, the Graydon exception is applied "with sole reference to the public
interest. .. " and in light of the purposes underlying the competitive bidding requirement, which
are " ... to prevent favoritism, improvidence, extravagance, fraud and corruption; to prevent waste
of public funds; and to obtain the best economic result for the public." Graydon at 636; and
WHEREAS, the reconstruction and replacement of the airport fuel tank delivery system
IS categorically exempt from the requirements of the California Environmental Quality Act
("CEQA") pursuant to Public Resources Code section 21084 and 14 California Code of
Regulations sections 1530l(d) and (f), 15302, 15303 and/or 15311, as constituting the
replacement, rehabilitation, reconstruction and/or repair of existing facilities with substantially
the same purpose and capacity to meet current standards of health and safety and/or the
construction of small and/or accessory structures related to existing facilities; and
WHEREAS, U.S. Department of Transportation, Federal Aviation Administration Order
5100.3 8C, effective June 28, 2005, applies to this project because it is partly federally funded
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and provides at Subsections 904.d.(1).(b) and (c) that "a noncompetitive proposal is permitted
under the following circumstances ... (b) Public exigency or emergency when the urgency for
the requirement will not permit a delay incident to competitive solicitation; (c) After solicitation
of a number of sources, competition is determined inadequate .... "
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of
Petaluma as follows:
I. The above recitals are hereby declared to be true and correct and findings of the City
Council of the City of Petaluma.
2. The bid submitted by Paradiso Petroleum received on November 8, 2006 is hereby
rejected.
3. The revised budget for reconstruction and repair of the fuel tanks and fuel delivery
system at the Petaluma Municipal Airport in the amount of $1,098,000.00 is hereby
approved.
4. The City Manager or his delegate is authorized to enter into negotiations and execute a
contract for reconstruction, replacement and repair of the Petaluma Municipal Airport
fuel tank delivery system in an amount not to exceed $900,000.00 without further
compliance with competitive bidding requirements, pursuant to the established common-
law doctrine set forth in Graydon v. Pasadena Redevelopment Agency (1980) 104
Cal.App. 3d 631 and pursuant to U.S. Departroent of Transportation, Federal Aviation
Administration Order 5800.38C.
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Duvhl Glnss
MnJ•or
JCcitb CDnevaro
tHllte Jlnrris
Milt!! Henly
l{uren Nnu
r-,'l!ilc O'Brien
l'nmch1 Torllan
Courrcilmembcr.s
Firc Dcpllrtmc.J1f
/98 "D" Slreet
Pclofumc, CJ 94952
Plulllll (707) 778-1390
FnT (707) 762-4547
Fire l'r~l'i:lltilm Durt•o/1
I J Errglish Street
Pewlwno, Cl 94951
Plione(707) 77,V-4JII!J
Fm (707) i76-Jli4J
ATTACHMENT #2
CITY OF PETALUMA
POST OFFICE ;BOX 61
PETALUMA, CA 94953-0061
December 20, 2006
Michael Biennon, City Manager
ll English St
Petaluma CA 94952
MUNICIPAL AIRPORT FUEL TANKS
ORDER TO COMPLY
According to-my records, a new Aboveground Fuel Tank system (AG1) system
was to have been instillled and operational by October of2006. Due to unforeseen
setbacks= an extension was (¥anted to the Public Works Department to secpre bids
in November 2006, with installation to take place by mid-year 2007. I have been
infonned that the Public Works Department will reco.mmend that tl1e City Council
reject the sole bid they received in response to n recent request for proposals,
because the bid substantially exceeded the engineer's estimate for the work.
Failure to award this contract could move the tanlc installation into late next year
nnd well oeyond tl1e original 10/06 installation date:
Given rl1e failure to install a new AGT system by 10/06 and tl1e recent delay in
contracting for this work, I must issue nn inunedinte ORDER TO COMPLY to
install the new AGT on or before 7/I/07. Failure to meet this deadline w:ill result in
a red tag being attached to the existing fuel tank system, forbidding fuel delivery
and declali.ng·the system non-operallonal, under 23 California Code of Regulations
§2717 .1 and related provisions. This detennino.tion is based on several existing
non-compl-iant conditions miginally deferred pending the new AGT insta.llntion.
The red tag will be issued for the following non-compliance conditions:
o The monitoring system and some ofils components are outdated or inoperable.
•
On 11/30/2004, .the City obtained nn independent consuhant's evaluation of the
exisling airport fuel tnnks, piping and monitoring system. The consultant's
report concluded t11at the "3 fuel tanks are substamially out of cOmpliancen
with applicable regulations. Some of the de_.ficiencies were repaired and others
given temporary fixes in order to pennit the system to oPerate, bur-not resolving
all noncompliance issues.
A July 1005 regulatory deadline to upgrade the single wall fuel piping system
was not met. This requirement was deferred pending the instnJ1ation of the new
AGT by I 0/06.
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Nfichael Biem1ru1
Airport Ordcr to Comply
December 20, 2006-Page 2
• Enhanced Leak Detection (ELD) is required lo be installed because of a public
drinldng water well within 1 000' of the Juel tank site.
To date, water SEliTlples from the well indicate no hydrocarbon contlimination.
However, the deadlines for instnlling ELD are past due. This requirement was
deferred pending the· installation of the new AGT by I 0/06.
11 Vapor recovery system upgrades are required.
As noted in my 1125/05 memo to Fire Chief Aibertson, the vapor recovery system is
sorely out of compliance with air quality regulations.· While this deficiency in not a·
fire department regulatory issue, it is my opinion tlmt the Bay Area Air Quality
Management Board could issue an Order la Comply requiring irmnediate upgrade of
the vapor r~covery system and also assess serious fines and. penalties against the City
for the existing deficiencies.
A letter from you committing the City to install new AGTs an or before 711107 and to
make periodic interim reports· to the Fire Marshal which document substantial progress
toward tl1at installation will permit me to defer innnediately affixing a red tag to the fill
pipe.
However, if the new AGT.is n'oi inst~led by U1at date, or if adequate progress is not
demonstrated at any lime in the interim, I will red tag and shut down the system until the
issues noted above are canected or a new AGT system is installed,
117J~&-1J__;
Michael A. Ginn .
Fire Marshal
c: Chris Albertson, Fire Chief
Vince Marengo, Director of Public Works
Larry Zimmer, Division Mnnnger 1 Capital improvements
Jean MichC, Project Manager, Cnpitn_llmprovements
Paula Dueweke, Fire Inspector
File
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