COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

October 28, 2005

BOARD MEETING DATE:

November 8, 2005

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Neil R. Cullen, Director of Public Works

SUBJECT:

Maintenance and Extended Warranty Agreement for the Cogeneration Equipment at the Maguire Correctional Facility - Redwood City Area (Project No. P8W02)

Recommendation

Adopt a resolution:

1)

authorizing the President of the Board to execute a three-year agreement with Coast Intelligen, Inc. (Contractor) for the maintenance and extended warranty of said equipment, and

2)

waiving compliance with the County’s equal benefits ordinance.

Vision Alignment

Commitment: Responsive, effective and collaborative government.

Goal 20: Government decisions are based on careful consideration of future impact rather than temporary relief of immediate gain.

The proposed agreement will provide for the maintenance of the equipment and allow us to qualify for an “energy” rebate from the California Energy Commission.

Background

Previous Board Action

Adopted Resolution No. 66717 on June 8, 2004, which awarded and authorized execution of a contract to construct a cogeneration plant at the Maguire Correctional Facility (Facility).

History

Construction of the cogeneration plant is complete and the equipment manufactured and supplied by the Contractor must now be maintained. We estimate that the plant will be operational 95 percent (95%) of the time (over 8,300 hours per year) and will produce over 50 percent (50%) of the Facility’s annual electrical demand. The heat from the natural gas used by the cogeneration engines will also reduce the consumption of natural gas used to provide hot water at the Facility. The total annual energy savings are conservatively estimated at $200,000.

Discussion

The project qualifies for a one-time incentive of $300,000 from the California Public Utilities Commission program that is administered by PG&E (Self-Generation Incentive Program [Program]). However, a fully executed three-year maintenance and extended warranty agreement is one of the conditions required to claim the incentive payment.

The Contractor has declined to certify compliance with the County’s Equal Benefits Ordinance. He has also requested that the standard non discrimination language be omitted from the contract and the portion of the standard hold harmless language that requires the contractor to hold the County harmless for any passive or active negligence of the County resulting from the performance of the work by the contractor. We are recommending that your Board approve the agreement with the Contractor, as we have been unable to find other contractors that can provide this maintenance while warranting the equipment as required by the Program.

We do not believe that the omission the standard non-discrimination language will have a negative impact on the County as the standard language generally applies to contractors that are providing services to the general public. This contractor is not providing services to the general public.

We also do not believe that the elimination of the hold harmless language as described above will have a financial impact on the County since the contract is for maintenance and warranty of an alternate energy source for a County facility. Electrical energy will still be available to the facility even if the equipment has to be taken off line. County Counsel concurs with our conclusions.

We propose to have staff trained on maintaining this equipment during the term of the agreement in order to give us the option of “in house” maintenance in the future.

An agreement and resolution have been approved as to form by County Counsel and the Contractor has executed the agreement.

Fiscal Impact

The annual cost of the contract will not exceed $58,000, which includes the base cost of approximately $50,000 per year (based on the engines running 8,300 hours per year); and an additional $8,000 per year for escalation and contingencies, including after-hours repairs and annual emissions testing as required by the Bay Area Air Quality Management District, if we are unable to perform the emission testing with County staff. The entire contract amount for the three-year period shall not exceed $174,000.

Funding is available to cover the contract amount from the remaining Capital Project appropriation for the project and the Department of Public Works’ Facilities Services Division budget.

The impact to the General Fund would be in terms of the portion of the facility charges for the Maguire Correctional Facility that is paid for with General Funds. There is no additional impact to the General Fund.