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CITY OF COLTON AGENDA REPORT FOR COUNCIL MEETING OF OCTOBER 3, 2006 TO: HONORABLE MAYOR AND CITY COUNCIL FROM: Jeannette Olko, Electric Utility General Manager SUBJECT: Reject All Bids and award Contract for Purchase of Various Transformers to Young and Company in the Amount of $61,607.14 per Section 3.08.140(e) of the Colton Municipal Code DATE: September 28, 2006 BACKGROUND: The City purchases transformers into Electric Stores inventory when the need arises to upgrade, replace, or install a new transformer for an Electric customer. The City also orders back-up transformers to be used to replace a transformer that goes bad in the system. Back-up transformers are necessary, due to the long delivery time. The extreme heat wave this past summer caused many transformers to fail. As a result, the City's inventory of back-up transformers has been severely depleted. In addition, the combination of last year's hurricanes, and this past summer's record heat nationwide have caused delivery lead times to increase dramatically. DISCUSSION/ANALYSIS: On September 6, 2006, the Electric Department posted a Notice Inviting Bids for these transformers on the BidNet Network. Fifty-six vendors registered to supply distribution transformers were notified through the BidNet system. A public bid opening was held at 10:30 A.M. on September 25, 2006 at the Electric Department Administrative offices. Three bids were received and evaluated. A Bid Analysis is attached showing the price and delivery quoted by each vendor. The recommended vendor's price is underlined for each size transformer. The total of bid award is listed at the bottom for the recommended vendor. Also attached is a Transformer Load Loss Evaluation. This evaluation shows the life cycle cost of the transformer over its useful lifetime, using a combination of loss calculations supplied by the transformer manufacturer and the unit price quoted by the vendo C. To evaluate the lowest cost bid, the life cycle costs demonstrate the cost of the transformer over its "in-service" life, taking into consideration the degradation over time. The transformer that loss the least over the useful life results in the lowest cost of the equipment. It is a function of which manufacturer has the least loss. The lowest bid was from McAvoy & Markham, who bid ERMCO transformers. The delivery lead time quoted by McAvoy & Markham is 36-38 weeks, three and a half months longer than the delivery time of the other two bidders. This is the first instance in which the City has received a bid from this manufacturer and the Electric Utility's Engineering Division has not had the opportunity to research and evaluate their processes to determine if they will meet the long term reliability and efficiency goals of the utility. The other two manufactures quoted by other vendors, Howard and Central Moloney, have been evaluated by the City previously, and are proven to meet our needs. As stated above, the City's back-up :Mock of transformers was severely depleted this