HomeMy WebLinkAboutFCS-14-014 - T13-089 Gas Pipeline Construction Contract
REPORT TO:
Committee of the Whole
DATE OF MEETING:
2014-02-10
SUBMITTED BY:
Larry Gordon, Director of Supply Services, 519-741-2200
ext. 7214
PREPARED BY:
Larry Gordon, Director of Supply Services, 519-741-2200
ext. 7214
WARD(S) INVOLVED:
All Wards
DATE OF REPORT:
2014-01-15
REPORT NO.:
FCS-14-014
SUBJECT: T13-089 – Gas Pipeline Construction Contract
RECOMMENDATION:
Aecon Utilities, a
That Tender T13-089 – Gas Pipeline Construction Contract, be awarded to
Division of Aecon Construction Group Inc., Toronto, Ontario
at their reduced tendered
price of $5,219,080.64, including contingencies and allowances of $913,596.77., plus H.S.T. of
$678,480.48, for a total of $5,897,561.13.
BACKGROUND:
The Gas Pipeline Construction Contract addresses the need to install underground gas mains
and services to service new customers, to replace existing piping in locations that conflict with
underground infrastructure proposed by others, and to replace aging or failing existing piping.
This work is needed to ensure that Kitchener homeowners and business owners all have equal
and safe access to natural gas, if they require it. It is the intention of Kitchener Utilities for the
Contractor to maintain the roles and responsibilities as the Constructor for the various gas
pipeline installation projects for the life of this contract.
Prices were solicited based on quantities corresponding to 100%, 65%, and 35% of the
estimated workload for 2014, but this exceeded the available capital funding for 2014.
Therefore, it is recommended that the contract be awarded to Aecon Utilities at 35% of the
estimated workload quantity. Staff will reassess the 2014 project cost estimates based on the
new contract rates to determine whether the scope of the work must be adjusted.
Utilities does not anticipate that the reduced contract will result in the elimination of any required
projects. Utilities will monitor expenditures as the construction season progresses to ensure
costs remain within budget. If necessary, Utilities may defer projects that have more flexible
schedules. For example, projects that are not associated with road reconstruction or rapid
transit.
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A significant portion of the total tender cost is associated with work items that are required very
infrequently (once in 5-10 years). Utilities is unable to predict when these work items may be
required, because they are driven by customer requests. Unit prices for these infrequent work
items are included in the contract to ensure that Utilities can provide prompt customer service at
competitive prices.
REPORT:
Tenders were advertised publicly in the Daily Commercial News, on the City of Kitchener
website and the Internet through the Ontario Public Buyers Electronic Tendering Information
System. Documents were downloaded by fifteen (15) interested parties, and by the closing date
of Thursday, January 2, 2014, two (2) tenders had been received.
The tenders were reviewed by S. Eastman, Utilities Engineer, L. Jones, Utilities Engineer and T.
Gaber, Utilities Operations Manager, who concur with the above recommendation.
The following tenders were received:
BidPrice Reduced Bid
Price
Aecon Utilities Toronto ON $6,189,469.39 $5,897,561.13 *
Link-Line Contractors Ltd. Vaughan ON $8,834,465.39
The pricing for this contract has increased by approximately 27% compared to the 2011
contract.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
Theme: Financial Management
Strategic Direction: Ensure responsible use of public funds within a supportive policy framework.
The City of Kitchener’s purchasing policies and practices ensure openness, fairness and
transparency in the procurement of goods and services.
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FINANCIAL IMPLICATIONS:
The net cost for this tender (A), is fair and reasonable for a purchase of this scope and the upset
limit is within the budget allowance (B) provided within the budget. Funding for this project is
included within the approved capital budget. The estimated surplus (D) will remain within the
account to fund future purchases.
Financial Summary for Tender T13-089
Estimated Cost
Tender T13-089 costs, including HST 5,897,561.13
less: HST rebate on tender (678,480.48)
Net Cost Being Awarded 5,219,080.65A
Costs Incurred to Date
Projected Costs -
Estimated Cost 5,219,080.65C
Budget
New Service Installations (52000453) 3,983,366.33
New Main Construction (52000525) 1,635,473.96
Replacement Gas Mains (52000524) 765,301.84
Uncommitted (59500696) 221,688.74
LRT (52000903) 1,691,394.39
Budget for this Purchase
8,297,225.26B
Estimated Surplus/(Deficit) (B - C) 3,078,144.61D
COMMUNITY ENGAGEMENT:
Potential vendors are informed of bid opportunities through the public posting of bid documents
as outlined in the City’s Purchasing By-Law. Vendors, local media and the general public are
informed of purchasing recommendations to Council through the public reports which are
included with the Council agenda the week prior to the Council meeting.
ACKNOWLEDGED BY:
Dan Chapman, Deputy CAO & City Treasurer, Finance and Corporate
Services
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