HomeMy WebLinkAboutFCS-15-102 - T15-028 Network Analysis Modelling Software for NG Distribution
REPORT TO: Committee of the Whole
DATE OF MEETING: 2015-06-29
SUBMITTED BY: Michelle Palmer-Novakovic, Director of Supply Services
519-741-2200 ext. 7214
PREPARED BY: Steve Rudak, Buyer, 519-741-2200 ext. 7213
WARD(S) INVOLVED: All
DATE OF REPORT: 2015-06-22
REPORT NO.: FCS-15-102
SUBJECT: Sole Source - Network Analysis Modelling Software for Natural
Gas Distribution
___________________________________________________________________________
RECOMMENDATION:
That the Corporation of the City of Kitchener enter into an agreement with Det Norske Veritas
(Canada) Ltd., Calgary, Alberta, for their natural gas modelling software system in the amount of
$246,831., plus H.S.T. of $32,088., for a total of $278,919., for an initial six (6) year period, with
an option to renew for five (5) additional twelve (12) month terms, subject to the satisfaction of
the City Solicitor.
BACKGROUND:
Network analysis modelling software is used to evaluate the flow of natural gas through a
distribution pipeline system. This typically involves developing and maintaining a computer
model that represents existing and/or proposed gas mains and services. The computer model
can then be used to evaluate the effects of changes to the distribution system such as adding or
removing pipelines, increasing or decreasing operating pressure, and/or constructing a new
station. This would be particularly helpful to optimize future changes to the natural gas
distribution system that will be required to address anticipated future development such as
intensification of the downtown core and new construction to the southwest.
REPORT:
A request for quotation (Q14-004) was advertised publicly on the City of Kitchener website.
Documents were downloaded by seven (7) interested parties, and by the closing date of Friday
March 14, 2014, only one (1) quotation had been received from Det Norske Veritas (Canada
Ltd.).
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The quotation received was significantly in excess of the available budget and City staff
proceeded with cancelling Q14-004. Additional investigation by City staff was undertaken and it
was determined that Det Norske Veritas (Canada) Ltd. is the sole source provider of the
required system. Article 9 -170.9.1 (b) of the Purchasing By-law allows for acquisition by
negotiation where the Director of Supply Services is satisfied that there is only once source of
supply for the goods or service and began negotiations with Det Norske Veritas (Canada) ltd. as
a sole source provider. The total price over the initial six (6) year term includes operating costs
for five (5) years following the initial twelve month term.
Staff involved in the negotiations are S. Eastman, Utilities Engineer, L. Jones, Utilities Engineer,
and S.Rudak, Buyer, who concur with the above recommendation.
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.
FINANCIAL IMPLICATIONS:
The net cost for this proposal (A), is fair and reasonable for a purchase of this scope but the
upset limit exceeds budget allowance (B) provided within the budget. Additional funding for
the Capital portion of the purchase is provided by the existing balance in the Gas Capital
Reserve Fund. The amount available in this account is sufficient to fund the transfer. The
Operating costs are for 5 years of maintenance and support for the modelling software. The
estimated surplus for operating costs (E) will be closed out to the stabilization reserve fund.
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Financial Summary for Tender
Network Analysis Modelling Software for NG Distribution
Capital Operating Total
Estimated Cost
Negotiated costs, including HST 208,075.15 70,844.22 278,919.37
less: HST rebate (23,937.85) (8,150.22) (32,088.07)
Net Cost Being Awarded 184,137.30 62,694.00 246,831.30 A
Costs Incurred to Date - -
Projected Costs - -
Estimated Cost 184,137.30 62,694.00 246,831.30 C
Budget
Gas Operating Budget 70,000.00 70,000.00
Gas System Model 100,000.00 100,000.00
Budget for this Purchase
100,000.00 70,000.00 170,000.00 B
Estimated Surplus/(Deficit) (B - C)
(84,137.30) 7,306.00 (76,831.30)D
Transfer from Gas Capital Reserve Fund 84,137.30 84,137.30
Total Estimated Surplus/(Deficit) - 7,306.00 7,306.00 E
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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