HomeMy WebLinkAboutFCS-15-147 - Sole Source - Gas Pipeline Reconstruction - Duke Street and Frederick Street LRTStaff Report
rTC.� R finance and Corporate Services Department www.kitcheneaa
REPORT TO: Special Council
DATE OF MEETING: 2015 -10 -19
SUBMITTED BY: Michelle Palmer - Novakovic, Director of Supply Services
519- 741 -2200 ext. 7214
PREPARED BY: Michelle Palmer - Novakovic, Director of Supply Services
519- 741 -2200 ext. 7214
WARD(S) INVOLVED: Ward 10 and Ward 9
DATE OF REPORT: 2015 -10 -15
REPORT NO.: FCS -15 -147
SUBJECT: Sole Source — Gas Pipeline Reconstruction, Duke Street
and Frederick Street LRT
RECOMMENDATION:
That the Corporation of the City of Kitchener enter into an agreement with Aecon
Utilities, A division of Aecon Construction, Toronto, Ontario, for the Gas Pipeline
Reconstruction, Duke Street and Frederick Street LRT in the amount of $2,821,638.,
plus H.S.T. of $366,812.94, for a total of $3,188,450.94.
BACKGROUND:
In February 2014, Aecon Utilities, A division of Aecon Construction (Aecon) was
awarded contract T13 -089 for gas pipeline construction. This contract commenced
March 16, 2014 and was for a one year term with the option to renew, upon mutual
agreement, for two terms of 12 months each.
In advance of the contract term ending March 15, 2015, discussions commenced with
Aecon regarding the renewal of the contract. In December 2014, Aecon agreed to
maintain 2014/2015 pricing for new and replacement main /services during 2015/2016,
but requested additional time to complete an ongoing LRT project before submitting
pricing for LRT work. New main /services, replacement main /services, and LRT projects
were each projected to account for approximately 30 -35% of overall 2015/2016
workload.
In March 2015, Aecon submitted new pricing for LRT projects for the 2015/2016 period,
which represented an increase of approximately 50 %. After further negotiation, Aecon
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proposed a 25% increase for certain large LRT projects (including Ottawa,
Duke /Frederick, and the high pressure main crossing Courtland). This increase for a
renewal was not acceptable to City staff and staff proceeded with the tender process to
competitively bid the requirement.
In April 2015, in consultation with Grandlinq Contractors (GLC), the required schedule
for the large LRT projects was determined to be July to October 2015 for Ottawa,
December 2015 to March 2016 for Duke /Frederick, and Summer 2016 for the Courtland
crossing. The Region expanded the scope of work to include Frederick (Duke to
Weber) in July 2015. In August 2015, in consultation with GLC, the required schedule
for the Duke /Frederick LRT project was amended to September to October 2015 for
Duke (Water to Ontario), and April to June for Duke (Ontario to Frederick) and Frederick
(Charles to Weber). The schedule was subsequently delayed by GLC to accommodate
higher priority work on Charles, which must be completed in time to allow paving in
October 2015. In October 2015, GLC again amended the required schedule to include
winter work.
The work on Duke (Water to Ontario) is scheduled to begin in late October 2015,
weather permitting.
REPORT:
Tender (T15 -046) for Gas Pipeline Reconstruction related to LRT Construction (Ottawa
and Duke / Frederick) was advertised publicly on the City of Kitchener website and the
internet through the Ontario Public Buyers Electronic Tendering Information System.
Documents were downloaded by ten (10) interested parties and by the closing date of
Thursday May 14, 2015, two (2) tenders had been received.
Tender T15 -046 for Ottawa and Duke /Frederick referenced the original schedule and
design released in April 2015.
Both tenders received were significantly in excess of the available budget. Article 9 -
170.9.1 (e) of the Purchasing By -law allows for acquisition by negotiation where the
lowest bid meeting the specifications is excessive in total cost and / or exceeds the
estimated cost by at least 10 %. City staff proceeded with cancelling T15 -046 and began
negotiations with Aecon. After negotiating the Ottawa project, negotiations proceeded
on the Duke /Frederick project. In collaboration between the Region, GLC, Aecon, and
City staff, risks to Aecon related to work by multiple contractors and working hours were
mitigated. However, traffic diversions, proximity of other underground utilities, and
winter work have increased the overall construction costs.
Staff involved in the negotiations were; S. Eastman, Utilities Engineer and M. Palmer -
Novakovic, Director of Supply Services, who concur with the above recommendation.
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ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
The recommendation of this report supports the achievement of the city's strategic
vision through the delivery of core service.
FINANCIAL IMPLICATIONS:
The net cost for this proposal (A), is fair and reasonable for a purchase of this scope.
The funding for this project is part of the 2016 capital budget, so preapproval of this
project budget is required. The estimated surplus for this phase of work (D) will be
used to fund estimated deficits from other phases of the project, leading to a small total
estimated surplus (E).
Financial Summary
Gas Pipeline Reconstruction related to LRT Construction - Frederick and Duke St
As at October 14, 2015
Estimated Cost for this Phase of Work
Negotiated Costs, including HST
less: HST rebate on tender
Net Cost Being Awarded
Costs Incurred to Date
Projected Costs : Staff Time
Estimated Cost for this Phase of Work
Proposed 2016 Budget for LRT Project
Capital
3,188,450.94
(366,812.94)
2,821,638.00 A
2,821,638.00 C
Preapproval of 2016 budget for City's Portion
1,737,000.00
Preapproval of 2016 budget for Region's Portion
1,244,000.00
Total Proposed 2016 Budget for LRT Project
2,981,000.00 B
Estimated Surplus /(Deficit) for this Phase of
Work (B - C)
159,362.00 D
Estimated Surplus /(Deficit) from previous phases (158,000.00)
Total Estimated Surplus /(Deficit) 1,362.00 E
COMMUNITY ENGAGEMENT:
INFORM - 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
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the public reports which are included with the Council agenda the week prior to the
Council meeting.
PREVIOUS CONSIDERATION OF THIS MATTER:
Not applicable
ACKNOWLEDGED BY: Dan Chapman, Deputy CAO & City Treasurer, Finance and
Corporate Services
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