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Home My WebLink About2006/09/26 Item 5 COUNCIL AGENDA STATEMENT Item S Meeting Date 09/26/06 ITEM TITLE: Resolution Waiving the formal bidding process as impractical and authorizing the City's Purchasing Agent to negotiate purchase orders (PO's) directly with Hanson Aggregates, Inc. for procurement of aggregate products to complete street maintenance tasks by City crews SUBMITTED BY: Director of Public Works Operations 17 Director of Finance sP / REVIEWED BY: City Manager JI (4/5 Vote: Yes_ No...K.J Over the past several years, the aggregate products industry within the San Diego region has been consolidating. The only remaining aggregate supplier in the South Bay is Hanson Aggregates, Inc. located at the east end of Main Street. Hanson Aggregates, Inc. now owns and operates most of the aggregate suppliers in San Diego County. The next closest aggregate suppliers are located in Mission Valley and Carroll Canyon. Therefore, due to the proximity of Hanson Aggregates Inc. compared to other aggregate suppliers in San Diego County, staff recommends waiving, as impractical, the normal bidding process under provision 2.56.070 of the Chula Vista Municipal Code. RECOMMENDATION: That City Council adopt the Resolution waiving the formal bidding process as impractical and authorizing the City's Purchasing Agent to negotiate purchase orders (PO's) directly with Hanson Aggregates, Inc. for procurement of aggregate products to complete street maintenance tasks by Public Works Operations crews. BOARDS/COMMISSIONS: N/ A. DISCUSSION: Over the past several years, the aggregate products industry within the San Diego region has been consolidating. The only remaining aggregate supplier in the South Bay is Hanson Aggregates located at the east end of Main Street. Their products include: Crushed Aggregate Base (CAB), Sand, Gravel, and Structural Backfill materials, and pre-mixed Portland Cement Concrete (PCC). They also furnish aggregates to the only "Hot Plant" remaining in the South Bay, California Commercial Aggregate, LLC (CCA, LLC), which produce Asphalt Concrete (AC) and supply Emulsified Asphalts. This company, formerly California Commercial Asphalt Corporation joined with Hanson Aggregates in December of2005 to become CCA, LLC is located on Main Street near Third A venue in Chula Vista. This was the latest in a long procession of buy-outs and mergers in the region for the aggregate industry. Hanson Aggregates, Inc. currently owns and operates most of the 5-1 Page 2, Item 2 Meeting Date: 09/26/06 aggregate suppliers in San Diego County. The next closest aggregate suppliers are located in Mission Valley and Carroll Canyon. Material supply location is the single most important parameter affecting the responsiveness and efficiency of our Public Works Operations crews. The nature of the work by our Street, Storm Water, and Wastewater crews require "just in time" delivery for material transport to avoid costly stand-by time of labor, equipment and/or delays in restoring public services. Typical repairs made by City crews are very labor intensive. The materials cost is a relatively small portion when considering the total labor and equipment required for the work. However, quick access to these materials has a dramatic affect on overall costs of the operation. For example, travel times to and from Mission Valley and other sources north of Interstate 8 take at least two hours and can take as much as 4-5 hours depending on traffic conditions and potential delays at the plant. Idle time of labor and equipment adds up quickly when waiting for materials to complete the work. Emergency repairs for catastrophic failures such as pavement sinkholes, resulting from water main breaks, sewer line or culvert failures, requires rapid access to aggregate materials. Consider the implications if the repair is on a major arterial. The cost and responsiveness advantages for short turn around on material acquisition cannot be overstated. In the last year, the prices of aggregate products have risen dramatically in large part due to price escalations in fuels, oils, and cement coupled with increased demand on the world market. In addition, due to increasing environmental regulation and diminishing resources, many quarries throughout the region have closed. In this environment, suppliers have been reluctant to guarantee fixed prices for more than a few months to small quantity users. For these reasons, the benefits of soliciting bids continues to diminish, especially when one considers the importance of supplier proximity to the city. To date, the expenditures for the purchase of aggregate products fell within the authorized limits of the Purchasing Agent and/or the City Manager. Furthermore, in the current limited competitive market, it has been "in the best interest of the City" and has been the practice over the last several years, to waive the bidding process and negotiate PO's directly with the suppliers. Between material costs increases, 54% to 68% depending upon the type, and increased demand due to the continued growth of the city, Public Works Operations anticipates spending over $250,000 during the current fiscal year to keep our crews furnished with materials adequate to maintain the city's infrastructure. Decision Maker Conflict. Not Applicable. Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently the 500 foot rule found in California Code of Regulations section I 8704.2(a)(l) is not applicable to this decision. 5-2 FISCAL IMPACT: Funds for these materials are included in the FY06-07 Budget. Attachment: Disclosure Form for Hanson Aggregates, Inc. K:\Public Works Operations\Agenda Statements FY06\Aggregate Products supply contracts-2.doe 5-3 Page 3, Item 5 Meeting Date: 09/26706 09/19/2006 09:11 F~1 619 J97 6259 praLIC WORKS CENTER ~001 City of ChuJa Vista Disclosure Statement Pursuant to Council Policy 101-01, prior to any action upon matters that will require discretionary action by the Council, Planning Conunission and all other official bodi~s of the City, a :,Wement of disclosure of certain owner;hip or financial interests, payments, or campaign contributions ~Jr. a City of Chula Vista election must be filed. The following information must be disclosed: 1. Ltst the names of all persons having a financial interest in the property that is the subject of the application or the contract, e.g., owner, applieant, contracinr, subcontraClor, material supplier, H CUtS ()", ClJf'~..f.a ks PCK: ,".?:'r , 'YJH. ~ ~J;rc. 2. If my person' identified pursuant to (1) above is a corporation or partDCl'ship, list the nam~s of all individuals with a $2000 investment in the business (corporation/partnenhip) entity. AJI4 3. Ifany persen' idenllfied pursuant to (I) above is a non-profit organization or trust, list the names of any p=on serving as director of the non-profit organizallon or as trustee or beneficiary or trustor of the trust. ^, I A 4. Please identify every person, including any agents, employees, consultants, or independent l;Ontractors you bave assigned to represent you before the City in this m;'tter. pq IJ,' d .c:,-b'~r::>9..... I fYtc-U k. L-~ "J 1)",,,,(" '+.UfA.M, e I ~ "..1,;' J..b...oeJ ( p ,p~~t' 7..o..&;;ec.. r J 5, Has any person' associated with this contract bad any financial dealin!,s with an official" of the City ofChula Vista as it relates to this contract within the past 12 mont],s? Yes_ No* 5-4 09/19/2006 09:11 F.~1 619 397 B259 PUBLIC WORKS CENTER IilI 002 If Yes, briefly describe the nature of the financial interest the official" may have in this contract. ;() / A- I 6. Have you m<u::le a contribution of more than $250 within the past twelw (12) months to a current member of the Chula Vista City Council? No 2( Yes _ Jfyes, which C'mncil member? ...!:I !+o...t.U..... ~.-. -=-J::;c. ~<;; h.."... I"'UPJ-e ,otA IkJ~ c-I,.,'~ 6#"1 d. ./t16(J- foil ~"I Sk-<.CtS-kAt:d,q U Have you provided more than $340 (or an item of equivalent vaIue) to an official" of the City of Chula Vista in the past twelve (12) months? (1bis includes being a source of income, money to retire a legal debt, gift, loan, etc.) Yes _ No X 7. If Yes, which official" and what was the nature of item provided? t'lBv .. . . Date 9/1'7/0 " Si , Person is defined as: any individual, firm, co-partnership, joint ventun" association, social club, fraternal organization, corporation, estate, trust, receiver, syndicate, any other couury, city, municipality, district, or other political subdivision, -or any other group or combination acting as a unit. " Official includes, but is not limited to: Mayor, Council member, Planning Commissioner, Member ofa board, commission, or committee of the City, employee, or staff members. 5-5 RESOLUTION NO. 2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA WAIVING THE FORlvlAL BIDDING PROCESS AS IMPRACTICAL AND AUTHORIZING THE CITY'S PURCHASING AGENT TO NEGOTIATE PURCHASE ORDERS (POs) DIRECTLY WITH HANSON AGGREGATES, INe. FOR PROCUREMENT OF AGGREGATE PRODUCTS TO COMPLETE STREET MAINTENANCE TASKS BY CITY CREWS WHEREAS, the only aggregate supplier in the South Bay is Hanson Aggregates, Inc., located at the east end of Main Street; and WHEREAS, Hanson Aggregates, Inc., currently owns and operates most of the aggregate suppliers in San Diego County. The next closest aggregate suppliers are located in Mission Valley and Carroll Canyon; and WHEREAS, material supply location is the single most important parameter affecting the responsiveness and efficiency of the Public Works Operations crews. The nature of the work by the Street, Storm Water, and Wastewater crews require "just in time" delivery for material transport to avoid costly stand-by time of labor, equipment and or delays in restoring public services; and WHEREAS, travel times to and from Mission Valley and other sources north ofInterstate 8 take at least two hours and can take as much as four to five hours depending on traffic conditions and potential delays at the plant. Idle time of labor and equipment adds up quickly when waiting for materials needed to complete the work; and WHEREAS, emergency repairs for catastrophic failures such as pavement sinkholes, resulting from water main breaks, sewer line or culvert failures, require rapid access to aggregate materials; and WHEREAS, due to material costs increases, ranging from 54 to 68 percent depending upon the material required, and increased demand for materials due to the continued growth of the City, Public Works Operations anticipates spending over $250,000 during the current fiscal year to keep our crews furnished with materials adequate to maintain the City's infrastructure. 5-6 Resolution No. 2006- Page 2 NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does waive the formal bidding process as impractical and authorize the City's purchasing agent to negotiate purchase orders (POs) directly with Hanson Aggregates, Inc. for procurement of aggregate products to complete street maintenance tasks by City crews. Presented by Approved as to form by Dave Byers Director of Public Works ~kt.l.5\~~~~\.\ Ann Moore City Attorney j :\Attomey\RESO\AGREEMENTS\Hanson Aggregates _ 09-26-06.doc 5-7