Background: BLS personnel do annual inspections of the two turbine generators. These inspections are necessary to verify clearances, wear, and the alignment of the bearings prior to the running season. Although BLS personnel do the actual labor involved with removing and replacing the bearing caps, SEU always employs a representative from a turbine manufacturer to oversee the work and for technical expertise when questions arise. These technical services are unique in nature, but staff is aware of three companies which can provide the particular talents.

SEU does a "major" inspection of each unit on a five year cycle. A major inspection involves taking the top half of the turbine shell off, pulling the turbine from the casing, sandblasting it clean, and then performing tests to locate any cracks in the blading, flights, or spindle. (All this is done in addition to the checks of the bearings.) This work can be performed at the plant. Any necessary repairs required by findings of this testing would then require that the turbine be shipped someplace for the actual repair work.

One of the turbines is an Elliott and the other is an Allis Chalmers. Past experience has demonstrated that, due to the similarity of both turbines, ether an Elliott or Allis Chalmers representative is qualified to oversee the work on both units. Although the units are worked on one after the other, the site representative(s) were usually not needed continuously during the process because of how long it takes to get one unit completely back together before starting the tear-down on the second. Because of this time factor, these services were viewed as two separate jobs for purchase orders in the past.

The on-site time for a representative to oversee a minor inspection is approximately one week. Staff estimates a two week work period for such services for a major inspection (per turbine). This is the year for major inspections of the two units.

Discussion: Normally, SEU staff obtains faxed quotations from the companies which can do this type of work. The one-week bearing inspection costs are usually less than $5,000 and per the Purchasing Manual, faxed quotes are acceptable if the costs fall in the $3,500 to $5,000 range for purchase orders on each unit. If the cost is estimated to be more than $5,000 before requesting quotes, the Purchasing Manual indicates that the item is to be advertised for written competitive bids.

However, staff notes that the faxed replies received from the service companies are standard, fixed, preset quotes with the hourly rates, travel rates, per diem charges, etc. listed and they are not quotes specifically created due to Stillwater's request. As such, there is no benefit to SEU in going to the expense of preparing, posting, mailing, and advertising for a sealed bid because we will receive the same quotes in either case. These quotes are for per-unit items with services charged by the hour.

Three faxed quotes were received for this work. Copies are attached and it is noted that they are "standard" rate schedules for services. Staff is unaware of any other companies who have personnel with the specific knowledge and work history needed on these older types of steam turbines, in addition to having the necessary insurance to cover their employee's actions and liabilities during the work.

Staff assumed that the representative would be on site for two work weeks of 40 hours each for each turbine. This assumption meant that the representative would travel on the beginning and ending weekends, and stay over in Stillwater during the middle weekend. It also meant that the representative would stay overnight for 12 nights. The lowest price is $9,240 this year, assuming that time plan and the low priced quote from Elliott. An estimated $3,240 of this cost is due to travel time costs and living expenses. This total exceeds the $5,000 limit set by the City Purchasing manual.

It is noted that if the work proceeds at a faster rate than expected, it is possible that the representative could leave early, canceling living expenses for the non-used days and allowing travel at straight time rather than overtime rates. If some unknown problem occurs, then it may also run longer than expected. In either case, billing will be made on the quoted per unit costs.

Staff will request that the Trustees waive the formal bidding requirement for site representative services for this specific project and allow the use of faxed, per unit quotes to determine the low bidder.

Scheduling and Funding: This is the time of year when all major utilities are performing similar turbine overhaul projects, so services reps are at a premium. SEU staff has planned that the #1 Unit will be inspected during the first two weeks of December. If all tests are satisfactory, it will be reassembled and completed during the remainder of that month. We will then get the #2 Unit ready for inspection during the last 2 weeks of January. BLS personnel will do all of the preparatory and button-up work before and after the site representative is here to minimize his on-site time and cost. Staff has checked with Elliott and they could provide somebody to meet that work schedule.

The present budget includes $28,000 for the turbine inspections. Charges will be made based upon actual time on site at the quoted rates.

1. Allow the waiver of the formal bidding requirement for this particular technical services work and allow staff to award purchase orders for the work to the lowest priced quote received by fax. A purchase orders would be issued to the low bidder, Elliott, for providing technical site supervision of the turbine inspections at Elliott's quoted hourly costs.
2. Require staff to prepare a bid document, per the requirements of the Purchasing Manual, and proceed with securing the professional services after receipt and evaluation of sealed bids.

Recommendation: Staff recommends Alternative 1.