Title
MOTION TO ADOPT PROPOSED RESOLUTION NO. 2025-R-13
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF PEMBROKE PINES, FLORIDA, APPROVING THE AGREEMENT WITH OPERATIONS MANAGEMENT INTERNATIONAL, INC., FOR THE OPERATION, MAINTENANCE, AND MANAGEMENT OF THE CITY UTILITY SYSTEM AND SERVICES; MAKING SPECIFIC FINDINGS THAT THE APPROVAL OF THIS AGREEMENT IS IN THE BEST INTEREST OF THE CITY PURSUANT TO SECTION 35.18(C)(8) OF THE CITY CODE OF ORDINANCES; AUTHORIZING THE APPROPRIATE CITY OFFICIALS TO EXECUTE THE NECESSARY DOCUMENTS TO EFFECTUATE THIS RESOLUTION; PROVIDING FOR CONFLICTS; PROVIDING FOR SEVERABILITY; PROVIDING FOR AN EFFECTIVE DATE.
Summary Explanation and Background
PROCUREMENT PROCESS TAKEN:
- Chapter 35 of the City’s Code of Ordinances is titled “PROCUREMENT PROCEDURES, PUBLIC FUNDS.”
- Section 35.18 of the City's Code of Ordinances is regarding "COMPETITIVE BIDDING OR COMPETITIVE PROPOSALS REQUIRED; EXCEPTIONS."
- Section 35.18(C) states that "Only the following situations are exempt from the competitive bid and competitive proposal requirements of this section:"
- Section 35.18(C)(8) states, “Best interest of the city. Purchases of and contracts for commodities or services are exempt from this section when the City Commission declares by a simple majority affirmative vote that the process of competitive bidding and competitive proposals is not in the best interest of the city. The City Commission shall make specific factual findings that support its determination, and such contracts may be placed on the City Commission consent agenda."
- Section 35.21 of the City's Code of Ordinances is titled "AWARD OF CONTRACT."
- Section 35.21(A) of the City's Code of Ordinances is titled "City Commission Approval."
- Section 35.21(A)(1) states, "An initial purchase of, or contract for, commodities or services, in excess of $25,000, shall require the approval of the City Commission, regardless of whether the competitive bidding or competitive proposal procedures were followed."
SUMMARY EXPLANATION AND BACKGROUND:
1. The City of Pembroke Pines provides water and wastewater services to residents and businesses located within the City’s utility service areas.
2. On February 28, 2013, the City Commission, during a workshop/retreat, requested that the City Manager explore function sourcing for the Utility System, Customer Service, Parks Maintenance, General Government Services, and Streets and Sidewalk Services.
3. On April 17, 2013, the City Commission approved the advertisement of:
A) RFQ # PSUT-13-01 “Operation, Maintenance and Management of the City's Water and Wastewater Utility System”
B) RFQ # PSUT-13-02 “Utility Billing, Customer Service, and Meter Reading Services.”
4. On June 4, 2013, the City opened five sealed proposals for RFQ # PSUT-13-01 and five sealed proposals for RFQ # PSUT-13-02.
5. In June of 2013, the Evaluation Committee conducted their evaluations of RFQ # PSUT-13-01 “Operation, Maintenance and Management of the City's Water and Wastewater Utility System” ranked the firms in the following order:
1) U.S. Water Services Corporation
2) CH2M HILL (Operations Management International, Inc.)
3) Veolia Water North America Operations, Inc
4) Calvin, Giordano & Associates, Inc.
5) Severn Trent Environmental Services, Inc.
As a result, the Evaluation Committee recommended to award RFQ # PSUT-13-01 to U.S. Water Services Corporation, as the highest ranked firm.
6. Similarly, in June of 2013, the Evaluation Committee conducted their evaluations of RFQ # PSUT-13-02 “Utility Billing, Customer Service, and Meter Reading Services” and also recommended to award it to U.S. Water Services Corporation, as the highest ranked firm.
7. On June 19, 2013, the City Commission approved the recommendation of the Evaluation Committees for both RFQ # PSUT-13-01 and PSUT-13-02 and directed the City Manager to negotiate a price with U.S. Water Services Corporation for services to be brought back to Commission for consideration.
8. On September 3, 2013, the City Commission approved to award RFQ # PSUT-13-01 and RFQ # PSUT-13-02 to U.S. Water Services Corporation and to enter into the negotiated agreement in the amount of $8,404,868 which resulted in a total overall city savings of $1,228,258, and to also sell twenty-one (21) city vehicles to U.S. Water Services Corporation for a lump sum amount of $469,251.
9. On November 26, 2014, U.S. Water Services Corporation issued a 180-day notice of termination for convenience to the City pursuant to section 14.2 of the agreement, while remaining open to an earlier termination.
10. Since U.S. Water Services Corporation needed to be replaced immediately, the City initiated contract negotiations with the next highest-ranked vendor, Operations Management International, Inc. (OMI), a subsidiary of CH2M Hill, which was evaluated as the second most qualified firm under RFQ # PSUT-13-01, “Operation, Maintenance, and Management of the City's Water and Wastewater Utility System.”
11. On February 4, 2015, the City Commission approved resolution # 3443 (proposed resolution # 2015-R-03), approving the Original Agreement for Utilities Function Sourcing with Operations Management International, Inc. (OMI), in the best interest of the City, for the operation, maintenance, and management of the City's Utility System, for an initial term commencing on March 1, 2015 through September 30, 2020, with the option to renew for one additional five-year term.
12. In 2017, Jacobs acquired Operations Management International, Inc. (OMI) as part of a larger acquisition of CH2M Hill, as a result OMI is now a wholly owned subsidiary of Jacobs.
13. On April 15, 2020, the City Commission approved the Amended and Restated Agreement with Operations Management International, Inc. (OMI) for the Operation, Maintenance, and Management of the City's Utility System. The commencement date of the agreement was October 1, 2020, and for a period of five years. This agreement naturally expires on October 1, 2025, with no provisions for renewal.
14. In lieu of going out to bid, the Utilities Department believes that it is in the best interest of the City to renegotiate the existing agreement with OMI. As a result, Administration is presenting a new negotiated agreement with OMI for an initial term commencing on October 1, 2025, and remaining in effect through September 30, 2030. In addition, the agreement may be renewed for one additional five-year term upon mutual agreement of the parties, provided that such renewal is agreed upon no less than 120 days prior to the expiration of the current term. The new negotiated agreement includes:
A) An initial Annual Fee for Services in the amount of $10,909,726.81.
B) In line with the existing agreement, the new agreement shall be automatically adjusted, on October 1, 2026 and annually thereafter, according to the annual Consumers Price Index (CPI) for All Urban Consumers, Not Seasonally Adjusted as published by U.S. Department of Labor, Bureau of Labor Statistics in the Detailed Report Series ID:CUUR0000SEHG01 - Water and Sewerage Services for the month of April, or four percent (4%), whichever is less, but not less than zero.
C) Consistent with the existing agreement, the City may terminate all or part of the agreement for any reason with at least 365 days’ written notice, while OMI may terminate the agreement with at least 180 day’s written notice.
D) Similar to the existing agreement, the City will reimburse OMI monthly for Maintenance and Repair Expenditures, which OMI pays upfront and invoices the City separately from the Annual Fee. Expenses over $2,500 require prior City approval, with exceptions for pre-approved routine items. The City must respond to approval requests within five business days, or the Operator may proceed after notice. Total spending must stay within the City’s approved annual budget, which the City tracks and manages. Equipment purchases over $2,500 must be made by the City unless declined, in which case OMI may purchase and retain ownership. Subcontracted work and smaller equipment purchases are also reimbursable as Maintenance and Repair Expenditures.
E) The new agreement ensures continuity of service at equal or improved levels for the operation, maintenance and management of the City's water and wastewater utility system and the utility billing, customer service, and meter reading services.
F) In addition to the services in the existing agreement, the new negotiated agreement includes additional services, such as:
F1) Pressure cleaning and removal of build-up including fats, oils and grease from master lift station 4.
F2) Timely restoration of all road, sidewalk, curb, and landscape repairs as a result of routine and/or emergency repairs of water and sewer lines, in lieu of just being responsible for coordinating with other City contractors for the repairs.
F3) Exercising and maintaining water and sewer valves at least once every five years, as agreed with the City.
F4) Cleaning all gravity sewer lines every five years and coordinating with the City to prioritize areas needing more frequent cleaning.
F5) Asphalt and concrete repairs under 100 square feet per City standards.
15. Section 35.18(C)(8) of the City Code of Ordinances provides that contracts for services may be exempt from competitive bidding requirements under the City’s Procurement Code upon a simple majority affirmative vote of the City Commission declaring that the process of competitive bidding and competitive proposals is not in the best interest of the City. This decision would be based on the specific factual findings that support its determination.
16. Below are the factual findings:
A) As outlined above, the City previously conducted a competitive procurement process for these services, which ultimately resulted in the current agreement with OMI.
B) The Utilities Department Staff has confirmed that OMI has provided the services required under the current agreement in a satisfactory manner for the last ten years.
C) The daily provision of water and sewer services to the City’s residents and businesses is a complex endeavor directly impacting the life, health, and welfare of the citizens, residents, and visitors of the City of Pembroke Pines.
D) OMI has thoroughly demonstrated its significant familiarity with the City’s utility system as well as its ability to provide the services under the proposed agreement in the same form and manner that it has provided since 2015.
E) Under the current agreement with Operations Management International, Inc., the City has been able to limit utility rate increases to the amount prescribed by annual consumer price index adjustments.
F) The City’s Utilities Department and Administrative Staff have provided that the selection of a new firm to begin providing water and sewer services throughout the City will result in a costly six (6) month overlap between the present and future providers.
G) Staff has further provided that the introduction of a new contractor who is unfamiliar with the City’s utility system may result in an unnecessary risk to the health, safety, and welfare of the City’s residents and businesses.
H) The current annual fee under the existing agreement is $9,841,928.39. While the actual Consumer Price Index (CPI) change for April (Detailed Report Series ID: CUUR0000SEHG01) was 4.71%, the agreement caps any CPI-based adjustment at a maximum of 4%. As a result, the new annual fee, if adjusted by the maximum 4%, would be $10,235,605.53.
I) The initial annual fee for services under the new agreement is $10,909,726.81, representing an increase of $674,121.31 over the 4% CPI-adjusted fee in the existing agreement. However, please note that the new agreement includes additional services, including the addition of a sewer vacuum truck (to be purchased by OMI and dedicated solely to the services and scope of work for the City of Pembroke Pines contract, including cleaning of 20% of city's sewer mains each year). In addition, the new agreement includes the cleaning of master lift station # 4, performance of road restorations for excavations where they repair mains or services up to 100 square feet, and cleaning all gravity sewer lines and exercising water and wastewater system valves during the five-year period.
J) The ongoing professional contractual relationship between the City of Pembroke Pines and OMI has fostered a familiarity and understanding between both parties of the needs, expectations, and demands of the City’s residents and the City’s government related to the provision of the services required herein.
K) Ensuring the continued and trusted provision of such essential services to the citizens, residents, business owners, and visitors of the City of Pembroke Pines is of significant importance to the City, a benefit to the City’s residents, and a matter of public health, safety, and welfare.
L) The City anticipates saving approximately $36,914,942 over the initial term of the contract when compared to bringing these services in-house.
M) By continuing to utilize Operations Management International, Inc., the OMI employees that have been providing services for a number of years would not need to worry about changes in their employment, including accrued time and benefits, if the City were to change service provider.
17. Staff recommends that the City Commission adopt proposed Resolution No. 2025-R-13, approving the new five (5) year agreement with OMI, a wholly owned subsidiary of Jacobs, with an option to extend an additional five (5) years providing satisfactory performance is achieved, for the operation, maintenance, and management of the City utility system and services in the best interest of the City pursuant to section 35.18(C)(8) of the City’s Code of Ordinances.
Financial Impact
FINANCIAL IMPACT DETAIL:
a) Initial Cost: The initial annual fee for services is $10,909,726.81 and is subject to a maximum CPI adjustment of 4% annually. Separately, from the annual fee for services, the City reimburses OMI for approved Maintenance & Repair Expenditures. The City will establish a Maintenance & Repair budget as part of its annual budgeting process and will track and manage expenses against that budget.
b) Amount budgeted for this item in Account No: Funds will be budgeted in the 2025-26 proposed budget in object code # 534981 (Function Sourcing - Utilities) under the various divisions in the Utility Fund:
471-536-6010-534981-0000-000-0000 (Utilities Admin Services)
471-535-6021-534981-0000-000-0000 (Sewer Collection)
471-535-6022-534981-0000-000-0000 (Sewer Treatment Plant)
471-533-6031-534981-0000-000-0000 (Water Plants)
471-533-6032-534981-0000-000-0000 (Water Distribution)
c) Source of funding for difference, if not fully budgeted: Not applicable.
d) 5 year projection of the operational cost of the project: The agreement is for an initial five-year period with annual CPI increases between 0-4%. The five-year projection below utilizes a 3% annual increase to the annual fee for services:
|
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
Revenues |
N/A |
N/A |
N/A |
N/A |
N/A |
|
Expenditures |
$10,909,726.81 |
$11,237,018.61 |
$11,574,129.17 |
$11,921,353.05 |
$12,278,993.64 |
|
Net Cost |
$10,909,726.81 |
$11,237,018.61 |
$11,574,129.17 |
$11,921,353.05 |
$12,278,993.64 |
Note - The projection above does not include the Maintenance & Repair budget, which will be established separately by the City as part of its annual budgeting process.
e) Detail of additional staff requirements: Not Applicable.
FEASIBILITY REVIEW:
A feasibility review is required for the award, renewal and/or expiration of all function sourcing contracts. This analysis is to determine the financial effectiveness of function sourcing services.
a) Was a Feasibility Review/Cost Analysis of Out-Sourcing vs. In-House Labor Conducted for this service? Yes.
b) If Yes, what is the total cost or total savings of utilizing Out-Sourcing vs. In-House Labor for this service? Based on the attached analysis, we anticipate a savings of approximately $36.9 million over the initial term of the contract by outsourcing these services in-lieu of utilizing in-house labor.