Explanation
1. BACKGROUND
This ordinance authorizes the Director of Public Utilities to enter into a construction contract with Kokosing Industrial, Inc., via the City’s Invitation for Bid process for the Southerly Waste Water Treatment Plant (SWWTP) Organics Receiving and Bioenergy Utilization Facility project, CIP #650353-100007, in an amount up to $443,275,000.00; and to encumber funds with the Department of Public Service for construction prevailing wage services in an amount up to $2,000.00, for a total expenditure of $443,277,000.00.
This project will provide the Southerly Wastewater Treatment Plant (SWWTP) with an upgraded biosolids digestion system and a cogeneration facility. The upgraded digestion system includes the construction of two three-million gallon digesters, an extension of Tunnel C, and a new digester control building (DC5). Six of the existing digesters will be upgraded with concrete covers to address fugitive methane issues. To increase the amount of biogas generated by the digesters, a new fats, oils, and grease (FOG) digester is planned to be constructed. A new cogeneration facility will be built to create heat and electricity from the digester biogas. This facility includes a previously purchased gas cleaning system. The cogeneration engines will require the construction of a new Northwest Switching Station (NWSS).
This project plans to take advantage of the Inflation Reduction Act (IRA) rebate being offered to energy communities and municipalities. Under the available IRS guidance, the City of Columbus will be eligible for a rebate up to 50% of the construction cost. According to our current construction cost estimate, this project would be eligible for approximately $120 million in rebates. To obtain this rebate, the project had to meet what the IRS called the “Beginning of Construction” deadline of December 31, 2024. The project must either have had 5% of the construction cost paid to the Contractor by then or must have had substantial construction begin and continue through the completion of the project (Substantial Work Test). The City met the “Beginning of Construction” requirement by having fabrication start on essential plant equipment. The City must now demonstrate “project continuity”. The contract with Kokosing Industrial, Inc., is for the general construction of the facility. General construction must begin as soon as practical in order to show project continuity from the equipment procurement packages through the completion of the project.
The Department of Public Utilities (DPU) performed several outreach efforts to try to get multiple bidders for this project. These outreach efforts included contacting construction firms across the nation, holding informational sessions, and providing updates on the progress of the design and estimated bid dates. The project received one bid. That bid was in excess of $545 million (nearly double the engineer’s estimate). DPU considered rebidding the project in its entirety, breaking the project into smaller projects and rebidding them, and cancelling the project. Market research was also performed to determine why the bid was so high. The final conclusion was Central Ohio construction market conditions had driven the price of this bid up as it was doing to other construction projects, rebidding was not likely to result in a lower price, and rebidding may actually increase the price or result in no bid at all. The chosen approach was to negotiate with the only bidder in an attempt to reduce the project cost. This negotiation resulted in savings due to redesign and efficiencies gained, and ultimately netted a price reduction of $101,774,000.00. A waiver of the City’s competitive bidding requirements must be requested due to the negotiation of price.
The Community Area for this ordinance will be 99, City-wide.
TIMELINE: Contract work is required to be completed in a manner acceptable to the City within 2,234 days from the date that a Notice to Proceed (NTP) is given by the City.
ESTIMATED COST OF PROJECT: The proposed award amount is $443,275,000.00, including a 5.1% construction contingency amount that will be utilized to fund needed and approved changes in the work. No contract modifications are anticipated at this time; however, construction exigency might later compel modification of this contract, if unforeseen difficulties are encountered.
Cost summary:
Original Contract $ 443,275,000.00
Future Anticipated Needs $ 0.00
Prevailing Wage Services $ 2,000.00
CONTRACT TOTAL $ 443,277,000.00
2. ECONOMIC IMPACT/ADVANTAGES; COMMUNITY OUTREACH; PROJECT DEVELOPMENT; ENVIRONMENTAL FACTORS/ADVANTAGES OF PROJECT
This project was specifically designed to have the greatest positive economic impact possible. Due to the federal Inflation Reduction Act, non-tax paying entities with qualified biogas properties, including digesters, digestion infrastructure, and cogeneration equipment, are eligible for a tax rebate. This project was designed to achieve the maximum rebate possible (50% on eligible portions). The cogeneration facility will allow the SWWTP to offset some of the purchased power, reducing a portion of the operating budget.
This project was also designed with the environment in mind. The cogeneration facility will allow the SWWTP to offset some of the purchased power and associated greenhouse gas emissions. This project will also mitigate fugitive methane (a powerful greenhouse gas) emissions from the digestion complex. The addition of a FOG (fats, oils, grease) receiving station will allow diversion of FOG from the landfill and allow for beneficial reuse.
3. CONSTRUCTION CONTRACT AWARD
An Invitation for Bids for the SWWTP Organics Receiving and Bioenergy Utilization Facility project was advertised on the Vendor Services and Bid Express websites from 08/09/24 through 09/25/24. One bid was received for the project and was opened on 09/25/24. The following company submitted a bid:
Company Bid Amount Compliance Number ODI Status
Kokosing Industrial, Inc. $545,049,000.00* CC012309 MAJ
*The contracted amount will be $443,275,000.00 as negotiations resulted in a reduction in the bid price.
The Kokosing Industrial, Inc. bid was deemed the lowest, best, most responsive and responsible bid.
4. WAIVER OF COMPETITIVE BIDDING REQUIREMENTS
A waiver of the competitive bidding requirements for construction in City Code Chapter 329 is requested. The only bid received was 190% higher than the engineer estimate. The Department of Public Utilities chose to negotiate the price instead of rebidding or cancelling the bid. This negotiation resulted in a price decrease of $101,774,000.00. Negotiating a bid price is not an option under City Code for construction projects, so a waiver of the construction bid requirements of City Code must be requested.
5. CONTRACT COMPLIANCE INFORMATION
Kokosing Industrial, Inc.’s contract compliance number is CC012309 and expires 5/4/25.
Searches in the Excluded Party List System (Federal) and the Findings for Recovery list (State) produced no findings against Kokosing Industrial, Inc.
6. MINORITY AND WOMAN OWNED BUSINESS ENTERPRISE & SMALL LOCAL BUSINESS ENTERPRISE PROGRAM
This contract was bid with an anticipated City of Columbus MBE/WBE Program goal of 8% as assigned by the City’s Office of Diversity and Inclusion (ODI). After ODI’s review of the Utilization Plan and other related information the contractor submitted with their bid response, ODI has approved an MBE/WBE Program goal of 8% for this contract. Failure by the contractor to meet this goal subjects the contractor to the Penalties for Non-Compliance as described in the “City’s Minority and Women-Owned Business Enterprise & Small Local Business Enterprise Program Manual” and in the bid documents for this contract.
Kokosing Industrial, Inc. listed 26 subcontractors for this project:
See the attached Utilization Report for the subcontractor listing.
The certification of Kokosing Industrial, Inc., and the above referenced companies (on attached Utilization Report) were in good standing at the time the bid was awarded.
7. PRE-QUALIFICATION STATUS
Kokosing Industrial, Inc. and all subcontractors have met code requirements with respect to pre-qualification, pursuant to relevant sections of Columbus City Code Chapter 329.
8. FISCAL IMPACT
The construction portion of this project is anticipated to be financed with a loan from the Water Pollution Control Loan Fund (WPCLF), a program jointly administered by the Ohio EPA's Division of Environmental and Financial Assistance and the Ohio Water Development Authority (OWDA). City Council authorized this loan application and acceptance of funding via Ordinance 2720-2024, passed by Council on 10/28/24. This loan is expected to be approved at the OWDA March Board meeting. This ordinance is contingent upon the loan being approved by OWDA. The Department of Public Utilities will inform the Auditor's Office when this loan has been approved.
Funding in the amount of $2,000.00 is appropriated and available within the Sanitary Bond Fund, Fund 6109, to pay the Department of Public Service to provide prevailing wage services for this project. An amendment to the 2024 Capital Improvement Budget is necessary to align budget authority with the proper project. A transfer of cash and appropriation between projects within the Sanitary Bond Fund, Fund 6109, is necessary to align cash and appropriation with the proper project.
Title
To authorize the Director of Public Utilities to enter into a construction contract with Kokosing Industrial, Inc., for the Southerly Waste Water Treatment Plant Organics Receiving and Bioenergy Utilization Facility project; to authorize a waiver of the competitive bidding requirements of Columbus City Code; to authorize an amendment to the 2024 Capital Improvement Budget; to appropriate funds within the Sanitary Revolving Loan Fund; to authorize a transfer of cash and appropriation within the Sanitary Bond Fund; to make this ordinance contingent upon the Ohio Water Development Authority approving a loan for this project; and to authorize the expenditure of up to $443,277,000.00 from the Sanitary Revolving Loan Fund and the Sanitary Bond Fund to pay for the project. ($443,277,000.00)
Body
WHEREAS, the Department of Public Utilities is engaged in the SWWTP Organics Receiving and Bioenergy Utilization Facility project; and
WHEREAS, one bid for the SWWTP Organics Receiving and Bioenergy Utilization Facility Sewer Rehab project was received and opened on 09/25/24; and
WHEREAS, the lowest, best, most responsive and responsible bid was from Kokosing Industrial, Inc.; and
WHEREAS, negotiations were held with Kokosing Industrial, Inc., to reduce the bid price; and
WHEREAS, a waiver of the competitive bidding requirements in City Code Chapter 329 is needed to award this contract due to the negotiations; and
WHEREAS, Ordinance 2720-2024 authorized this project to be funded by a loan to be obtained through the Water Pollution Control Loan Fund (WPCLF) Loan Account; and
WHEREAS, this ordinance is contingent upon that loan being approved; and
WHEREAS, the 2024 Capital Improvement Budget must be modified to align budget authority with the proper project; and
WHEREAS, funds must be appropriated within the Sanitary Revolving Loan Fund, Fund 6111; and
WHEREAS, a transfer of cash and appropriation between projects within the Sanitary Bond Fund, Fund 6109, is necessary to align cash and appropriation with the proper project.
WHEREAS, it is necessary to authorize the Director of the Department of Public Utilities to enter into a construction contract with Kokosing Industrial, Inc. for the Public Sanitary Sewers for SWWTP Organics Receiving and Bioenergy Utilization Facility Sewer Rehab project; and
WHEREAS, it is necessary to authorize an expenditure of funds from the Sanitary Revolving Loan Fund, Fund 6111, and from the Sanitary Bond Fund, Fund 6109, to pay for the project; now, therefore,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the 2024 Capital Improvement Budget authorized by Ordinance 1907-2024 be amended as follows to establish sufficient budget authority for this project:
Fund / Project Number / Project Name (Funding Source) / Current Authority / Revised Authority / Change
6111 / P650353-100007 / SWWTP Organics Receiving and Bioenergy Utilization Facility (WPCLF Loan) / $131,600,000.00 / $460,074,258.00 / $ 328,474,258.00 (To match the loan amount)
6109 / P650290-100000 / Jackson Pike Waste Water Treatment Plant Audit (Voted Sanitary Carryover) / $80,000.00 / $78,000.00 / ($2,000.00)
6109 / P650353-100007 / SWWTP Organics Receiving and Bioenergy Utilization Facility (Voted Sanitary Carryover) / $0.00 / $2,000.00 / $2,000.00
SECTION 2. That the appropriation of $443,275,000.00, or so much thereof as may be needed, is hereby authorized in the Sanitary Revolving Loan Fund, Fund 6111, per the accounting codes in the attachment to this ordinance.
SECTION 3. That the transfer of $2,000.00, or so much thereof as may be needed, is hereby authorized between projects within the Sanitary Bond Fund, Fund 6109, per the account codes in the attachment to this ordinance.
SECTION 4. That a waiver of the competitive bidding requirements of Columbus City Code Chapter 329 is hereby approved due to the final contract price for the SWWTP Organics Receiving and Bioenergy Utilization Facility having been negotiated with the sole bidder.
SECTION 5. That the Director of Public Utilities is hereby authorized to enter into a construction contract for the SWWTP Organics Receiving and Bioenergy Utilization Facility Sewer Rehab project with Kokosing Industrial, Inc., 6235 Westerville Road, Westerville, OH 43081, in an amount up to $443,275,000.00, in accordance with the terms and conditions of the contract on file in the Department of Public Utilities, and to obtain the necessary prevailing wage services for this project from the Department of Public Service in an amount up to $2,000.00.
SECTION 6. That the expenditure of $443,277,000.00, or so much thereof as may be needed, is hereby authorized to pay for this contract per the accounting codes in the attachment to this ordinance.
SECTION 7. This ordinance is contingent upon the Ohio Water Development Authority's Board approving the loan for this project.
SECTION 8. Funds are hereby deemed appropriated and expenditures and transfers authorized to carry out the purposes of this ordinance and the City Auditor shall establish such accounting codes as necessary.
SECTION 9. That the City Auditor is authorized to make any accounting changes to revise the funding source for all contracts or contract modifications associated with this ordinance.
SECTION 10. That the City Auditor is hereby authorized to transfer the unencumbered balance in a project account to the unallocated balance account within the same fund upon receipt of certification by the Director of the Department administering said project that the project has been completed and the monies are no longer required for said project.
SECTION 11. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.