HomeMy WebLinkAboutApprove Sole Source Procurement Request with Jones Chemical ' 2000 Main Street,
Huntington Beach,CA
92648
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City of Huntington Beach
File #: 22-606 MEETING DATE: 9/6/2022
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Al Zelinka, City Manager
VIA: Sean Crumby, Director of Public Works
PREPARED BY: Chris Davis, Senior Administrative Analyst
Subiect:
Approve Sole Source Procurement request with Jones Chemical (JCI) for Chlorine Gas
Statement of Issue:
Submitted for City Council approval is a sole source procurement request in the amount of$100,000
for the purchase of chlorine gas from JCI.
Financial Impact:
This request is to authorize the procurement of chlorine in an amount up to $100,000. The City has
already budgeted $60,000 for procurement in the FY 2022/23 Budget in Water Fund account
50685803.64305. If additional funds are required up to the total request amount, staff will evaluate
the budget to determine the source of funds at that time.
Recommended Action:
Approve the sole source procurement request for the purchase of chlorine gas from JCI.
Alternative Action(s):
Do not approved the recommended action, and direct staff accordingly.
Analysis:
The City produces approximately 20,000 acre-feet (AF) of water from the City's nine (9) potable
drinking water wells. Water produced from these wells is continuously chlorinated using gaseous
chlorine, which is American National Standards Institute/National Science Foundation (ANSI/NSF)
Standard 60 certified, as required under the City's Domestic Water Permit.
The City has used chlorine gas as the primary disinfection method since the Utility Division's creation
in 1964. Historically, the average annual chlorine supply cost has been less than $30,000 and was
procured in accordance with Huntington Beach Municipal Code (HBMC) Section 3.02.070 for Small
Procurements. Over the past year, however, the price of chlorine gas has doubled due to raw
material cost increases for chlorine and sodium hydroxide products. Due to these price increases,
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File #: 22-606 MEETING DATE: 9/6/2022
the planned annual procurement cost of chlorine gas is anticipated to exceed the amount allowable
for Small Procurements per the HBMC.
In the western United States, JCI Jones Chemicals, Inc. (JCI) is the only known supplier of ANSI/NSF
Standard 60 certified, 1-ton and 150-pound, chlorine gas cylinders suitable for use in public potable
water distribution systems. JCI's nearest facility is in Torrance, California. In contrast, the next
nearest alternate chlorine supplier is Olin Corporation, whose nearest chlorine plant and distribution
center is located in Freeport, Texas.
A locally available, reliable, and high-quality chlorine supply is crucial to the operations of the City's
water system and the public health and safety of residents. However, over the past year, there have
been supply chain disruptions due to force majeure and lack of trucking ability. As, such, the Utilities
Division has qualified staff with Class B driver licenses with HAZMAT and Tank Vehicle
Endorsements. Furthermore, JCI's facility in Torrance allows staff some operational flexibility to
ensure that chlorine deliveries are not impacted. There is no known equal at this time.
Per Huntington Beach Municipal Code Chapter 3.02 Purchases of Goods and Service, sole source
procurements are allowed in cases where the procurement of any product or supply is obtainable
only from a single or sole source. As such, it is recommended that the City utilize this authority to
continue purchasing chlorine from JCI under the authority of HBMC 3.02.
Chlorine disinfection allows the City to serve well water at a current cost of$558 per acre-foot.
Without chlorine gas and the ability to sole source from JCI, the City would be forced to import its
water supply from the Municipal Water District of Orange County (MWDOC) at a current cost of
$1,143 per acre-foot.
This request allows for the procurement of chlorine in an amount up to $100,000. Should additional
funds be necessary, staff will evaluate the budget to determine the source of funds at that time and
return with a budget appropriation request at a later date.
Environmental Status:
Not Applicable
Strategic Plan Goal:
Infrastructure & Parks
Attachment(s):
1. Sole Source Justification
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CITY OF HUNTINGTON BEACH
Sole-Source Justification
(For use on all goods and services acquisitions.)
This justification document consists of two(2)pages. All information must be provided and all questions must be answered. The"Required
Approvals"section must include a date for each signature,as appropriate for the transaction.
Requesting Department Information
Date: August 1, 2022
Requestor Name: Chris Cassotta Division Manager: Alvin Papa
(Type names. Do not sign.)
Department: Public Works Department Head: Sean Crumby
T e names. Do not sign. Must be same as signature below.
Department Contact Information
Contact Name: Chris Davis Street Address: 19001 Huntington Street
Telephone: 714-374-1641
Fax: Shipping Address: 19001 Huntington Street
Cellular hone:
Required Contact Information
Contractor/Supplier Name: JCI Jones Chemicals, Inc.
Contractor/Supplier Address: 2801 Post Oak Blvd, Suite 600
Contractor/Supplier City/State/Zip: Houston, TX 77056
Original Contract Amount:* Amendment Amount:" (if applicable) New Contract Amount:*
$30,000 $ $100,000
(`Includes original contract and previously ('Includes original contract and all amendments,
approved amendments) (*Current amendment only) including current amendment
Provide a brief description of the acquisition, including all goods and/or services the contractor willprovide:
Chlorine
Contract Type and Term
Contract Type: Contract Term: What account number will be used to purchase?
Select One: ® Goods Begin: 7/1/2022 Business Unit: 50685803
❑ Service
❑ Goods&Services End: Object Code: 64305
Require Approvals
Department Head Finance Manager-Budget Chief Financial Officer Assistant City Manager
❑Approved ❑ D 'ed [Approved ❑ Denied gApproved ❑ Denied Approved Denied
VV
Signature a Signature ignature _
/Signature
ate Date Date
Date
(Transactions exceeding$50,000
must be approved by City Council
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CITY OF HUNTINGTON BEACH
Sole Source Justification
' (For use on all goods and services acquisitions.)
Complete responses must be provided for all of the following items.
A. THE GOOD/SERVICE REQUESTED IS RESTRICTED TO ONE SUPPLIER FOR THE REASONS STATED
BELOW:
1. Why is the acquisition restricted to this goods/services/supplier?
(Explain why the acquisition cannot be competitively bid.)
In the western United States,JCI Jones Chemicals, Inc. (JCI) is the only known supplier of 1-ton and 150-
pound chlorine gas cylinders suitable for use in public potable water distribution systems. JCI's nearest
facility is in Torrance, California. The next nearest alternate chlorine supplier is Olin Corporation,whose
nearest chlorine plant and distribution center is located in Freeport,Texas.
A reliable and high-quality chlorine supply is crucial to our water system, and the public health and safety
of the Huntington Beach residents. In the past year,there have been supply chain disruptions due to
force majeures and lack of trucking ability. The Utilities Division has qualified staff with Class B driver
licenses with HAZMAT and Tank Vehicle Endorsements. JCI's facility in Torrance allows staff some
operational flexiblity to ensure that chlorine deliveries are not impacted. There is no known equal.
2. Provide the background of events leading to this acquisition.
The Utilities Division uses chlorine gas to treat water pumped from the groundwater water wells. The City
has used JCI for over 10 years. Historically,the annual chlorine supply cost was less than $30,000 and
was procured using non-competitive procurement in accordance with Huntington Beach Municpal Code
(HBMC) Section 3.02.070 Small Procurements.
Over the past year,the price of chlorine gas has doubled due to raw material cost increases for chlorine
and sodium hydroxide products. Due to these price increases,the planned annual procurement cost of
chlorine is anticipated to exceed the amount allowable for Small Procurements per the HBMC.
3. Describe the uniqueness of the acquisition (why was the good/service/supplier chosen?).
The City has used chlorine gas as the primary disinfection method since the Utility Division's creation in
1964. All of the City's wells and reservoirs are outfitted to disinfect water using chlorine gas only. There
is no alternate method available.
JCI was selected because they are the only known chlorine gas supplier of 1-ton and 150 pound cylinders
in our region.
FYI -In June 2022,the City of Long Beach advertised and bid for their chlorine gas supply. 104 potential
vendors were notified of the opportunity. Only one (1) bid was received. The firm was JCI.
4. What are the consequences of not purchasing the goods/services or contracting with the proposed
supplier?
Without chlorine gas,the City would be forced to import its water supply from the Municipal Water
District of Orange County (MWDOC)and pay double the cost of groundwater.
The cost of imported water from MWDOC is currently $1,143 per acre-foot. The Orange County Water
District(OCWD) cost to pump groundwater from the City's wells is $558 per acre-foot.
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5. What market research was conducted to substantiate no competition, including evaluation of other items
considered?
(Provide a narrative of your efforts to identify other similar or appropriate goods/services, including a summary of how the department
concluded that such alternatives are either inappropriate or unavailable. The names and addresses of suppliers contacted and the reasons
for not considering them must be included OR an explanation of why the survey or effort to identify other goods/services was not performed.)
As noted, there are no other known suppliers of chlorine gas for 1-ton and 150 pound cylinders in the
western United States. As a result, reliabilty and timely delivery cannot be assured.
Furthermore,the additional costs of hazardous material chlorine delivery via railcar, transoceanic
shipping, and other long distances would be an unnecessary premium.
B. PRICE ANALYSIS
1. How was the price offered determined to be fair and reasonable?
(Explain what the basis was for comparison and include cost analyses as applicable.)
There are few remaining agencies using chlorine gas for potable water disinfection. Currently,we pay
$345 per 150 pound cylinder.The City of Tustin is the only other City in Orange County that uses chlorine
gas. They currently pay $399 per 150 pound cylinder which is 16% more.
For 1-ton cylinders,we currently pay $1,615 per 1-ton cylinder. The Long Beach bid by JCI mentioned in
Item#3 is priced at$1,950 per 1-ton cyclinder which is 21% more.
2. Describe any cost savings realized or costs avoided by acquiring the goods/services from this supplier.
The City of Huntington Beach is expected to save between 16-21% in chlorine gas costs when compared
to other known cities (see above).
Remit completed form to: City of Huntington Beach—Purchasing Division
2000 Main Street, Huntington Beach,CA 92648-2702
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