FROM: Robert Thompson, General Manager
Originator: Wally Ritchie, Director of Finance
SUBJECT:
title
COMPREHENSIVE COST OF SERVICE RATE STUDY, SPECIFICATION NO. CS-2025-711BD
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GENERAL MANAGER'S RECOMMENDATION
recommendation
RECOMMENDATION:
A. Approve a Professional Consultant Services Agreement with HDR Engineering, Inc. to perform a Comprehensive Cost of Service Rate Study, Specification No. CS-2025-711BD, for a total amount not to exceed $254,280; and
B. Approve a contingency of $25,428 (10%).
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BACKGROUND
Since 2002, the Orange County Sanitation District (OC San) has completed a rate study every five years to determine customers’ fair and equitable share of collection, treatment, and disposal costs, developed an accurate rate model, and established a new five-year rate schedule which ensures full cost recovery and supports Proposition 218 notifications.
For the 2026 rate study, staff has requested a comprehensive rate study on all fees and charges including annexation fees and urban runoff fees.
This comprehensive rate study allocates costs to Flow, Biochemical Oxygen Demand (BOD), and Total Suspended Solids (TSS) for the purpose of billing different customer classes, including high flow and high strength dischargers.
RELEVANT STANDARDS
• Ensure the public’s money is wisely spent
• Stable rates, no large unforeseen rate increases
PROBLEM
OC San’s current five-year rate schedule will end as of June 30, 2028. To assess rates on the newly incorporated customers under the IRWD Agreement, approved in 2025, a new rate study and resulting rate schedule needs to be adopted by the OC San Board of Directors.
PROPOSED SOLUTION
Approve the Professional Consultant Services Agreement with HDR Engineering, Inc. to complete a comprehensive cost of service rate study to establish the next five-year rate schedule.
TIMING CONCERNS
To meet the legal requirements of Proposition 218 so the new Ordinances are adopted and the rate schedule is effective July 1, 2027, the rate study should begin no later than the beginning of April 2026.
RAMIFICATIONS OF NOT TAKING ACTION
The rate study would be delayed, which could potentially affect the implementation of the new rate schedule and hinder OC San’s cost recovery.
PRIOR COMMITTEE/BOARD ACTIONS
November 2025 - Approved initiating the rate setting process a year early to allow Orange County Sanitation District to assess rates across the service area including new customer bases.
ADDITIONAL INFORMATION
On December 1, 2025, OC San issued a Request for Proposals (RFP) and on January 5, OC San received two proposals. The proposals were evaluated in accordance with OC San’s policies and procedures and by a team consisting of the Director of Finance, Finance Manager, Accounting Supervisor, and an Engineering Supervisor. A Purchasing representative chaired the team as a non-voting member and legal counsel reviewed the proposals for process and adherence with Proposition 218 requirements.
Proposals were individually scored based on the following criteria:
|
CRITERION |
WEIGHT |
|
Qualifications of the Firm |
30% |
|
Staffing and Project Organization |
20% |
|
Work Plan |
30% |
|
Cost |
20% |
The evaluation team first reviewed and scored the proposals based on the criteria listed above, excluding the cost criterion.
|
Rank |
Proposer |
Criterion 1 Max (30%) |
Criterion 2 Max (20%) |
Criterion 3 Max (30%) |
Subtotal Max (80%) |
|
1 |
HDR Engineering. Inc. |
26.4% |
17.8% |
27.9% |
72.1% |
|
2 |
HF & H Consultants |
21.0% |
12.0% |
19.5% |
52.5% |
A sealed cost proposal accompanied all proposals. Only the cost proposal for the highest ranked firm was opened. OC San requested a Best and Final Offer.
The final scores for the proposers were as follows:
|
Rank |
Proposer |
Subtotal Before Cost (Max 80%) |
Cost (Max 20%) |
Total Weighted Score (Max 100%) |
|
1 |
HDR Engineering. Inc. |
72.1% |
20.0% |
92.1% |
|
2 |
HF & H Consultants |
52.5% |
N/A |
52.5% |
Based on these results, staff recommends approving a Professional Consultant Services Agreement to HDR Engineering, Inc.
CEQA
N/A
FINANCIAL CONSIDERATIONS
This request complies with authority levels of OC San’s Purchasing Ordinance. This item has been budgeted (Budget Update FY 2025-26, Page 23, Professional & Contractual Services) and is proposed to be incorporated in the FY 2026-27 budget.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OC San website (www.ocsan.gov) with the complete agenda package:
• Professional Consultant Services Agreement