FROM: Robert Thompson, General Manager
Originator: Lan C. Wiborg, Director of Environmental Services
SUBJECT:
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BIOSOLIDS HAULING SERVICES - SPECIFICATION NO. S-2020-1208BD CONTINGENCY INCREASE
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GENERAL MANAGER'S RECOMMENDATION
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RECOMMENDATION: Recommend to the Board of Directors to:
A. Approve an additional contingency increase of 3.25% to the unit price per wet ton for Denali Water Solutions, LLC (Denali) for Biosolids Hauling for an overall contingency of 23.25% per wet ton, for a new unit price of $19.14 per wet ton of biosolids plus fuel surcharges, with the total annual amount not to exceed $600,000 per year effective March 1, 2024, through December 31, 2024; and
B. Approve an annual unit price contingency increase of 5% for each of the two optional remaining one-year renewal periods that are based on a good faith estimate from Denali.
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BACKGROUND
Currently, Denali serves as the exclusive hauling service provider for the Orange County Sanitation District (OC San), responsible for transporting biosolids to the Inland Empire Regional Composting Facility (IERCF) in Rancho Cucamonga and other fail-safe management sites. On March 24, 2021, the Board of Directors authorized the execution of Denali's contract, which was based on a one year contract with four one-year renewal periods. We are now in the process of renewing our third optional annual renewal period. In December 2022, Denali and OC San renewed its Biosolids Hauling Contract at a mutually accepted unit price increase of 20% based on escalating labor and fuel costs. In December 2023, Denali proposed a 3.25% increase through the end of calendar year 2024. The proposed increase was evaluated by staff and deemed acceptable based on market conditions, labor, and inflation. Moreover, the proposed increase is comparable to other hauling service options.
However, the existing contingency fund was fully utilized by the December 2022 renewal. Thus, s...
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