M&C Review


COUNCIL ACTION:  Approved on 5/14/2019 

DATE: 5/14/2019 REFERENCE NO.: **C-29123 LOG NAME: 60SETTLEMENT AGREEMENT AND RELEASE TO TERMINATE WATER JCI
CODE: C TYPE: CONSENT PUBLIC HEARING: NO
SUBJECT:   Authorize Execution of a Settlement Agreement and Release to Terminate City Secretary Contract Nos. 29110-A4, A5, A6 and No. 47249 with Johnson Controls, Inc., in the amount of $411,734.47 (ALL COUNCIL DISTRICTS)

RECOMMENDATION:

It is recommended that the City Council authorize the execution of a Settlement Agreement and Release to Terminate City Secretary Contract Nos. 29110-A4, A5, A6 and No. 47249 with Johnson Controls, Inc., in the amount of $411,734.47.

 
DISCUSSION:

On or about September 2, 2003 the City and Johnson Controls, Inc. entered into City Secretary Contract No. 29110 (CSC No. 29110) implementing the City's initial Energy Saving Performance (ESP) Program. On September 16, 2008, the parties then executed CSC No. 38688 to allow for a study to be conducted by JCI to identify cost saving and conservation measures at the Village Creek Water Reclamation Facility (WRF) (formerly the Wastewater Treatment Facility). There were six identified Facilities Improvement Measures ("FIM") to be implemented as part of this program which were each adopted by amendment to CSC No. 29110. Pursuant to CSC No. 29110, the City pays JCI a fixed fee to prepare detailed Measurement and Verification (M&V) Evaluation Study Reports that occur over an extended period to show the energy savings achieved over time after each FIM has been implemented

* Amendment No. 4 (CSC No. 29110-A4) was for Phase V.1 to implement FIM 1.4 (Aeration Diffuser Upgrades), 4.4 (SCADA System Replacement), 6A.4 (Aeration Control Improvements) and 6D.4 (Pump and Motor Upgrades); to include the Village Creek WRF as a facility; and to increase the maximum fee to the Contractor.

* Amendment No. 5 (CSC No. 29110-A5) was for Phase V.2 to implement FIM No. 2.5 (Turbine Waste Heat Recovery), 3A.5 (Co-digestion), 3B.5 (Digester Mixing Upgrades) and 5.5 (Anoxic Zones) and to increase the maximum fee to the Contractor.

* Amendment No. 6 (CSC No. 29110-A6) was for Phase VI-a to implement FIM 6E.6 (HVAC Improvements), 6F.6 (Lighting Improvements) and 6H.6 (Power Factor Correction) and to increase the maximum fee to the Contractor.


On May 9, 2016, the City notified JCI that the two steam turbines designed and installed by JCI pursuant to FIM No. 2.5 to power the blowers for the aeration process incurred immediate failure. CSC No. 29110 provided a warranty to the City that all work and material performed pursuant to JCI's FIM and or direction would be free from defect so therefore the City made a demand that JCI pay for the cost to repair the damages the City incurred due to the steam turbines defect and failure on or about November 13, 2017. The City' s cost to repair the two steam turbines was $411,734.47. Approval of this M&C would allow for the settlement of claims between the parties upon execution and payment by JCI.

During the negotiation to settle the claim for the turbines, the Water Department realized that the Assured Performance Guarantee of $23,649,285.00 which CSC No. 29110-A5 provided for would not be realized within the stipulated timeframe, in part due to the extended downtime of the steam turbines resulting from the mechanical failures and lengthy time to repair. Without the Assured Performance Guarantee, the parties agreed that the City would end up paying more money in its attempt to implement future FIMS and paying for future Evaluation Study Reports for Project Development Agreements for CSC Nos. 29110-A4, 29110-A5, 29110-A6 and 47249, collectively referred to as the Village Creek Water Reclamation Facility Agreements. Therefore, the parties have agreed in good faith and resolved all claims and matters that the parties have raised arising out of, or relating to, the City' s breach of contract claim against JCI in order to compensate the City for its damages by terminating and releasing the parties from any claim.

The City shall pay JCI the $556,500.00 stipulated in CSC No. 47249 for preparation of the report already authorized by the City Council and JCI shall release and discharge the City from any claim for future payment for any and all reports, M&Vs and or any other Project Development Agreements. The City shall have full ownership of the report and shall have all rights to use the information in the Report as the City deems necessary. JCI will release the City from any and all remaining payments for the future M&V reports incorporated in CSC No. 29110-A4, CSC No. 29110-A5, and CSC No. 29110 A-6 amounting to a total cost of $1,393,007. The City agrees that JCI shall be released from any outstanding performance to complete the remaining M&V reports. And the City shall have the intellectual property rights to that work product produced under these agreements which JCI owns.

 
FISCAL INFORMATION/CERTIFICATION:

The Director of Finance certifies that the Water Department is responsible for collection of funds due under this settlement agreement.

TO
    Fund Department
ID
Account Project
ID
Program Activity Budget
Year
Reference #
(Chartfield 2)
Amount

FROM
    Fund Department
ID
Account Project
ID
Program Activity Budget
Year
Reference #
(Chartfield 2)
Amount

Submitted for City Manager's Office by:
Jay Chapa (5804)
Originating Department Head:
Christa Lopez-Reynolds (8984)
Sarah Fullenwider (7606)
Additional Information Contact:
Chris Harder (5020)

 
 
ATTACHMENTS
  Form 1295JCI.pdf