Placement: Consent Agenda
Action Requested: Motion / Vote
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Approve Amendment #3 to Contract #20160120 for the Supply of Zinc-Orthophosphate for the Water Treatment Facilities with Amaya Solutions, Inc. f/k/a American Water Chemicals, Inc.
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Submitted By: Kevin R. Matyjaszek, Utility Systems Director
Strategic Plan Link: The City's Goal of high-quality infrastructure and facilities.
Summary Brief (Agreements/Contracts only)
1. Prepared by: Anibal Barreto, Procurement Agent I, PMD
2. Parties: City of Port St. Lucie and Amaya Solutions, Inc. f/k/a American Water Chemicals, Inc. or “AWC”
3. Purpose: To amend Contract #20160120 to modify the pricing of Zinc-Orthophosphate for the City’s water treatment facilities.
4. New/Renewal/Modified: Modified.
5. Duration: This is a continuing contract.
6. Benefits to Port St. Lucie: To continue to provide AWC’s proprietary blend of the chemical Zinc-Orthophosphate as a corrosion inhibitor to protect the City’s facilities as part of the water treatment process.
7. Cost to Port St. Lucie (Annual and Potential): AWC seeks an increase from $0.83/lb. to $1.29/lb., which includes the cost of freight at $0.09/lb. The estimated additional cost to the City is $55,000 for FY 22/23.
Presentation Information: N/A.
Staff Recommendation: Approve Amendment #3 to Contract #20160120 with Amaya Solutions, Inc. f/k/a American Water Chemicals, Inc. to provide Zinc-Orthophosphate.
Alternate Recommendations:
1. Move that the Council amend the recommendation and approve Amendment #3 to Contract #20160120.
2. Move that the Council not approve Amendment #3 to Contract #20160120 and provide staff with direction.
Background: The City, by and through its Utility Systems Department, entered into Contract #20160120 with AWC, approved by the City Council on July 25, 2016, for the supply of Zinc-Orthophospate, a proprietary blend successfully used as a corrosion inhibitor in the water treatment process. AWC subsequently assigned its right under the contracts to Amaya Solutions, Inc. The Prineville Water Treatment Facility used 68,829 lbs. and the James E. Anderson (“JEA”) Water Treatment Facility used 68,954 lbs. of this chemical in FY 21/22. The City has a separate contract with the same vendor for anti-scalant. The base component for AWC A-751 Corrosion Inhibitor is zinc, used in battery manufacturing, an industry experiencing an increase in demand. The world market for zinc has been disrupted by the massive demand for zinc in automobile batteries for Hybrid and Fully Electric vehicles. In addition, the availability of zinc for non-vehicle zinc applications is extremely low. Automotive manufacturers worldwide are willing to pay a premium for zinc which is simply passed onto the consumer.
The USD performed a pilot study at the water treatment plants in 2009 with Tetra Tech. The pilot showed that the Zinc Orthophosphate blend used at Prineville showed a significant reduction in corrosion. Corrosion inhibitors are not a “one size fits all” - the performance may vary and is specific to each water quality and can vary widely between similar applications. The AWC Blend was successfully tested and is a proprietary blend.
Issues/Analysis: Staff reviewed the requested price increase and recommends approval.
Financial Information: The City initially denied AWC’s August 2022 request for a price increase, however, AWC provided justification for the increase. The City must remain compliant with applicable regulation and its permits. AWC seeks an increase based on demand for zinc from $0.83/lb. to $1.29/lb., which includes the cost of freight at $0.09/lb. The USD spent $102,831 on this chemical in FY 20/21 and $121,903 in FY 21/22. This Amendment results in a net increase of approximately $55,000. Account #431-0000-141005 (Chemicals).
Special Consideration: The Contract provides for price adjustments every 12 months. AWC was afforded one price adjustment via Amendment One in June 2021. This Amendment #3 holds the price firm until July 1, 2023, and the parties will re-evaluate every 6 months thereafter based on the Producer Price Index (“PPI”).
Location of Project: Due to the critical infrastructure sector of the Homeland Security Act, no location map is provided for water facilities.
Attachments:
1. Amendment 3 Signed by AWC.
2. Amendment 2.
3. Amendment 1.
4. Contract.
NOTE: All of the listed items in the “Attachment” section above are in the custody of the City Clerk. Any item(s) not provided in City Council packets are available upon request from the City Clerk.
Internal Reference Number: 9402
Legal Sufficiency Review:
Reviewed by Ella M. Gilbert, Senior Deputy City Attorney. Approved as to Legal form and sufficiency by James D. Stokes, City Attorney.