HomeMy WebLinkAboutF-4.1. Material Purchase and Integrated Supply System Agreement with Ferguson WaterworksCONSENT ITEM F-4
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: TIKAN SINGH, GENERAL MANAGER
DATE: MAY 27, 2025
SUBJECT: APPROVAL OF A WATER DISTRIBUTION SYSTEM MATERIAL
PURCHASE AND INTEGRATED SUPPLY SYSTEM AGREEMENT WITH
FERGUSON WATERWORKS
BACKGROUND:
The Azusa Light & Water (ALW) Water Division maintains warehouse stores of water
distribution system materials to ensure the prompt restoration of service in the event of
equipment failure and to maintain and repair water distribution facilities on a routine basis. As
such, the purchasing of supplies is required as supplies are used. ALW utilizes an on-site
integrated supply system (ISS) distributor that maintains a warehouse of specified items, and
ALW purchases items out of the warehouse on an as-needed basis without inventory carrying or
maintenance costs. The current ISS agreement is expiring on June 30, 2025, so a Request for
Proposals (RFP) for a new ISS distributor was issued on March 10, 2025. The recommended
action would award a Waterworks Materials Purchase Agreement to the low bidder, Ferguson
Waterworks, for a five-year term, effective July 1, 2025.
RECOMMENDATION:
Staff recommends that the Utility Board take the following action:
1)Approve a Waterworks Materials Purchase Agreement for an Integrated Supply
System for Waterworks Materials and Fittings with Ferguson Waterworks; and
2)Authorize the Mayor to execute the Waterworks Materials Purchase Agreement in a
form acceptable to the City Attorney; and
3)Authorize the issuance of an annual Blanket Purchase Order to Ferguson in the
amount not to exceed $500,000 per year of contract duration.
Approved
Utility Board
05/27/2025
Waterworks Materials Purchase Agreement
May 27, 2025
Page 2
ANALYSIS:
On an annual basis, ALW purchases approximately $325,000 of various water work materials
and supplies in order to maintain the water distribution pipeline and facilities. For the past 23
years, ALW has utilized an Integrated Supply System (ISS) to house material at a Warehouse
located at an ALW site, on consignment, from a water works supplier. This arrangement has
proven to be an efficient and cost-effective way to hold inventory of supplies. The contracted
supplier is responsible for stocking and replenishing all supplies to minimum inventory levels,
reducing ALW labor time. There is no direct cost to ALW associated with carrying the
inventory, and supplies are paid for only when they are checked out from the Warehouse. The
supplier carries approximately $70,000 worth of supplies in the warehouse, at no expense to
ALW, that are varied in nature to accommodate the variety of maintenance and repair tasks the
Water Distribution crew perform daily.
On March 10, 2025, ALW requested proposals from water work suppliers to re-evaluate the
competitive market and update the ISS program. On April 03, 2025, ALW received two sealed
bid proposals for the Integrated Supply System for Waterworks Materials and Fittings, which
included Ferguson Waterworks (Ferguson) and Core & Main (C&M). Staff received email
confirmation that Western Water Works respectfully declined to bid. The bids are summarized as
follows:
Core & Main, delivered a similar proposal to Ferguson offering lower pricing for a lot of the
items listed in the Request For Proposals, but the markup being offered is 22.5% for all
warehouse supplies and an 18% markup for supplies used in a Capital Improvement Project.
Core & Main does have experience in the water industry, however they do not have any
experience with an ISS. They also do not have any warehouses located within the vicinity of the
city, with their closest warehouse being located 44 miles away. This could cause issues in the
event of an emergency as it would take longer for the supplies to arrive.
Ferguson Waterworks, the current supplier of the ISS, submitted a proposal with slightly
higher pricing for the base cost of the material, but a lower markup. Ferguson proposed an 18%
markup for all warehouse supplies, and a 15% markup for any supplies used for Capital
Improvement Projects. Even with Core & Main offering lower pricing, the lower markup offered
by Ferguson results in a very small difference in pricing between the two. Approximately 15% of
Ferguson’s current business in the Southern California Water industry involves an ISS so they
have experience with more than just the ISS with the City of Azusa. Another benefit to Ferguson
is that they are already familiar with our Warehouse and the way the City of Azusa operates, so
there will not be a transitionary period in which we would need to train the new staff on how the
ISS works. They also have two separate facilities within a thirty-mile radius to the City which is
helpful in the event of an emergency delivery.
After a thorough review of both proposals, including evaluation criteria and weighting factors
listed in the RFP, Staff determined Ferguson Waterworks, was the best option at 18% markup,
and they have the experience and qualifications to continue to maintain the inventory
management system. Staff recommends the award of a Waterworks Materials Purchase
Waterworks Materials Purchase Agreement
May 27, 2025
Page 3
Agreement to Ferguson Waterworks for a five-year term along with a corresponding purchase
order.
FISCAL IMPACT:
Funding for the Waterworks Materials Purchase Agreement is available in Water Distribution -
Supplies/Special, Account No. 32-40-723-751-6563. Supplies purchased, as necessary, under the
Waterworks Materials Purchase Agreement, will not exceed $500,000 annually.
Prepared by: Prepared by:
Fabian Lucarelli Ken Godbey
Associate Water Utility Engineer Water Distribution Superintendent
Reviewed and Approved: Reviewed and Approved:
Melissa Barbosa Danny Smith
Assistant General Manager Utilities Admin & Finance Manager
Water Operations
Reviewed and Approved: Reviewed and Approved:
Tikan Singh Sergio Gonzalez
General Manager City Manager
Attachments:
1) Ferguson Waterworks - Waterworks Materials Purchase Agreement