HomeMy WebLinkAboutE-5.1 Approve 3rd Amendment for PSA with Northstar ChemicalCONSENT CALENDAR E-5
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: TIKAN SINGH, GENERAL MANGER
DATE: JUNE 27, 2022
SUBJECT: APPROVE THE THIRD AMENDMENT TO THE PROFESSIONAL
SERVICES AGREEMENT WITH NORTHSTAR CHEMICAL TO PROVIDE
WATER TREATMENT CHEMICALS AND EQUIPMENT SERVICES
BACKGROUND:
On June 28, 2021, the Azusa Utility Board approved the Second Amendment to the Professional
Services Agreement (PSA) with Northstar Chemical (“Northstar”) for mini-bulk delivery of
12.5% sodium hypochlorite used in water treatment. The agreement was amended to extend the
term until June 30, 2022, with two additional one-year extension options. Northstar continues to
provide water treatment chemicals at a competitive price, and Azusa Light & Water (“ALW”)
recommends exercising its option to extend the PSA for one-year, effective July 1, 2022 in an
amount not to exceed $175,000.
RECOMMENDATION:
Staff recommends the Utility Board take the following actions:
1) Approve the Third Amendment to the Professional Services Agreement with
Northstar Chemical, as a DBA of Pacific Star Chemical, in an amount not to exceed
$175,000, in accordance with Azusa Municipal Code Section 2-517(a)(24); and
2)Authorize the Mayor to execute the Third Amendment, in a form acceptable to the
City Attorney, on behalf of the City.
ANALYSIS:
Northstar delivers Azusa Light & Water 12.5% sodium hypochlorite. This chemical is used for
groundwater disinfection at eleven groundwater wells throughout the ALW water system. In
2017, the Utility Board approved a two-year PSA with Northstar to continue to supply 12.5%
Approved
Utility Board
06/27/2022
Approve Third Amendment – Northstar Chemical
June 27, 2022
Page 2
sodium hypochlorite at $1.50 per gallon. On May 28, 2019, the Utility Board approved the First
Amendment to the PSA, extending the term of the PSA for an additional two (2) years from July
1, 2019 to June 30, 2021, with three (3) additional, one (1) year extension options to be exercised
by the City of Azusa. The 12.5% sodium hypochlorite was at $1.50 per gallon. On June 28,
2021, the Azusa Utility Board approved the Second Amendment to the Professional Services
Agreement with Northstar to extend the term until June 30, 2022, with two additional (1) one-
year extension options. The 12.5% sodium hypochlorite was at $1.60 per gallon.
With the current one-year extension expiring, ALW is losing the one-year locked price. This
year, Northstar has experienced sustainable price increases for chemicals. The best rate Northstar
can lock in is for one quarter, July 1, 2022 until September 30, 2022, for 12.5% sodium
hypochlorite at $2.88 per gallon. The increase is due to inflation and high demand for chlorine
products and local supply shortages. For the remaining three quarters, October 1, 2022 until
June 30, 2023, Northstar will honor a price not-to-exceed $3.88 per gallon for 12.5% sodium
hypochlorite.
ALW reached out to Univar Solutions and the best rate they would provide was $3.62 per gallon
for 12.5% sodium hypochlorite for one quarter, July 1, 2022 until September 30, 2022.
The purchase of chemicals for water treatment is exempt from competitive bidding pursuant to
Azusa Municipal Code Section 2-517(a)(24); however, ALW Water Division is committed to do
all the due diligence to provide the best for ALW customers to provide safe and reliable drinking
water that meets or exceeds all the water quality standards. Northstar continues to work with
ALW.
FISCAL IMPACT:
The Chemicals are budgeted in the Water Division’s Operating Budget. There are sufficient
funds for water treatment chemicals in Water Fund Account 32-40-722-701-6563 – Chemicals &
Filtering Materials, Supplies/Special.
Prepared by: Reviewed and Approved:
Melissa Barbosa, PE Tikan Singh
Interim Assistant General Manager General Manager
Water Operations
Reviewed and Approved:
Sergio Gonzalez
City Manager
Approve Third Amendment – Northstar Chemical
June 27, 2022
Page 3
Attachments:
1) Third Amendment to Professional Services Agreement
2) Northstar Chemical Quote
3) Univar-USA Quote