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HomeMy WebLinkAbout11 - Amd 1 to Sampson Oil AgreementSEW PART CITY OF NJEWP��RT BEACH �IFORNP City Council Staff Report Agenda Item No. 11 November 27, 2012 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Municipal Operations Department Mark Harmon, Municipal Operations Department Director 949 644 -3055, mharmon @newportbeachca.gov PREPARED BY: George Murdoch, Utilities General Manager APPROVED: 'ZC. -1 TITLE: Amendment No. One to Agreement with Sampson Oil Company, for Additional Services to Manage and Operate the City's Oil Fields ABSTRACT: Sampson Oil Company (Sampson) currently manages and operates the City's oil fields. This amendment allows Sampson (with City approval) to purchase materials and manage subcontractors to perform as- needed repairs and maintenance. Efficiency will be increased by reducing down time of the wells and saving numerous hours of staff time preparing requests for proposals (RFPs), agreements, insurance review, and acquiring multiple proposals for purchases. RECOMMENDATION: Authorize the Mayor and City Clerk to enter into Amendment No. One to Professional Services Agreement with Sampson Oil Company to provide additional management and operations services for the City's oil fields. FUNDING: The current adopted budget includes sufficient funding for this amendment. It will be expensed to the Oil and Gas Tidelands Fund maintenance and repair account in the Municipal Operations Department, budget number 5400 -8160. Sampson will be entitled to reimbursement for the cost of Additional Services plus a fee not to exceed 10% of the invoice amounts paid by Sampson to the subcontractors, consultants, vendors and delivery companies. (Maximum of $25,000 annually based on 10% of the maintenance budget). Amendment No. One to Agreement with Sampson Oil Company, for Additional Services to Manage and Operate the City's Oil Fields November 27, 2012 Page 2 DISCUSSION: Sampson has managed and operated the City's oil fields in West Newport since 1984. In 2010, following a formal RFP process, Sampson entered into an agreement with the City for the continued management and operation of the City's oil fields. Current agreement services include the daily maintenance, repair and operation of the City's 16 oil wells, the production tank facility, production lines and provide services coordinating regulatory agency inspections, and compliance. The purchasing of goods, such as chemicals, and acquiring of contractors for unforeseen repairs is the responsibility of city staff. The individual contracts and purchase requests are established and managed by city staff following the City contract and purchasing guidelines. Previously, the City entered into several on -call agreements with contractors in the event that the oil wells require unforeseen repairs. The approximate time needed to create a contract is four months; this includes the preparation of RFPs, contractor negotiations, insurance documentation and the final agreement. In some cases a specialized service is needed for which the city does not have an on -call agreement. In this case an oil well may sit out of service for several weeks or months until an agreement can be established. Additionally, the oil operations require certain materials such as chemicals, filtering material, and normal replacement parts. Currently, these are purchased by City staff and provided to Sampson. This amendment requires Sampson to follow the same City processes such as: acquiring proposals for materials, entering into contracts and agreements with sub- contractors, processing invoices, paying for services, and obtaining proper insurance coverage for work being done. Sampson will be required to seek City approval prior to any purchase or service. The approval process is based on total value of work shown below. Total value of work Approval Requirements Under $10,000 Written notification to the Utilities General Manager $10,000 to $25,000 Written approval by the Utilities General Manager. Must include a minimum of three proposals, or a. sole souroa justification Over $25,000 Written approval by Municipal Operations Director, Must include a minimum_ of three proposals or a sole source justification Amendment No. One to Agreement with Sampson Oil Company, for Additional Services to Manage and Operate the City's Oil Fields November 27, 2012 Page 3 ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted Mark Harmon V Municipal Operations Director Attachments: A. Amendment #1 to Professional Services Agreement with Sampson Oil Company to Provide Management and Operations Services for the City's Oil Fields Original 1/26/10 Contract Proposed Amendment #1 Term Terminates 1/25/11 with four No change (4) automatic one -year extensions: currently terminates 1/25/13 (with one extension until 1/25/14 after that Services to be performed As described in RFP As amended to include contracting with and paying all associated subcontractors that used to be contracted and paid directly by city. Compensation $104,400 /year. With yearly $359,760 1year (accounts for cost of living increase direct payments from contractor to subcontractors). With yearly cost of living increase Insurance Standard terms Risk Management added new provisions to cover new contractor - subcontractor relationship Exhibit A Original scope of work New scope of work includes contracting with subs and procedures for subcontracting Exhibit B Original fees New fee schedule includes subcontractor fee limits, insurance charges Exhibit C None New schedule of subcontractor insurance requirements per Risk Management AMENDMENT NO. ONE TO PROFESSIONAL SERVICES AGREEMENT WITH SAMPSON OIL COMPANY TO PROVIDE MANAGEMENT AND OPERATIONS SERVICES FOR THE CITY'S OIL FIELDS THIS AMENDMENT NO. ONE TO PROFESSIONAL SERVICES AGREEMENT is entered into as of this _ day of November, 2012, by and between the CITY OF NEWPORT BEACH, a California municipal corporation ( "City"), and SAMPSON OIL COMPANY a California corporation whose address is 301 Ultimo Avenue, Long Beach, California 90814 ( "Contractor"), and is made with reference to the following: RECITALS: A. On January 26, 2010 ( "Commencement Date "), City and Contractor entered into a Professional Services Agreement ( "Agreement") to provide management and operations services for the City's Oil Well Fields ( "Project "). B. City desires to enter into this Amendment No. One to reflect additional services not included In the Agreement and to increase the total compensation to Contractor and update insurance requirements ( "Amendment No. One'). C. City and Contractor mutually desire to amend the agreement, as provided below. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: SERVICES TO BE PERFORMED Section 2 and Exhibit A of the Agreement shall be supplemented to Include the Schedule of Additional Services, which is attached hereto as Exhibit A and incorporated herein by reference. Exhibit A of the Agreement and Exhibit A of Amendment No. One shall collectively be known as "Exhibit A ". The City may elect to delete certain tasks of the Services To Be Performed at its sole discretion. 2. COMPENSATION TO CONTRACTOR Section 6 of the Agreement shall be amended in its entirety and replaced with the following: A. City shall pay Contractor for the work and services described in Exhibit A on a time and expense not -to -exceed basis in accordance with the provisions of this Section, Exhibit A and the Fee Schedule attached hereto as Exhibit B and incorporated herein by reference. Contractor's total compensation for all work and services performed in accordance with this Agreement as amended, Including all reimbursable items, subcontractor fees and Contractor's Fee, shall not exceed Three Hundred Fifty -Nine Thousand Seven Hundred and Sixty Dollars and no/100 ($359,760.00) ( "Amended Contract Amount ") per 12 -month period, commencing with the second anniversary of the Commencement Date. No billing rate changes shall be made during the term of this Agreement, or any extension thereof, without the prior written approval of the City, except for the annual adjustment to the Amended Contract Amount in proportion to changes In the Consumer Price Index, as more particularly described In Section 6.D, below. The Amended Contract Amount reflects Contractor's additional compensation over and above the original Contract Amount for additional services to be performed, reimbursables, subcontractor fees, as well as the initial 2.5% maximum Consumer Price Index adjustment increase effective January 26, 2012. .B. Contractor shall submit monthly invoices to City describing the work and services performed the preceding month. City shall pay Contractor no later than thirty (30) days after approval of the involce by City staff. Payment shall be deemed made when deposited in the United States mall, first -class postage pre -paid, and addressed to Contractor as specified in Section 23. C. City shall reimburse Contractor only for those fees or expenses specifically Identified in the Fee Schedule, which is attached hereto as Exhibit B and Incorporated herein by reference, or as specifically approved in writing In advance by City. D. Upon the third anniversary of the Commencement Date and upon each anniversary of the Commencement Date thereafter, the Amended Contract Amount shall be adjusted in proportion to changes in the Consumer Price Index, subject to the maximum adjustment set forth below. Such adjustment shall be made by multiplying the Amended Contract Amount by a fractlon, the numerator of which is the value of the Consumer Price Index for the calendar month three (3) months preceding the calendar month for which such adjustment is to be made and the denominator of which is the value of the Consumer Price Index for the same calendar month Immediately prior to Commencement Date, Le., October 2009. The Consumer Price Index to be used in such calculation Is the "Consumer Price Index, All Items, 1982 -84 =100 for All Urban Consumers (CPI -U) ", for the Los Angeles- Riverside - Orange County Metropolitan Area, published by the United States Department of Labor, Bureau of Labor Statistics. If both an official index and one or more unofficial Indices are published, the official index shall be used. If said Consumer Price Index is no longer published at the adjustment date, it shall be constructed by conversion tables included in such new index. In no event, however, shall the amount payable under this Agreement be reduced below the Amended Contract Amount in effect immediately preceding such adjustment. The maximum adjustment increase to the SAMPSON OIL COMPANY 2 Amended Contract Amount, for any year where an adjustment is made pursuant to this Section, shall not exceed 2.5% of the Amended Contract Amount in effect immediately preceding such adjustment. 3. FAMILIARITY WITH WORK AND WORK SITE Section 9.A shall be amended in its entirety to read as follows: By executing this Agreement, as amended, Contractor warrants that Contractor. (a) has thoroughly investigated and considered the work and services to be performed, (b) has carefully considered how the work and services should be performed, and (c) fully understands the facilities, difficulties and restrictions attending performance of the work and services under this Agreement. Contractor warrants that Contractor has Investigated the sites depicted in Exhibit A and is fully acquainted with the conditions there existing, prior to commencement of services hereunder. 4. INSURANCE Section 11 of the Agreement shall be amended in its entirety and replaced with the following: Without limiting Contractor's Indemnification of City, and prior to commencement of work, Contractor shall obtain, provide and maintain at its own expense during the term of this Agreement and any extensions thereof, policies of insurance against claims for Injuries to persons or damages to property, which may arise from or In connection with the performance of the work and services hereunder by Contractor, his agents, representatives, employees or subcontractors. Said insurance shall be of the type and amounts described below and in a form satisfactory to City. The cost of such Insurance shall be included In Contractor's bid. A. Proof of Insurance. Contractor shall provide certificates of insurance and endorsements, or copies of the applicable insurance language to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers' compensation. Insurance certificates and endorsement must be approved by City s Risk Manager prior to commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement and any extensions thereof. City reserves the right to require complete, certified copies of all required insurance policies, at any time. B. Acceotable Insurers. All insurance policies shall be Issued by an Insurance company currently authorized by the Insurance Commissioner to transact business of Insurance In the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) In accordance with the latest edition of SAMPSON OIL COMPANY 3 Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. C. Coverage Requirements. Workers' Compensation Coverage. Contractor shall maintain Workers' Compensation Insurance (Statutory Limits) and Employer's Liability Insurance (with limits of at least one million dollars ($1,000,000)) for Contractors employees In accordance with the laws of the State of California, Section 3700 of the Labor Code In addition, Contractor shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California, Section 3700 for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (ten (10) calendar days written notice of non- payment of premium) prior to such change. Contractor shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of City, its officers, agents, employees and volunteers. II. General LiabilltV Coverage. Contractor shall maintain commercial general liability insurance, Insurance Services Office Form CG0001, in an amount not less than five million dollars ($5,000,000) per occurrence for bodily injury, personal injury, property damage, and products and completed operations, Including without limitation, blanket contractual liability. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limits. iii. Automobile Liability Coverage. Contractor shall maintain automobile insurance, Insurance Services Office Form CG0001, covering bodily Injury and property damage for all activities of the Contractor arising out of or In connection with Work to be performed under this Agreement, Including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than $1,000,000 combined single limit for each accident. iv. Pollution Liability Coverage. Contractor shall maintain pollution liability insurance with onsite and third party coverage In an amount not less than five million dollars ($5,000,000). If a general SAMPSON OIL COMPANY 4 aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limits. D. Other insurance Provisions or Requirements. The policies are to contain, or be endorsed to contain, the following provisions: L Additional Insured Status. All liability policies Including general liability, excess liability, pollution liability, and automobile liability, but not including professional liability (if required), shall provide or be endorsed to provide that City and its officers, officials, employees, volunteers and agents shall be Included as insureds under such policies on Insurance Services Form CG 20 10 11 85 or CG 2010 and CG 2037. ii. Primary and Non Contributory. For any claims related to this agreement, the Contractor's Insurance coverage shall be primary insurance as respects the City, Its officers, officials, employees, volunteers and agents and shall not require contribution from any Insurance or self - insurance maintained by City. ill. Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this Agreement shall be endorsed to waive subrogation against City, its elected or appointed officers, agents, officials, employees and volunteers or shall specifically allow Contractor or others providing insurance evidence in compliance with these requirements to waive their right of recovery prior to a loss. Contractor hereby waives its own right of recovery against City, and shall require similar written express waivers and insurance clauses from each of Its subcontractors. iv.. Enforcement of Contract Provisions. Contractor acknowledges and agrees that any actual or alleged failure on the part of the City to inform Contractor of non - compliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder. V. Requirements not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as It pertains to a given issue and Is not Intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. SAMPSON OIL COMPANY 5 vi. Notice of Cancellation. Contractor agrees to oblige Its insurance agent or broker and Insurers to provide to City with thirty (30) days notice of cancellation (except for nonpayment for which ten (10) days notice is required) or nonrenewal of coverage for each required coverage. vii. Claims Made Policies. If any of the required policies provide coverage on a claims -made basis: 1. The Retroactive Date must be shown and must be before the date of the agreement or the beginning of the agreement work. 2. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after the completion of the agreement work. 3. If coverage Is canceled or non - renewed, and not replaced with another claims -made policy form with a Retroactive Date prior to the agreement effective date, the Contractor must purchase "extending reporting" coverage for a minimum of five (5) years after completion of agreement work. viii. Subcontractors. Contractor shall require and verify that all subcontractors maintain insurance meeting the requirements as set forth in the Schedule of Subcontractor Insurance Limits by Service Type, which Is attached hereto as Exhibit C and Incorporated herein by reference. E. Timely Notice of Claims. Contractor shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Contractor's performance under this Agreement. F. Additional Insurance. Contractor shall also procure and maintain, at Its own cost and expense, any additional kinds of insurance, which In Its own judgment may be necessary for its proper protection and prosecution of the work. 5. INTEGRATED CONTRACT Except as expressly modified herein, all other provisions, terms, and covenants set forth in the Agreement shall remain unchanged and shall be In full force and effect. SAMPSON OIL COMPANY 6 IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. One on the dates written below. APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE Date: O 1 L i Mm 1 By: Aaron C. Harp City Attorney b 10-H ATTEST: Date: Lellani f. Brown City Clerk Attachments: CITY OF NEWPORT BEACH, A California municipal corporation Nancy Gardner Mayor CONTRACTOR: SAMPSON OIL COMPANY, a California corporation Date: Renick Sampson Owner By: Pam Pickard Secretary Exhibit A — Schedule of Additional Services Exhibit B — Fee Schedule Exhibit C — Schedule of Subcontractor Insurance Limits by Service Type SAMPSON OIL COMPANY 7 EXHIBIT A SCHEDULE OF ADDITIONAL SERVICES A. Additional Services In conjunction with Its Agreement to provide management and operations services at the Citys oil fields, and subject to the limits and procedures set forth below, Contractor agrees to perform the following additional tasks: 1. Enter Into contracts and agreements directly with subcontractors, consultants, vendors and /or delivery companies for all work necessary for the smooth and efficient operation of the City's oil fields. 2. Receive invoices for all said work performed by subcontractors, consultants, vendors and delivery companies at the Citys oil fields. 3. Review and approve all valid and substantiated Invoices for authorized work performed at Citys oil fields, following City's procedures as set forth herein. 4. -Process and pay said invoices directly to subcontractors, consultants, vendors and delivery companies. 5. Obtain required City- approved insurance documents from subcontractors, consultants, vendors and delivery companies prior to allowing their work at the City's oil fields. A list of the required Insurance limits is contained In Exhibit C. B. Approval Requirements for Contracts Between Contractor and Subcontractor, Consultant, Vendor and /or Delivery Comoanv Contractor shall comply with the following, based on proposed total value of contract: (a) Under $10,000: Written notification to Utilities General Manager. (b) $10,000 to $25,000: Prior written approval by Utilities General Manager. Must Include a minimum of three proposals or a sole source justification document. (c) Over $25,000: Prior written approval by Municipal Operations Department Director. Must include a minimum of three proposals or a sole source document. SAMPSON OIL COMPANY A -1 EXHIBIT B 9d =&Tflm W bill 014 The following fees to perform all services required under this Agreement, as amended, reflect the initial 2.5% maximum adjustment increase effective January 26, 2012, as set forth in Section 6 of the Agreement. This schedule is based on a 365 day work year. • Pumper $ 49,397.83/year • Design and Engineering $ 3,383.52/year • Rig Supervision $ 15,225.35/year • Construction Supervision $ 15,225.35 /year • Addendum $ 9,852.30/year • Special Insurance Charges` $ 16,675.65/year `Includes all costs to satisfy City's insurance requirements. Total Annual Fee for Above Services Not to Exceed 109.760.00 Contractor shall be entitled to reimbursement for the cost of Additional Services performed as set forth in Exhibit A, Section A of this Amendment No. One, plus a fee not to exceed 10% of the invoice amounts paid by Contractor to subcontractors, consultants, vendors and delivery companies, as set forth herein ( "Contractor's Fee "). Total Annual Fee for Additional Services Plus Contractor's Fee Not to Exceed SAMPSON OIL COMPANY B -1 EXHIBIT C SCHEDULE OF SUBCONTRACTOR INSURANCE LIMITS BY SERVICE TYPE All subcontractors, consultants, vendors and/or delivery companies shall provide General Liability with endorsements as outlined in Section 11 of the Agreement with the following limits, according to the type of service provided: Pump Unit Repair Well Maintenance, Well Pulling Misc. Electrical Work Clean Up and Removal of Oil Waste Motor Repairs Tank Repairs Welding, Misc. Testing of Tubes $1,000,000 Occurrence $5,000,000 Occurrence $1,000,000 Occurrence $2,000,000 Occurrence' $1,000,000 Occurrence $1,000,000 Occurrence $2,000,000 Occurrence $1,000,000 Occurrence For all of the above, Aggregate limits shall be twice the Occurrence limit or apply specifically to this Agreement All subcontractors shall provide Automobile Liability and Workers Compensation with endorsements as outlined in the Agreement. 'Clean up and removal of oil waste vendors must also carry Pollution Liability SAMPSON OIL COMPANY C -1