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Agenda Item - 2024-05-07 - Number 9.2 - Resolutions 24-19 and 24-18, Special Procurement for Owner's Advisors Services and Amending Resolution 18-55 9.2 O F �s� COUNCIL REPORT —� OREGO� Subject: Resolution 24-19 and 24-18, Wastewater Treatment Facility Project Update Meeting Date: May 7, 2024 Staff Member: Stefan Broadus, PE Director of Special Projects Report Date: April 26, 2024 Department: Public Works - Engineering Action Required Advisory Board/Commission Recommendation ❑ Motion ❑ Approval ❑X Public Hearing ❑ Denial ❑ Ordinance ❑ None Forwarded ❑X Resolution ❑ Not Applicable ❑ Information Only Comments: ❑ Council Direction ❑ Consent Agenda Staff Recommendation: (1) Approve Resolution 24-19 Amending Resolution 18-55 and Authorizing a Special Procurement for a new Design-Build-Operate-Maintain (DBOM) Procurement for the Wastewater Treatment Facility. (2) Approve Resolution 24-18 Authorizing a Special Procurement for Owner's Advisor services for the Wastewater Treatment Facility, and authorize the City Manager to execute a contract with Carollo Engineering, Inc., in an amount not-to-exceed $888,659. Recommended Language for Motion: Move to adopt Resolutions 24-19 and 24-18. Project/ Issue Relates To: Collaborate with the City of Portland to make a financially and environmentally responsible long-term investment in a wastewater treatment facility. Issue before Council (Highlight Policy Question): ❑X Council Goals/Priorities ❑Adopted Master Plan(s) ❑Not Applicable BACKGROUND The existing Tryon Creek Wastewater Treatment Plant (TCWTP) was built in 1964 and is owned and operated by the Portland Bureau of Environmental Services (BES). The plant is reaching the end of its useful life cycle and needs to be upgraded or replaced. Respect. Excel'ence. Trust. Service, 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 2 In 2018, the cities of Lake Oswego and Portland began exploring a new Wastewater Treatment Facility (WWTF) to replace the existing Tryon Creek plant under a public-private partnership. On December 18, 2018, the Council approved Resolution 18-55, which authorized a special procurement using a competitive selection process to enter into a Design, Build, Finance, Operate and Maintain (DBFOM) contract for new wastewater treatment plant. Following a competitive process, the City selected EPCOR Foothills Water Partners (EFWP) as the preferred proposer. On May 4, 2021, the City entered into a Preliminary Services Agreement (PSA) with EFWP for the DBFOM of a new plant. The preliminary services phase was originally intended to develop designs to the 60% phase and complete deliverables that included advancing permitting, scoping costs, developing schedule, completing archeological and environmental studies, and other items. In April 2023, the Council authorized extending the work under the PSA with EFWP to advance designs to a 90% level. In January 2024, the City and EWFP were not able to reach agreement on the terms of the Project Agreement, and the Council directed staff to explore competitive procurement methods, including special procurement and alternative contracting methods for final design, construction, operation and maintenance of a new WWTF. Staff recommends continuing to move forward with the project to build a new facility. The life- cycle cost estimate from Portland Bureau of Environmental Services (BES) to upgrade the existing 1964 Tryon Creek Wastewater Treatment Plant is between $800 million and $1 billion, and the cost estimate to design, build, maintain, and operate a new plant with public financing is estimated from the PSA work to be between $590 and $675 million. To do so, staff requests the Council authorize a procurement process for the WWTF work and to continue with Carollo Engineers, Inc. for Owner's Advisor services. DISCUSSION Wastewater Treatment Facility- Procurement Methods In exploring competitive procurement methods, there are a number of different approaches, and many combinations thereof, to deliver this project. The following table shows the possibilities. Regardless of the possible methods, a key distinction from the prior DBFOM method is that the cost will not be privately financed (with attendant expected cost savings). Phase Delivery Method Final Design Design-Build- Design RFP Design-Build (DB) Construction Operate- Design-Bid-Build (DBB) Maintain Operations & (DBOM) Contract In-House Contract In-House Maintenance Operations Operations Operations Operations Respect. Excel'ence. Trust. Service, 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 3 Operation and Maintenance - Contract vs. In House During the original project planning efforts, it was determined that contract operations and maintenance with a private firm would be preferable over in-house operations and maintenance. Although the City decided not to move forward with EFWP, the considerations for contract operations and maintenance have not changed. Contracting for operations and maintenance transfers risk to the provider, which insulates the City from volatilities in labor forces, material prices and availability, and mechanical failure and other unplanned maintenance. The change in financing of the project does not alter the prior analysis favoring contracted operations and maintenance. Design-Bid-Build (DBB) At this point of the project, it would be possible to transition to a more traditional Design-Bid- Build approach. Under this scenario, staff would partner with an engineering firm to take the existing 90% Plans deliverable to Final. This could be done with a Special Procurement to directly appoint the professional services contract to the same engineering team that brought the concept to the 90% stage. Alternatively, staff could publicly advertise a Request for Proposals for engineering services. However, it's unclear how much interest there would be due to the significant effort required for a new team to familiarize themselves with the plans. Following design procurement and finalization of design, the next step would be to publicly advertise an Invitation to Bid for construction. After construction is completed, the project team would then publicly advertise a Request for Proposals for long-term operations and maintenance of the facility. The primary benefit of this approach is to minimize indirect costs. The biggest cost of this project by far is the thirty-year Operations and Maintenance element, followed by Construction. The design phase is a small percentage of the overall cost. DBB would solicit bids for construction and operations/maintenance separately. This would minimize markups and overhead. However, staff's biggest concern with DBB is the ownership of risk amongst Design, Construction, and Operations and Maintenance. Much of these risks stay with the City. While having separate contracts for the three remaining phases reduces indirect costs, the cost of owning the additional risk is expected to significantly outweigh those potential savings. Design-Build (D-B) The alternative contracting method of the Design-Build approach would solicit cost proposals from firms that would finish the design and then build the completed plans. A second publicly advertised Request for Proposals would be released closer to the completion of the construction phase and would seek bids for the long-term operations and maintenance. This approach is fairly similar to the DBB process. One key difference is that the risk between designer and builder is transferred from the City to the Contractor (Design-Builder) because it is responsible for both products. This likely increases the initial price some, but the transfer of risk likely outweighs the added bid cost. An additional benefit of a design-build approach is the early involvement of the build team. They can easily provide feedback to the designers and Respect. Excel'ence. Trust. Service, 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 4 could likely get started with early construction tasks (such as demolition) before the design is finished, accelerating the schedule. The D-B process transfers some of the risk to Contractor (Design-Builder) during the construction phase. However, most of the risk is still owned by the City to ensure a smooth transition from Construction to Operations. Because the Operations and Maintenance phase comprises the largest percentage of the overall cost of this project, and design/construction is separated from considerations of long-term operations and maintenance, the risk of higher Operations and Maintenance is also the greatest. Design-Build-Operate-Maintain (DBOM) The Design-Build-Operate Maintain model—which is similar to the previously authorized DBFOM model -- would publicly advertise a Request for Qualifications, followed by a Request for Proposals to eligible firms to deliver the entirety of the remaining project. Proposers would submit complete proposals including cost to complete the design, construct the facility, and perform long-term operations and maintenance. This approach is similar to the D-B method in getting early involvement from the construction team. In addition to that, the DBOM method goes one step further in getting the Operations and Maintenance team involved early. The staff that will be operating and maintaining the plant day after day for decades will be able to weigh in on design and construction decisions that can lead to more efficient and higher performing plant operations. The primary advantage of this model is the risk transfer. This model is competitive in that proposers will be bidding, but the approach also likely includes the highest level of markups and contractor contingencies. Even with that, transferring much of the project risk to a single entity is expected to have the lowest lifecycle cost. Procurement Recommendation After careful consideration of the three primary delivery methods available to move the project from its current position through construction and into operations, staff strongly recommends the DBOM model. The work products completed on the project to date have been of very high quality, and staff believe these still best meet the City's objectives for this project.The one component of the previous approach (DBFOM) that did not meet those objectives was the financing through the private entities. DBOM keeps the components that were working well while pivoting from private to public financing for cost savings. All scenarios would anticipate advancing partially completed work products to date to completion. Staff believes that the DBOM model best positions the City to be flexible in offering these partially completed products to proposers, while being open to alternative concepts that might better meet the project objectives. Respect. Excel'ence. Trust. Service, 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 5 Owner's Advisor Services On April 8, 2019, the City awarded a personal services contract to Carollo Engineers, Inc. (Carollo) to provide technical support in the procurement process. Carollo was selected from the Qualification Based Selection (QBS) shortlist of Owner Representative Services because Carollo had detailed knowledge of the wastewater system because (1) they had completed the 2013 Wastewater Master Plan and (2)the design experience they had as they were working on a secondary process expansion for the Tryon Creek Wastewater Plant (which the WWTF will replace) with Portland's Bureau of Environmental Services. As previously described, the City, Carollo, and other project partners have since completed the scope of services for the original PSA (to 60% design) as well as an amendment to advance the project design to 90% design. It is in the City's best interest to continue Carollo's role as Owner's Advisor to consult on the next competitive proposal. Carollo and staff have negotiated a scope and fee proposal in the Not-to-Exceed amount of $888,659 to complete the upcoming procurement. To date, Carollo has spent approximately $1,033,000 of the budgeted NTE $1,398,800 of their existing contract. There is approximately $365,800 in remaining budget/ NTE amount from Carollo's existing scope so the net increase in contract value would be approximately NTE $523,000 for a new NTE total of$1,921,800. Staff also intends to amend this contract upon completion of the DBOM procurement to continue Owner's Advisor services into the next phases of final design, construction, and an initial operations period. RECOMMENDATIONS (1) Move to Approve Resolution 24-19 amending Resolution 18-55 and Authorizing a Special Procurement for a new Design-Build-Operate-Maintain (DBOM) Procurement for the Wastewater Treatment Facility; and (2) Move to Approve Resolution 24-18 Authorizing a Special Procurement for Owner's Advisor Services for the Wastewater Treatment Facility; and authorize the City Manager to execute a contract with Carollo Engineering, Inc., in an amount not to exceed $888,659 for Owner's Advisor Services. ATTACHMENTS 1. Resolution 24-19, Amending Resolution 18-55—Special Procurement Authorizing DBOM for the WWTF. 2. Resolution 24-18, Special Procurement for Owner's Advisor Services for the WWTF. Respect. Excel'ence. Trust. Service, 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY ATTACHMENT 1 RESOLUTION 24-19 A RESOLUTION OF THE LAKE OSWEGO CITY COUNCIL,ACTING AS THE LAKE OSWEGO PUBLIC CONTRACTING REVIEW BOARD PURSUANT TO ORS 279A.060, MAKING CERTAIN FINDINGS AND APPROVING AN AMENDMENT TO RESOLUTION 18-55 AND AUTHORIZING A SPECIAL PROCUREMENT TO ENTER INTO A DESIGN, BUILD, OPERATE,AND MAINTAIN CONTRACT FOR THE NEW WASTEWATER TREATMENT PLANT FACILITY. WHEREAS,the Lake Oswego Public Contract Rules (LOPCR) consist of the divisions of the Oregon Administrative Rules (OAR) Chapter 137 listed in LOPCR 46-099(2)("Model Rules"), except as amended, supplemented, or deleted by LOPCR Rules; and WHEREAS, ORS 279C.335(1) and OAR 137-049-0130, -0160, -0200 and -0210 generally require the Public Contracting Officer to seek competitive bids, based upon an advertisement for bids,when a public improvement contract is in excess of$100,000; and WHEREAS, ORS 279C.335(2), and OAR 137-49-0620, -0640, -0645, -650, and -0660 permit the local contract review board to exempt certain contracts from competitive bidding requirements upon approval of findings of fact addressing the statutory criteria; and WHEREAS, ORS 279C.335(2) provides a process for exempting certain contracts from competitive bidding for traditional design-bid-build construction methods for public improvements, and allowing "alternative contracting methods"; and WHEREAS, "alternative contracting methods" means per OAR 137-049-0610(2) "innovative techniques for procuring or performing Public Improvement Contracts, utilizing processes other than the traditional methods involved in the design-bid-build construction contracting method (with Award of a Public Improvement Contract based solely on price, in which a final design is issued with formal Bid documents, construction Work is obtained by sealed Bid Awarded to the Responsible Bidder submitting the lowest Responsive Bid, and the project is built in accordance with those documents); and WHEREAS, ORS 279C.335(2) and OAR 137-049-0130 permits the awarding authority to exempt a public improvement contract from competitive bidding if: (2) Subject to subsection (4)(b) and (c) of this section, a local contract review board may exempt a public improvement contract from the competitive bidding requirement of subsection (1) of this section after the local contract review board approves the following findings that the contracting agency submits: (a)The exemption is unlikely to encourage favoritism in awarding public improvement contracts or substantially diminish competition for public improvement contracts. (b)Awarding a public improvement contract under the exemption will likely result in substantial cost savings and other substantial benefits to the contracting agency. In approving a finding under this paragraph, the local contract review board shall consider the type, cost and amount of the contract and, to the extent applicable to the particular public Page 1 -A Resolution 24-19, Making Certain Findings and Approving an Amendment to Resolution 18-55 and Authorizing a Special Procurement to Enter into a Design, Build, Operate, and Maintain Contract for the Wastewater Treatment Plant Facility. improvement contract or class of public improvement contracts,the following: (A) How many persons are available to bid; (B) The construction budget and the projected operating costs for the completed public improvement; (C) Public benefits that may result from granting the exemption; (D) Whether value engineering techniques may decrease the cost of the public improvement; (E) The cost and availability of specialized expertise that is necessary for the public improvement; (F) Any likely increases in public safety; (G) Whether granting the exemption may reduce risks to the contracting agency, or the public that are related to the public improvement; (H) Whether granting the exemption will affect the sources of funding for the public improvement; (I) Whether granting the exemption will better enable the contracting agency to control the impact that market conditions may have on the cost of and time necessary to complete the public improvement; CO Whether granting the exemption will better enable the contracting agency to address the size and technical complexity of the public improvement; (K) Whether the public improvement involves new construction or renovates or remodels an existing structure; (L) Whether the public improvement will be occupied or unoccupied during construction; (M) Whether the public improvement will require a single phase of construction work or multiple phases of construction work to address specific project conditions; and (N) Whether the contracting agency has, or has retained under contract, and will use contracting agency or state agency personnel, consultants and legal counsel that have necessary expertise and substantial experience in alternative contracting methods to assist in developing the alternative contracting method that the contracting agency will use to award the public improvement contract and to help negotiate, administer and enforce the terms of the public improvement contract. WHEREAS, on December 18, 2018 the City Council authorized by Resolution 18-55 a Special Procurement method of a Design, Build, Finance, Operate and Maintain (DBFOM) procurement method, as an alternative to traditional methods involved in the design - [competitive] bid - build construction; and WHERAS, pursuant thereto the City thereafter proceeded with a Request for Qualifications and Request for Proposal solicitation for a DBFOM preliminary services agreement with EPCOR Foothills Water Partners (later EPCOR Foothills Water Project, Inc.) (EFWP), and in accordance therewith design plans and studies were performed that resulted in obtaining 90%design plans, but the City and EFWP were not able to agree upon the terms of a Project Agreement, and Page 2 -A Resolution 24-19, Making Certain Findings and Approving an Amendment to Resolution 18-55 and Authorizing a Special Procurement to Enter into a Design, Build, Operate, and Maintain Contract for the Wastewater Treatment Plant Facility. WHEREAS,the Project Director has submitted a request to consider amendment of the 2018 exemption of the solicitation of a public improvement construction contract for the Wastewater Treatment Facility project from the competitive bidding requirements,to competitively solicit for a DBOM public improvement contract, as the City will not seek private financing as a part of the contract for the design, construction, operation and maintenance of a new wastewater treatment plant; and WHEREAS, pursuant to ORS 279C.335(4)(b),the Project Director has submitted findings that support awarding a DBOM public improvement contract without the competitive bidding requirement of ORS 279C.335(1) showing that the exemption of a contract complies with ORS 279C.335(2), above; and WHEREAS, pursuant to ORS 279C.335(5), published public notice was given not less than 14 days prior to a public hearing before the City Council, acting as the Lake Oswego Public Contract Review Board,to provide interested persons an opportunity to appear and present comment upon the competitive bidding exemption request for solicitation of a DBOM contract for the Wastewater Treatment Facility project by this amendment of Resolution 18-55; and WHEREAS,the Lake Oswego City Council has fully considered the testimony and other evidence presented at the hearing; THE LAKE OSWEGO CITY COUNCIL,ACTING AS THE LAKE OSWEGO PUBLIC CONTRACTING REVIEW BOARD, hereby adopts Findings and amends Resolution 18-55 to approve an exemption to the competitive bidding requirements pursuant to ORS 279C.335 as follows: 1. The attached findings of the Project Director in support of the request for amendment of approval of an exemption from the competitive bidding requirements of ORS 279C.335(1) and OAR 137-049-0200 for the construction of the Wastewater Treatment Facility, a public improvement project, are hereby adopted. 2. Based upon the foregoing findings of fact, BE IT RESOLVED that the exemption of the Wastewater Treatment Facility, a public improvement project, from the competitive bidding process pursuant to ORS 279C.335(2) by Resolution 18-55 is hereby continued for the solicitation of a design, build, operate and maintain (DBOM) contract. Page 3 -A Resolution 24-19, Making Certain Findings and Approving an Amendment to Resolution 18-55 and Authorizing a Special Procurement to Enter into a Design, Build, Operate, and Maintain Contract for the Wastewater Treatment Plant Facility. Considered and enacted at the regular meeting of the City Council of the City of Lake Oswego on this 7th day of May, 2024. AYES: NOES: ABSTAIN: EXCUSED: Joseph M. Buck, Mayor ATTEST: Kari Linder, City Recorder APPROVED AS TO FORM: Ellen Osoinach, City Attorney Page 4-A Resolution 24-19, Making Certain Findings and Approving an Amendment to Resolution 18-55 and Authorizing a Special Procurement to Enter into a Design, Build, Operate, and Maintain Contract for the Wastewater Treatment Plant Facility. FINDINGS FOR AMENDMENT OF THE SPECIAL PROCUREMENT FOR THE WASTEWATER TREATMENT FACILITY Prepared by: Stefan Broadus, Project Director Date:4/24/2024 WHEREAS, ORS 279C.335(1) and OAR 137-049-0200 and -0210 generally requires the Public Contracting Officer solicit public improvement contracts in excess of$100,000 by an advertised Request for Bids; and WHEREAS, ORS 279.335(2) and OAR 137-049-0130 permits the awarding authority to exempt a particular public improvement contract from competitive bidding if the awarding authority finds: (a) The exemption is unlikely to encourage favoritism in awarding public improvement contracts or substantially diminish competition for public improvement contracts. (b) Awarding a public improvement contract under the exemption will likely result in substantial cost savings and other substantial benefits to the contracting agency. In approving a finding under this paragraph,the local contract review board shall consider the type, cost and amount of the contract and, to the extent applicable to the particular public improvement contract or class of public improvement contracts [based on the listed considerations below]. WHEREAS, on December 18, 2018 the City Council authorized by Resolution 18-55 a Special Procurement method of a Design, Build, Finance, Operate and Maintain (DBFOM) procurement method, as an alternative to traditional methods involved in the design - [competitive] bid - build construction; and WHERAS, pursuant thereto the City thereafter proceeded with a Request for Qualifications and Request for Proposal solicitation for a DBFOM preliminary services agreement with EPCOR Foothills Water Partners (later EPCOR Foothills Water Project, Inc.) (EFWP), and in accordance therewith design plans and studies were performed that resulted in obtaining 90%design plans, but the City and EFWP were not able to agree upon the terms of a Project Agreement, and WHEREAS, Staff recommends continuing to move forward with the project as the original value proposition was to determine whether it was more beneficial to upgrade the existing Tryon Creek Wastewater Treatment Facility or build a new facility, and staff believes that it will be cost effective to proceed with a design, build, operate and maintain contract for a new plant,with public financing. NOW,THEREFORE,THE PROJECT DIRECTOR OF THE CITY OF LAKE OSWEGO PRESENTS THE FOLLOWING FINDINGS IN SUPPORT OF AN AMENDMENT TO THE EXEMPTION OF A PUBLIC IMPROVEMENT CONTRACT FROM COMPETITIVE BIDDING AS FOLLOWS: 1.The Findings adopted by the Council in Resolution 18-55 are incorporated. 2. Criterion: "The exemption is unlikely to encourage favoritism in awarding public improvement contracts or substantially diminish competition for public improvement contracts."[ORS 279C.335)(2)(a)] The Design, Build, Operate and Maintain (DBOM) entity will be selected through a competitive process in accordance with: Page 1- Findings for a Special Procurement for the Wastewater Treatment Facility Project. -A Request for Qualifications (RFQ) selection process substantially similar to that used for the prior DBFOM solicitation and to the RFQ procedure in OAR 137-049-0645 to determine and rank the field of DBOM entities qualified to provide the required design, build, and operations and maintenance of the Wastewater Treatment Facility(WWTF)for the DBOM contract duration, and then -A Request for Proposal (RFP) selection process substantially similar to that used for the prior DBFOM solicitation and to the RFP procedure in OAR 137-049-0650 from those DBOM entities that are were found to be qualified and ranked eligible to submit proposals through the RFQ competitive process. Any design, construction, or operations and maintenance contractor may be,form, or be a part of a DBOM entity that may submit a Statement of Qualifications (SOQ) for the RFQ, and if qualified and ranked, then submit a proposal for the RFP.The RFQ process will be publicly advertised and competitive. The SOQ will be evaluated and ranked.The higher-ranked SOQs will qualify those DBOM entities to submit a proposal in response to an RFP, which will also be a competitive process with the proposals evaluated and ranked.Therefore, it is unlikely that the awarding of the DBOM contract for the Project will encourage favoritism or substantially diminish competition of contractors. 3. Criterion:Awarding a public improvement contract under the exemption will likely result in substantial cost savings and other substantial benefits to the contracting agency. In approving a finding under this paragraph, the local contract review board shall consider the type, cost and amount of the contract and, to the extent applicable to the particular public improvement contract or class of public improvement contracts, the following: [ORS 279C.335)(2)(b)] Consideration(A):How many persons are available to bid; Whether under a traditional Design-Bid-Build (DBB) or under an alternative contracting process,the RFQ would require vendors to have experience delivering wastewater treatment plants of at least similar size and complexity.The field of potential vendors is not reduced by including all phases of the DBOM method as one procurement.As was approved for the DBFOM and similar to a Design-Build (D-B) alternative contracting process per OAR 137-049-0640, -0670,the potential vendors can either form teams such that they can successfully deliver the individual phases of the project or be capable of self- performing all phases of the project as a single entity.The DBOM alternative contracting method does not limit the field of engineers, contractors, or operators available to bid on the project as compared to the DBB or D-B methods as any of these methods will demand a wide range of expertise for the City to deliver all elements/disciplines of the project. In summary,vendors that meet the experience qualification requirement for the design, construction, operation and maintenance of a WWTF of this size and complexity are able to form or be a part of a DBOM entity that would be eligible,subject to evaluation criteria,to provide a proposal for the construction of the proposed WWTF.The DBOM procurement will likely prohibit EWFP and their subcontractors from participation to avoid favoritism, exclusivity, or otherwise uncompetitive proposals. However, prohibiting these firms from participation would be included in the procurement regardless of method. Page 2- Findings for a Special Procurement for the Wastewater Treatment Facility Project. Consideration (B): The construction budget and the projected operating costs for the completed public improvement; The estimated construction cost of the WWTF is approximately$175 to $200 million.The total project cost for the entire 30 year period was estimated in the Preliminary Services Agreement completed by EWFP to be between $590 and $675 million. The DBOM contract will establish fixed pricing(which allows and defines escalations for market conditions) for the entire Project, inclusive of operation costs.The operating and maintenance costs would be equal to or less than could be provided by the City. Operating supplies and utilities would be the same whether bought by the City or by a private entity.The personnel costs to be paid by a private entity would be either equal to or less than that which could be paid to public employees.The operating and maintenance costs of the WWTF under a DBOM contract would be less than under the traditional approach where the City takes over operation and maintenance post-construction due to these reasons as well as the value of transferring risk to the DBOM entity. Consideration(C):Public benefits that may result from granting the exemption; The Project will require expertise regarding the constructability and long-term cost/benefit analysis of innovative wastewater treatment design.That knowledge is best obtained directly from plant operators and the construction industry. Many decisions will be required during the final design process that are best made with immediate feedback on constructability, operability, and pricing. Under the traditional design-bid-build process,there is a high risk of increased change orders and schedule impacts for a project of this size and complexity.There are significant costs associated with delay, both as to project costs and to the services to the public.Time is of the essence. Moreover,traditional design-bid-build processes rarely accurately account for asset life-cycle considerations on a facility of this scale, such as operations and long-term maintenance. An alternative contracting process that combines design and construction within the overall project will provide a scope of work with a constructible and operable design that best meet the requirements of the project with significantly lower risk to the project costs and schedule. Involving the contractor and operator during design will allow project risks to be addressed early. By combining the design and build components into an overall DBOM process,the City would achieve reliable pricing provided by traditional Design-Build and CM/GC alternative contracting methods during the design and construction phases that will reduce the potential for time delays due to later discovery of higher-than-anticipated costs and consequent changes of direction. Also, the use of value engineering helps keep the construction costs within the budget.Taking it one step further than D-B and CM/GC,the inclusion of operation and maintenance into the overall project will assure that construction savings will not come at the price of later increased operation and/or maintenance cost.The DBOM method with fixed pricing (with escalations as previously described) will deliver reliable pricing over the long-term, giving the City and the users of the WWTF the highest ability to achieve the lowest possible long-term cost, with the cost spread out over the term of the DBOM contract. Page 3- Findings for a Special Procurement for the Wastewater Treatment Facility Project. Consideration (D): Whether value engineering techniques may decrease the cost of the public improvement; The DBOM entity will have a high incentive to include value engineering to decrease the cost of construction of the WWTP, but not if it would result in later increased operational or maintenance costs. The "value engineering" that will occur will be that which provides the lowest cost over the term of the DBOM contract. The Project will benefit from the active involvement of the contractor and operator during the design process in the following ways: a. The contractor's and operator's input regarding the constructability and cost effectiveness of various alternatives will guide the design toward the most cost-effective choice, considering not only construction cost but also life-cycle operation and maintenance costs; b. Knowing the specific equipment available to the contractor and operator allows creation of a design that best utilizes the capacity of that equipment that meets the wastewater plant performance requirements; c. The contractor will be able to provide current and reliable information regarding the cost of materials that are experiencing price volatility and the availability of scarce materials; d. The contractor will also be able to order materials while design is being completed in order to avoid inflationary price increases and provide the lead-time that may be required for scarce materials; e. The contractor will be able to help develop design documents to reflect the best work plan that accommodates the DBOM entity and the project deadline; and f. The contractor will have early involvement in the specification of materials and work phasing, allowing: (i)The contractor to schedule the best grouping of the subcontractor bid packages that will help insure optimum subcontractor work coverage; (ii)The most efficient construction staging area in and around the project area; and (iii) Adjustment of the work plan when the needs change along the way that has as minimal impact upon price and schedule as possible. Value engineering cannot be addressed by the usual Design-Bid-Build method of construction. All of the above results in a better coordinated project with less cost and change orders,thus resulting in a lower construction cost component, and hence a lower total DBOM cost. Page 4- Findings for a Special Procurement for the Wastewater Treatment Facility Project. Consideration (E): The cost and availability of specialized expertise that is necessary for the public improvement; The availability of qualified contractors for the construction of the WWTF of the proposed size and complexity is the same as if the City proceeded under the traditional Design-Bid-Build method because the competitive process for the selection of a DBOM entity to design, construct, operate and maintain the WWTF will be to include a qualified contractor that can achieve the lowest total cost. The availability of the additional expertise required for the final design of the WWTF would also be the same as if the City proceeded under the traditional Design-Bid-Build method.The City would need to retain design (architectural and engineering) expertise for the construction of the WWTF. Bundling the design, build, operations, and maintenance components necessary for the construction of the WWTF does not alter the necessity for, or the availability of, providers of such expertise. By bundling these components together in a single competitive process for a DBOM entity,the lowest public cost is achieved. Consideration(F):Any likely increases in public safety; The DBOM entity will be responsible for long-term maintenance of the WWTF. Therefore, public safety will be increased because the entity that constructs the WWTF does not gain by employing design or construction techniques that could cause higher maintenance and risk of wastewater treatment failures, with high clean-up costs, later. Consideration(G): Whether granting the exemption may reduce risks to the contracting agency, or the public that are related to the public improvement; The DBOM method with fixed pricing (with escalations as previously described) will assure that the overall project will deliver reliable pricing through the duration of the long-term contract.This gives the City and the users of the WWTF the highest likelihood of achieving the lowest possible total cost. By participating in the design phase, the construction contractor will be able to obtain a complete understanding of the overall project's needs, the design intent of the architects and engineers,the full scope of work, and the operational needs of the WWTF, and will be able to offer suggestions for improvements and cost-reductions.The contractor will also be able to better calculate an appropriate fee, a price within which the DBOM entity will be contractually bound.The DBOM entity is able to provide fixed pricing (with escalations as previously described) for the entire project because the contractor was involved in the design process and in the consideration of the maintenance and operation costs, identification of the specifications for the work, preparation of the construction schedule, and establishment of the sequence of work. Consideration(H): Whether granting the exemption will affect the sources of funding for the public improvement; The WWTF RFQ and RFP will seek fixed pricing for design, construction, and a long-term operations period.This fixed pricing (with escalations as previously described) will better allow City staff to project fund balances and plan other infrastructure improvements.The traditional design-bid-build contracting method followed by a contract for third party operations defers securing pricing for construction and Page 5- Findings for a Special Procurement for the Wastewater Treatment Facility Project. even more so for operations.These phases are largest costs of the project. Deferring pricing would hinder the City's ability to start other infrastructure projects due to less certainty in fund balances over time. Consideration (I): Whether granting the exemption will better enable the contracting agency to control the impact that market conditions may have on the cost of and time necessary to complete the public improvement; As well as the multitude of construction market factors that exist today in Oregon (e.g., competition of other projects, environmental issues that limit construction materials,variable bid market, unemployment, etc.), the difficulty in establishing the best work sequence complicates City's ability to accurately estimate the construction cost of this project. An alternative contracting method that combines the design and build components is more likely to result in a more experienced and better suited contractor for the project.The complexities that need to be addressed to accomplish the design and constructions tasks, including the City's goal of considerations of life-cycle costs, and the inclusion of operation and maintenance costs for a long term are obviously not well served by the usual competitive procurement.The DBOM method ensures that the selected entity will select the best contractor for the most beneficial reasons for the project outside of having to select based solely upon lowest responsive and responsible bid. This alternative contracting method, similar to other alternative contracting methods that combine the design and building components, e.g., Design-Build or CM/GC, allows construction work to commence relatively rapidly on some portions of the work while design continues on the remaining portions.This will shorten the duration of the construction and allow completion of the Project sooner. Use of the DBOM method, similar to other alternative contracting methods that combine the design and building components,will result in a better coordinated project and speedy completion of the WWTF. Consideration(J): Whether granting the exemption will better enable the contracting agency to address the size and technical complexity of the public improvement; In the DBOM RFQ and RFP,the wastewater treatment performance requirements will be specified. These performance requirements would be the same regardless whether traditional Design-Bid-Build is used or an alternative contracting method.The DBB method would put the risk on the City to find the most efficient balance of meeting the performance requirements, constructing the facility, and then operating and maintaining it through its useful life. If the most efficient balance is not found,the City risks not meeting treatment performance requirements, inefficient construction, and/or inefficient operations. All of these risks result in increased costs to the City. In contrast,the DBOM process will result in a single entity responsible for delivery of a wastewater treatment method that will best meet the wastewater treatment performance requirements at the lowest long-term life-cycle cost, inclusive of operations and maintenance. Technical contractor expertise will be required for environmental management, quality management, scheduling, estimating, meeting sustainable facilities standards and guidelines, and ensuring energy efficiency. Specialized skills will be required of the DBOM entity to negotiate and price multiple options and schedule complex tasks. A high level of coordination among the many technical disciplines is required for successful delivery of a project of this scale and complexity.This coordination is best facilitated by the DBOM approach. Page 6- Findings for a Special Procurement for the Wastewater Treatment Facility Project. Consideration (K): Whether the public improvement involves new construction or renovates or remodels an existing structure; The WWTF will be new construction. Consideration (L): Whether the public improvement will be occupied or unoccupied during construction; The WWTF will be unoccupied during construction. Consideration (M): Whether the public improvement will require a single phase of construction work or multiple phases of construction work to address specific project conditions;and The wastewater treatment performance requirements will require the WWTF to have the designed and constructed capacity to meet the projected demand for the duration of the projected planning period, e.g., 30 years. Accordingly,the WWTP will require single phase construction work. Consideration (N): Whether the contracting agency has, or has retained under contract, and will use contracting agency personnel, consultants and legal counsel that have necessary expertise and substantial experience in alternative contracting methods to assist in developing the alternative contracting method that the contracting agency will use to award the public improvement contract and to help negotiate, administer and enforce the terms of the public improvement contract. City staff have experience in large infrastructure projects under the traditional Design-Bid-Build method: a. Lake Oswego Interceptor Sewer- 2009-2011; $95 million (RFQ/RFB). Replaced the 20,000- foot interceptor pipe that forms the backbone of the City's sewer collection system and is in Oswego Lake. b. Lake Oswego Tigard Water Treatment Plant-2012-2017, $254 million (RFQ/RFB). Upgraded, upsized and expanded six major facilities (the Clackamas River intake in Gladstone,the pipeline that conveys raw water to the water treatment facility,the water treatment facility in West Linn,the pipes that convey finished water to Lake Oswego and Tigard,the Waluga Reservoir site in Lake Oswego, and the Bonita Road pump station in Tigard). City staff also have considerable recent experience in alternative contracting methods: c. Operations Center-2015-2017 -$14.4 million (CM/GC) - new 47,000 SF Office Building, Motor Pool/Shop Building, Decant Facility. d. City Hall/Police Building- 2017-2020, $40 million (CM/GC) - new 53,000 SF City Hall in downtown Lake Oswego. e. Telemetry and Communications Systems Upgrades—2021-2024, $1 million (D-B)— improvements to the City's remote monitoring and control system of water reservoirs and pump stations. f. Back Up Power at Water Treatment Plant and River Intake Pump Station—2023-2024, $5 Page 7- Findings for a Special Procurement for the Wastewater Treatment Facility Project. million (D-B)—backup power generation at critical water supply facilities. g. Lake Oswego Wastewater Treatment Plant—2017-2024, $10 million (DBFOM)—City staff and the city's consultants have been engaged in the DBFOM project through expiration of the Preliminary Services Agreement. A key reason why the DBFOM did not move forward as authorized by Resolution 18-55 is that the financing element resulted in costs to the project that staff believes can be reduced through public financing. The decision to eliminate the private financing element,while completing the balance of the preliminary services agreement and drafting of the project agreement for the DBFOM method demonstrates that the City has agency personnel, consultants and legal counsel that have necessary expertise and substantial experience in alternative contracting methods to assist in developing the DBOM alternative contracting method. Page 8- Findings for a Special Procurement for the Wastewater Treatment Facility Project. ATTACHMENT 2 RESOLUTION 24-18 A RESOLUTION OF THE LAKE OSWEGO CITY COUNCIL,ACTING AS THE LAKE OSWEGO PUBLIC CONTRACTING REVIEW BOARD PURSUANT TO ORS 279A.060, MAKING CERTAIN FINDINGS AND APPROVING A SPECIAL PROCUREMENT FOR OWNER'S ADVISOR SERVICES FOR THE WASTEWATER TREATMENT PLANT FACILITY(DBOM PHASE)AND AUTHORIZING THE CITY MANAGER TO EXECUTE A CONTRACT WITH CAROLLO ENGINEERING, INC. WHEREAS,the Lake Oswego Public Contract Rules (LOPCR) consist of the divisions of the Oregon Administrative Rules (OAR) Chapter 137 listed in LOPCR 46-099(2)("Model Rules"), except as amended, supplemented, or deleted by LOPCR Rules; and WHEREAS, LOPCR 47-0277(LO) generally requires the Public Contracting Officer to solicit at least three competitive proposals, based upon a Request for Proposals, when a personal services contract is in excess of$100,000; and WHEREAS, OAR 137-047-0285 permits the awarding authority to award a contract as a special procurement pursuant to the requirements of ORS 2796.085(4): (4)The ... local contract review board, ... may approve a special procurement if the ... board, ... finds that a written request submitted under subsection (2) or(3) of this section demonstrates that the use of a special procurement as described in the request, or an alternative procedure prescribed by the ... board...: (a) Is unlikely to encourage favoritism in the awarding of public contracts or to substantially diminish competition for public contracts; and (b) (A) Is reasonably expected to result in substantial cost savings to the contracting agency or to the public; or (B) Otherwise substantially promotes the public interest in a manner that could not practicably be realized by complying with requirements that are applicable under ORS 279B.055, 279B.060, 279B.065 or 2796.070 or under any rules adopted thereunder. WHEREAS,the Project Director has submitted a request to consider approval of a special procurement,together with findings, to exempt Owner's Advisor services for a contract for the Wastewater Treatment Facility(DBOM Phase),from the Request for Proposal requirement of LOPCR 47-0277; and WHEREAS, a duly noticed public hearing was held before the City Council, acting as the Lake Oswego Public Contract Review Board,to provide interested persons an opportunity to appear and present comment upon the special procurement request; and WHEREAS,the Lake Oswego City Council has fully considered the testimony and other evidence produced at the hearing; THE LAKE OSWEGO CITY COUNCIL,ACTING AS THE LAKE OSWEGO PUBLIC CONTRACTING REVIEW BOARD, hereby adopts Findings and approves a Special Procurement as follows: Page 1 -A Resolution 24-18, Making Certain Findings and Approving a Special Procurement for a Contract for Owner's Advisor services; and Authorizing the City Manager to Execute the Contract 1. The attached findings of the Project Director in support of the request for approval of a special procurement for owner's advisor services are hereby adopted. 2. Based upon the foregoing findings of fact, BE IT RESOLVED that a contract with Carollo Engineers, Inc.for Owner's Advisor services for the Wastewater Treatment Facility(DBOM Phase) is hereby exempted from the competitive solicitation process pursuant to LOPCR 047-0277(4) and is approved as a special procurement pursuant to OAR 137-047-0285. 3. BE IT FURTHER RESOLVED that the City Manager is authorized to execute a contract for Owner's Advisor services for an amount not-to-exceed $888,659 in substantially the form attached fourteen days following public notice of the approval of the special procurement, pursuant to OAR 137-047-0285 and ORS 2796.400. Considered and enacted at the regular meeting of the City Council of the City of Lake Oswego on this 7th day of May, 2024. AYES: NOES: ABSTAIN: EXCUSED: Joseph M. Buck, Mayor ATTEST: Kari Linder, City Recorder APPROVED AS TO FORM: Ellen Osoinach, City Attorney Page 2 -A Resolution 24-18, Making Certain Findings and Approving a Special Procurement for a Contract for Owner's Advisor services; and Authorizing the City Manager to Execute the Contract FINDINGS FOR A SPECIAL PROCUREMENT FOR OWNER'S ADVISOR SERVICES FOR THE WASTEWATER TREATMENT FACILITY(DBOM PHASE) Prepared by: Stefan Broadus, Project Director Date:4/23/2024 WHEREAS, Lake Oswego Public Contract Rule 047-0277(4) generally requires the Public Contracting Officer to solicit at least three competitive proposals, based upon a Request for Proposals,when a personal services contract is in excess of$100,000; and WHEREAS, OAR 137-047-0285 permits the awarding authority to award a contract (or contract amendment) as a special procurement pursuant to the requirements of ORS 2796.085; and WHEREAS,the special procurement must demonstrate that granting a special procurement: (a) Is unlikely to encourage favoritism in the awarding of public contracts or to substantially diminish competition for public contracts; and (b) (A) Is reasonably expected to result in substantial cost savings to the contracting agency or to the public; or (B) Otherwise substantially promotes the public interest in a manner that could not practicably be realized by complying with requirements that are applicable under ORS 2796.055, 2796.060, 2796.065 or 2796.070 or under any rules adopted thereunder. NOW,THEREFORE,THE PROJECT DIRECTOR OF THE CITY OF LAKE OSWEGO PRESENTS THE FOLLOWING FINDINGS IN SUPPORT OF A SPECIAL PROCUREMENT AS FOLLOWS: A. Criterion: "Granting the special procurement is unlikely to encourage favoritism in the awarding of public contracts or to substantially diminish competition for public contracts. " 1. On April 8, 2019,the City of Lake Oswego awarded a personal services contract to Carollo Engineers, Inc. (Carollo)to provide technical support in the procurement process in selecting a Public-Private Partner—EPCOR Foothills Partners ("EPCOR") --to enter into a Preliminary Services Agreement (PSA)to design, build, finance, operate, and maintain (DBFOM) a new Wastewater Treatment Plant. Carollo was selected from the Qualification Based Selection (QBS) shortlist of Owner Representative Services because Carollo had detailed knowledge of the wastewater system since they completed the 2013 Wastewater Master Plan and because of the design experience that they had as they were working on a secondary process expansion for the Tryon Creek Wastewater Plant with the City of Portland's Bureau of Environmental Services. 2. EPCOR Foothills Water Project (EFWP) has since completed the scope of services for the PSA, including the amendment to advance the project design to a 90%design. On January 24, 2024, the City Council directed staff to explore competitive procurement methods for final design, construction, operation, and maintenance of a new Wastewater Treatment Facility (WWTF). It is in the City's best interest to continue Carollo's role as Owner's Advisor to consult on the competitive DBOM proposal and into the next phases of final design, construction, initial operations period and maintenance concerns. 3. It is unlikely that award of this special procurement will diminish competition because: Page 1- Findings For A Special Procurement For Owner's Advisor Services a. The scope of work for this contract builds upon the knowledge gathered by the prior work. Although, it is possible for a proposer to devote the necessary time to acquaint itself with all of the prior and current engineering work performed to date in order to prepare the DBOM proposal and, it is unlikely for the reasons set forth in the following subsections. b. The internal costs that another proposer would incur to develop an equivalent understanding of the wastewater system,flow modeling, technical specifications, and procurement activities to-date would be considerable and would likely exceed $250,000 and require an estimated six months of additional time. c. Carollo has executed all of its required tasks that are necessary to have crafted detailed specifications that were critical to the development and execution of the Preliminary Services Agreement. Proposers would recognize that Carollo would also be submitting a proposal and would enjoy a competitive advantage over its competitors for the reasons described in b. above. d. Another competitive proposal process would require firms to demonstrate equal or better knowledge, skills, and capability than Carollo to provide the technical services needed by the City to provide oversight regarding the services to be provided by a DBOM Project Company. Other firms are unlikely to submit proposals in part due to Carollo's body of knowledge and understanding of the City's wastewater system, and flow modeling. e. The scope of this work under the requested special procurement comprises technical advice, review, and oversight of a competitive proposal for final design, construction, operation, and maintenance of a new wastewater treatment facility as directed by City Council, as well as the subsequent phases of final design, construction, and an initial operations period including: — project management activities, — oversight of schedule and risk management activities, — development of a Request for Qualifications and Request for Proposals procurement documents, — design review, — review of numerous deliverables, — analysis of operations and maintenance, — permitting assistance, and — cost estimating. Based on the preceding reasons, it is unlikely that the open solicitation seeking additional proposers, as required by LOPCR 47-0277, would result in a new field of qualified, interested submittals. B(1). Criterion: "Granting the special procurement is reasonably expected to result in substantial cost savings to the contracting agency or to the public; or 1. Substantial staff time and cost is expended to prepare Request for Proposals solicitation documents, associated public notices, administer solicitation period activities, select proposal evaluation team members, evaluate responses to competitive solicitations, conduct interviews, conduct reference checks to confirm proposal responsibility and qualifications, supporting the preparation of Council reports for contract award, and supporting the preparation of contracts once the Council award is made. A competitive proposal procurement in lieu of authorizing this special procurement would take 3-4 months to conduct, and would incur staff labor and Page 2- Findings For A Special Procurement For Owner's Advisor Services material costs ranging from $15,000 to $25,000. It is also important to consider the time value of money on a project of this scale.Time is of the essence in implementing the new WWTF solicitation and selection, and reducing the delivery schedule by 3-4 months likely equates to a significant savings in that procurement as well. 2. As noted in part A, above, a substantial body of technical work has been developed by Carollo as it has performed owner's representative services and technical specification development for the DBFOM RFQ, RFP, PSA, and substantial work on the Project Agreement. In order to develop this body of work, many experts within Carollo have been utilized to conduct specialized elements of the work necessary to provide the technical information necessary.Any other consultant selected pursuant to a competitive proposal process to provide owner's advisor services in lieu of this special procurement,would necessarily have to procure all e-mails, documents, flow modeling, and other work of Carollo and evaluate such work that has completed to date of whatever nature in order to develop a thorough understanding of the technical and management aspects of this project. A conservative estimate of the time it would take for any consultant other than Carollo to develop a project understanding as comprehensive as that of Carollo is six months. As a result,this would likely lead to a project delay that would impact the schedule and delivery of the WWTF. 3. The additional owner's advisor services are a continuation of tasks and analyses already conducted to date. In addition, the experts needed to provide the additional services are already employed by Carollo. 4. Due to the past work by Carollo on the WWTF,the firm is knowledgeable and able to immediately dedicate sufficient resources and commence the owner's advisor work necessary to thoroughly and supportably oversee the competitive proposal for DBOM final design, construction, operation, and maintenance of a new wastewater treatment facility as directed by City Council, as well as the subsequent phases of final design, construction, and an initial operations period. 5. The hourly billing rates of Carollo staff are within the range of billing rates charged by other similar sized consulting firms with the Portland Metropolitan region, as are the administrative costs associated with reimbursable expenses. All such costs are commensurate with the Scope of Work and reflect the Project's complexity and risk. 8(2). Criterion: "Granting the special procurement otherwise substantially promotes the public interest in a manner that could not practicably be realized by complying with requirements that are applicable under ORS 2798.055, 2798.060, 2798.065 or 2798.070 or under any rules adopted thereunder. 1. The request for proposals requirement for"major personal services" is not based on state law (ORS 2796.055, 2796.060, 279B.065 or 279B.070), but rather by LOPCR 047-0277(4); personal service contract rules are not subject to the state law provisions cited.Therefore, it is not technically possible to comply with these cited provisions, and accordingly, it is not technically possible to "otherwise substantially promote the public interest in a manner that could not practicably be realized by complying with requirements" of cited state law. However, these findings look to the public interest sought to be served by the request for proposal requirement, and the spirit of solicitation of competitive proposals under ORS 279B.060. Page 3- Findings For A Special Procurement For Owner's Advisor Services 2. The Project Director believes that there is a significant likelihood that there would not be any additional proposers to a Request for Proposals because all potential proposers except Carollo would have to undertake extensive review of the Public-Private Partnership arrangement and the technical specifications that have been developed to date, in a short period of time,to submit a proposal. Page 4- Findings For A Special Procurement For Owner's Advisor Services