ITEM:		ACTION ITEMS
13.	Consider Authorization for Expenditure of Budgeted Funds for Professional Services Agreement with Pueblo Water Resources Inc., to Prepare Well Construction Bid Materials and Construction Management Services for Phase 1 Aquifer Storage and Recovery Project
Meeting Date:			September 18, 2006	Budgeted:	Yes
From:			David A. Berger,	Program/	1-2-1 A. Seaside Basin ASR
			General Manager	Line Item No.:	Project, Second ASR well at existing SMTIW site, Acct. No. 4-7860.04
Prepared By:			Joe Oliver	Cost Estimate:	$171,529
General Counsel Approval: N/A
Committee Recommendation: The Administrative Committee (AdCom) considered this item on September 7, 2006; AdCom recommended approval of this item and that it be considered by the full Board as an Action Item, rather than on the Consent Calendar.
CEQA Compliance: N/A

SUMMARY: At the August 21, 2006 Regular Meeting, the Board authorized certification of the final Environmental Impact Report / Environmental Assessment (EIR/EA) of the Monterey Peninsula Water Management District (MPWMD or District) Phase 1 Aquifer Storage and Recovery (ASR) Project. That action has set into motion several subsequent steps in order to implement this project. Those steps include making preparations for retaining a qualified drilling contractor for construction of the a second ASR well at the existing test ASR site on former Fort Ord property, as well as securing design and construction management services and initial testing of the new well. MPWMD staff proposes to retain the hydrogeologic and engineering services of Pueblo Water Resources, Inc. to assist with the installation and initial testing of the new ASR well. Pueblo Water Resources, Inc. (Pueblo) is a newly formed firm comprised of the same principal professionals formerly with Padre Associates, Inc (Padre). The MPWMD has successfully worked with these same individuals on its ASR testing program over the last six years prior to their new affiliation with Pueblo. MPWMD staff considers the proposal from Pueblo to be responsive to the MPWMD’s desire to “fast-track” the implementation of expanded ASR operations in the Seaside Basin, and competitive with other firms of similar capability in terms of professional rates, other direct charges, and the amount of time assigned to the project.

The Administrative Committee (AdCom) reviewed this item at its September 7, 2006 meeting and recommended approval. The AdCom also recommended that this item be considered by the full Board as an Action Item, and should include additional clarification on several topics requested by the committee, including: (a) the nature of the relation between the Padre and Pueblo, (b) whether or not the District should seek proposals from other qualified firms, (c) whether or not District staff can undertake some if not all of the projected work tasks, (d) specific rationale on per diem costs in the Pueblo proposal, (e) need for meetings as described in the Pueblo proposal, and (f) performance penalty provisions that would be included in the contract between Pueblo and the District. Additional information on these topics is provided in the Background Section of this item.

RECOMMENDATION: Authorize the General Manager to enter into a contract with Pueblo Water Resources, Inc. to: (a) complete final design specifications for the second ASR well (described as Santa Margarita Test Injection Well No. 2 [SMTIW No. 2]), (b) prepare well construction bid specification materials, (c) provide technical support during the well construction bidding process, (d) provide construction management and oversight during SMTIW No. 2 and monitor well construction, (e) conduct baseline hydrogeologic and well performance testing upon initial well completion, and (f) prepare a summary report. This authorization will be conducted as per the Scope of Work described in the proposal from Pueblo (Exhibit 13-A), for a not-to-exceed cost estimate of $171,529. This cost estimate includes a base estimate of $155,935, and a 10% budget contingency of $15,594, held for administrative authorization in the event unforeseen project complications or constraints arise during the course of this work.

BACKGROUND: The MPWMD has been investigating ASR as a potential alternative water supply project for the Monterey Peninsula since 1996. With the recent completion and certification of the EIR/EA for the MPWMD Phase 1 ASR Project, MPWMD is now focused on the remaining tasks needed to begin implementation of this important water supply project. Even though all the necessary land use and environmental permitting for this project have not yet been secured, it is imperative that the proposed work described herein is initiated in the near future, given that the public bidding process and preparation for well construction requires considerable lead time before this work can begin. The current schedule is aggressive and calls for work to take place over approximately the next two months prior to well construction in the December 2006 – January 2007 period. Final permitting activities (including authorizations from the U.S. Army, City of Seaside, State Water Resources Control Board, Regional Water Quality Control Board) will be ongoing simultaneously prior to the scheduled start of construction. However, there is still uncertainty about the timing of all needed approvals; accordingly, the projected schedule is subject to change. Note that the budget authorization requested under this item does not include the planned dual ASR well testing program planned for the upcoming (Water Year 2007) injection season, or the design, engineering and construction of other permanent ancillary facilities that will ultimately be part of the Phase 1 ASR project (e.g., permanent piping, chemical/electrical building, site completion). This later work will be by separate authorization request as these future tasks are not on the current critical path, and additional coordination is required to fully develop the details of these later work components. The various tasks for implementation of the Phase 1 ASR Project have been separated as a means to “fast-track” completion of the second ASR well, as directed by the Board at the January 25, 2006 ASR workshop, in order to accelerate injection activities at this new facility as soon as possible during this coming injection season. It should be noted that Pueblo has also been retained to assist with ASR planning and analysis as part of Cal-Am’s Coastal Water Project ASR consultant team, with a focus on quality control and optimization of costs. This project coordination will benefit both the MPWMD and Cal-Am in avoiding unnecessary duplication of costs on ASR related tasks.

At the September 7, 2006 AdCom meeting, committee members approved this item, and also requested that several questions raised during discussion be brought to the full Board as an Action Item rather than on the Consent Calendar, along with additional information responding to these questions. A summary of responses to specific questions is provided below.

What is the nature of the relation between Padre and Pueblo, which was formed by individuals formerly with Padre? The nature and circumstances under which the Pueblo firm was formed is more completely described in the attached letters from Padre’s principal engineer, Jeffrey Damron (Exhibit 13-B) and Pueblo’s president, Stephen Tanner (Exhibit 13-C).

Should this proposed work be distributed as a Request For Proposals (RFPs) to other qualified firms? The District could seek RFPs from other qualified firms for this proposed work, but District staff does not recommend this action in this case, given the desired aggressive project schedule, and the prior experience of the individuals with Pueblo on the District’s ASR testing program. Based on the understanding that the RFP solicitation process would likely add a minimum of 2 to 3 months to the proposed schedule, the AdCom concurred that the District should proceed with the Pueblo proposal as a means to expedite the proposed Phase 1 ASR project.

Can District staff undertake some if not all of the proposed tasks? District staff could undertake the tasks described in the Pueblo proposal, but it would be at the expense of other established staff program responsibilities and workload commitments, particularly of the District’s Senior Hydrogeologist/Water Resources Manager. In addition, there will be periods during the ASR and monitor well installation that construction management oversight will be required around-the-clock, necessitating assistance from two field professionals operating in 12-hour shifts.

What is the rationale for per diem costs included in the Pueblo proposal? Is there potentially double counting of these costs with the hourly rates for professional services? The per diem costs apply to outside direct costs when individuals are required for overnight stays, such as during the extended around-the-clock construction management during ASR well installation. These costs would not apply or be charged during times when hourly billings do not include overnight accommodations, and accordingly, these costs are not included in the consultant’s hourly rate structure, which incorporates other overhead costs, such as office operation expenses, insurance costs, etc. It should be noted that Pueblo’s hourly rate structure is significantly less than some other consulting firms that the District has been under contract with, including consultant assistance that is currently being provided to the District on the Integrated Regional Water Management Plan (Proposition 50 grant) program. Additional information on the per diem costs is included in the letter from Pueblo (Exhibit 13-C).

Are all the meetings described in the Pueblo proposal necessary and does the District have a means to control the consultant’s time charged to such meetings? The proposal includes five formal meetings as part of the proposed work. At this time, District staff believes all of these meetings are appropriate for project planning purposes. However, should one or more scheduled meetings prove redundant or unnecessary, District staff will not authorize such meetings and the consultant will not schedule or bill the District to conduct these meetings.

Does the District have the ability to maintain the project schedule as outlined in the Pueblo proposal through performance penalties should the projected schedule lag due to failure of the consultant to meet their responsibilities? Should there be a lag in the project schedule that is due to the failure of the consultant to meet their obligated responsibilities (as opposed to a schedule lag due to other circumstances outside the direct control of the consultant), the District would have the option to assess late performance penalties, as will be described and included in the contract agreement between the consultant and the District.

IMPACT TO STAFF/RESOURCES: A significant staff effort has been expended in planning, coordinating, analyzing and overseeing work on the District’s ASR testing program in the Seaside Basin. It is intended to expand that level of effort with the implementation of the permanent Phase 1 ASR Project. Amounts to undertake the tasks described in the proposal from Pueblo Water Resources, Inc. (Exhibit 13-A) are included in the MPWMD Fiscal Year 2006-2007 budget (Goal: Augment Water Supply, Objective 1-2-1 A., page 15 of June 22, 2006 adopted budget).

EXHIBITS

13-A Proposal from Pueblo Water Resources, Inc.

13-B Letter from Jeffrey Damron, Padre Associates, Inc.

13-C Letter from Stephen Tanner, Pueblo Water Resources, Inc.

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