CITY OF CHICAGO - DEPARTMENT OF PROCUREMENT SERVICES FRIDAY, JUNE 22, 2012 ADDENDUM NO. 2 REQUEST FOR PROPOSAL ( RFP ) FOR. Post Payment Energy Audit

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1 CITY OF CHICAGO - DEPARTMENT OF PROCUREMENT SERVICES FRIDAY, JUNE 22, 2012 ADDENDUM NO. 2 To REQUEST FOR PROPOSAL ( RFP ) FOR Post Payment Energy Audit SPECIFICATION NO.: For which Proposals are scheduled to be received no later than 4:00 p.m., Central Time on Tuesday, June 26, 2012 (pursuant to the Request for Proposal advertised April 23, 2012) in the Department of Procurement Services, Bid & Bond Room (Room 301 of City Hall). Respondent must acknowledge receipt of this Addendum No. 2 in the Cover Letter of its Proposal AND should complete and return the attached Acknowledgment by facsimile to Attn: Altha Riley, Contract Negotiator This document contains: I. Notice of Revisions and Changes; II. Answers to 23 questions submitted for clarification of the RFP; and III. Addendum Receipt Acknowledgment. The information contained in this Addendum No.2 is incorporated by reference into the original Request for Proposal (RFP) issued on April 23,

2 FRIDAY, JUNE 22, 2012 ADDENDUM NO. 2 To REQUEST FOR PROPOSAL ( RFP ) FOR Post Payment Energy Audit SPECIFICATION NO.: For which proposals are due in the Department of Procurement Services, Bid and Bond Room, Room 301, City Hall, 121 N. LaSalle Street, Chicago, Illinois 60602, at 4:00 p.m., C.T., Tuesday, June 26, The following revisions/changes will be incorporated in the above-referenced RFP document. All other provisions and requirements as originally set forth remain in full force and are binding. RESPONDENT SHOULD ACKNOWLEDGE RECEIPT OF THIS ADDENDUM IN THE COVER LETTER SUBMITTED WITH YOUR PROPOSAL. SECTION I: NOTICE OF REVISIONS/CHANGES REVISION DESCRIPTION 1 The following exhibits have been added to the RFP and are located at energyaudit-spec html: Exhibit 8 City of Chicago Commonwealth Edison Company Franchise Agreement Exhibit 9 City Facilities May 2012 Exhibit 10 Conoco Contract 2 The due date for receipt of proposals has been postponed. The new proposal due date is Monday, July 9, 2012 at 4:00 p.m., Central Time. 3 Exhibit 1, Scope of Services, has been deleted in its entirety and replaced as follows: 2

3 EXHIBIT 1 SCOPE OF SERVICES I. Description of Services There are two components to this scope of services: Funds Recovery Account Reconciliation Each component is to be priced separately as described in Exhibit 2 Pricing. Details of each component are described below. 1) Funds Recovery The Consultant will assist the City of Chicago in recovering funds paid in error for any energy use, transmission, and/or administration. Reasons for overpayment may include, but are not limited to: - Charges at incorrect rates; - Inaccurately applied late fees; - Duplicate billing; - Inaccurate monthly reconciliations of the previous month s actual usage to billed estimated usage; - Inaccurate meter readings; - Billing period overlaps (overlapping dates); - Incorrectly applied tax charges. Expectations for funds recovery activity: - The Consultant will conduct a thorough review of all invoices for the appropriate vendors and timeframes as permissible per the respective contract and state law. - The Consultant should not review and will not engage utilities in discussions concerning invoices less than two (2) months since paid. - The Consultant will coordinate with utilities as necessary to attain required information. - The Consultant will communicate potential refund opportunities to the appropriate City of Chicago personnel upon discovery of any potential refund. - The Consultant will keep a detailed record of all refund opportunities identified. - The Consultant must deliver bi-weekly reports, including but not limited to, addressing the number of recovery opportunities being reviewed by supplier, dollar amount of refunds being pursued, proposed approach for recovering funds, and total refunds to date. 3

4 - - The Consultant will not recover funds without the explicit prior written approval of the appropriate City of Chicago personnel, to be exercised in the City's sole and absolute discretion. - Consultant is expected to provide clear analysis, information and documentation necessary to substantiate that funds were paid in error, consistent with the appropriate contract. 2) Account Reconciliation The Consultant will conduct a reconciliation activity for the City of Chicago s current natural gas and electricity accounts with the following objectives: a) Ensure that only active facilities have open utility accounts. b) Reconcile all meters to the appropriate accounts and locations (addresses). c) Determine a balance owed by each party for each account. Expectations for account reconciliation activity: - The Consultant will review each open utility account to ensure it supports an active City of Chicago location, whether leased or owned. - The Consultant will note the utility supplier and account type for City of Chicago locations, whether leased or owned. - The Consultant will create a list of any utility account and meters that do not reference an active City of Chicago location or any account with consistently estimated zero and/or flat usage and provide it to the appropriate City of Chicago personnel. The Consultant will also create a list of any utility account that based on their experience or judgment warrants additional investigation by the Consultant and/or the City of Chicago. This list will also include the reason for inclusion on said list. - The Consultant will discuss any reconciliation opportunities with the appropriate City of Chicago personnel so the appropriate accounts can be closed or transitioned to the other Departments. - The Consultant will produce a deliverable report indicating which meters should be transitioned between which accounts. - Upon the completion of the funds recovery activity and the appropriate reconciliation items noted above, the Consultant will tender a deliverable report stating the disposition of each natural gas and electricity account. More specifically, this report would detail, an amount(s), if any, owed by or to the City of Chicago or energy supplier, for each current natural gas and electricity account. The Consultant must have a single point of contact (designated account manager) for the City to support the scope of services. City of Chicago actions and provided documentation: 4

5 - The City of Chicago will provide a main point of contact at the Department of Fleet and Facility Management. - The City of Chicago designee will oversee this project and approve the recuperation of any and all funds in advance of any recovery efforts made by the awarded Proposer. - The Consultant will be provided with the City s energy invoices directly or by access to the appropriate utility contacts. If no electronic invoices exist, the City will provide paper invoices where appropriate. - The City of Chicago will provide a list of all active and recently deactivated (inactive) facilities. - The City of Chicago will provide a signed authorization letter for the Consultant to seek information from utilities that have supplied energy to the City of Chicago. - The Consultant may be asked for assistance with coordination of refunds. All refunds from utilities will be issued in the form of a credit to a future invoice or a check to the City of Chicago. Upon confirmation that refunds have been received, Consultant will issue an invoice to the City of Chicago as described in Exhibit 2. II. Order of Magnitude There are approximately 421 active facilities being supplied energy (electricity and/or natural gas) by ConocoPhillips and/or Exelon through 2FM. At a minimum, Proposer will review all invoices issued from 2010 through 2012 and any older as authorized for refund by the utility. Additional companies, such as MidAmerican Energy, have supplied energy to the City of Chicago in the past. There are 11 leases that have been canceled in the last two (2) years and eight (8) buildings have been sold or demolished since Annual spend for the city s energy requirements is approximately $94M. The City of Chicago does not have a central repository of invoices. Consultant should expect to retrieve invoice and payment information from various sources, including but not limited to, City of Chicago systems, the energy supplier s portal/website and through provided hard copy information. INTENTIONALLY LEFT BLANK 5

6 4 Exhibit 2, Pricing, has been deleted in its entirety and replaced as follows: EXHIBIT 2 PRICING The City of Chicago intends to compensate the Consultant via a commission rate structure for funds recovery and via a fixed rate for the reconciliation activity. 1) Compensation for Funds Recovery The Consultant shall invoice the City of Chicago based on the value of funds confirmed as recovered. Proposers must propose a percentage commission that will compensate for its services, inclusive of all costs, overhead, and profit. Consultant cannot invoice for future savings. Any additional assumptions and definitions as to how funds recovered will be defined should be noted in the proposal. If the City was overcharged or otherwise overpaid for a deactivated facility account, then the Consultant may invoice the City for compensation at the commission rate structure based on the value of funds confirmed as recovered by the City. Consultant will invoice for refunds captured after the City of Chicago (accounts receivable) has validated that the funds have been received. The City of Chicago will process payment to Consultant upon 60 days receipt of invoice. Errors that the City has already identified, started pursuing, or routinely identifies during the normal course of business cannot be counted by Consultant as funds recovered and therefore cannot be a source of compensation for the Consultant. The City of Chicago may decide not to pursue refund opportunities at certain utilities if, in its sole discretion, it deems such action as appropriate. It is at the City s sole discretion to engage in refund discussions with utilities based on the review conducted by the Consultant. The City of Chicago, however, will act in good faith to promptly engage in refund discussions when appropriate but may choose to approach utilities upon completion of the Consultant s research and assessment as to consolidate discussions. 6

7 COMMISSION RATE: 2) Compensation for Reconciliation Consultant should propose a fixed fee for the reconciliation component to be invoiced upon the onset of services. The City of Chicago will process payment to Consultant upon 60 days receipt of invoice. The proposed fixed fee will be all inclusive of labor, overhead and any other costs to perform the reconciliation scope of services. Proposed fixed fee should not account for services to be performed as part of the funds recovery component of the scope of services and should be proposed exclusively to support reconciliation efforts. In the event that Consultant does not meet all expectations for the account reconciliation activity as described in Exhibit 1 Scope of Services by the completion of the term as described in Section 2.2 of the RFP, the City of Chicago is entitled to a refund of the fixed fee or a deduction of the amount of the fixed fee from the funds recovery activity as appropriate and feasible. FIXED FEE The City of Chicago is willing to entertain alternative pricing approaches or structures which can be demonstrated to be of benefit to the City. In order for any such alternative approaches to be considered, Proposer must first respond to the pricing format requirements outlined herein. Any proposed alternative must clearly explain the structure, any assumptions made regarding the structure, and the estimated benefit to the City for using the alternative method. If a Proposer bids a different structure, and the City wishes to entertain this structure, it will solicit proposals from all Proposers based upon that structure. INTENTIONALLY LEFT BLANK 7

8 Addendum #2, RFP for Post Payment Energy Audit, Specification Number Section II: Answers to Questions submitted for Clarification on RFP Question 1) If an error is identified by the Consultant, but the City chooses not to pursue the refund and/or correction of the error, will the City still pay Consultant's original fee? 2) The Term of Services, Section 2.2, states that all services must be completed within one (1) year of contract execution. Answer No. The City reserves the right to pursue, or not, specific identified errors. The City will only pay the Consultant for recovered (i.e. identified and received) funds. The City intends to work collaboratively with the Consultant and is willing to discuss prioritization of work, whether certain leads should be further investigated etc. to maximize the Consultant s efforts. Due to the scope changes described in the revised Exhibit 1, Scope of Services and Exhibit 2, Pricing, of this addendum, this question is no longer applicable. All account reconciliation activity will be covered under the Consultant s fixed fee. Exhibit 2, Pricing, states that the Consultant can invoice at the commission rate for future savings only when a deactivated facility account is reconciled by the Consultant saving the City of Chicago from paying to future invoices for a deactivated facility. In this instance, twelve (12) months of calculated savings can be invoiced. If deactivated facilities are reconciled by the City after the one (1) year period for completion of services, is it expected that the Consultant may bill the City for the future savings in accordance with the City s quoted statement in Exhibit 2, even if that billing occurs after the one (1) year period for all services to be completed? 8

9 Addendum #2, RFP for Post Payment Energy Audit, Specification Number Section II: Answers to Questions submitted for Clarification on RFP Question 3) As City energy invoices are not located in a central repository and utility providers typically take various time periods (sometimes up to 90 days) to provide billing information, does the Term of Services, Section 2.2, one (1) year contract service period begin upon receipt of all information necessary to conduct the audit as requested by the City? Are there opportunities for contract extensions or renewal periods? If so, under what circumstances? 4) Is there a cap on the payment of commissions under this project? What is the source of funds for payments under this Agreement as noted in Section 15, Page 4-9? 5) Are the City s street lights metered or unmetered? Answer The contract service period begins once the contract is fully executed by both parties. As described in Section 2.2 of the RFP, the service shall be performed within one (1) year of contract execution. There is no cap on commission payments. The Consultant will be paid after the identified funds (paid in error) have been fully recovered by the City. At that time, the Consultant would be paid according to the agreed upon commission rate and other applicable terms. The City has a combination of metered and unmetered street lights although most are unmetered and billed at a flat rate per the Exelon contract. The Exelon contract is publically available and online at: cyselection/begin.do Enter the link into your browser; Select City of Chicago (Vendors, Contracts, Disclosures, Bid Tabulations and Payments) ; 9

10 Addendum #2, RFP for Post Payment Energy Audit, Specification Number Section II: Answers to Questions submitted for Clarification on RFP Question Press Continue ; Type Exelon in the search field; Press Search for results. Answer 6) How many City streetlights are covered under this project? If an inventory of City streetlights exists, please provide. 7) How many City traffic signals are covered under this project? If an inventory of City traffic signals exists, please provide. 8) Does the City use a third-party to manage streetlights? 9) Does the City use a third-party to manage traffic signals? 10) Does the City receive any franchise or ordinance consideration from the electric utility? Please provide a copy of the City s franchise agreement(s) if applicable. The City s electric bills are broken out by facilities, street lights, traffic lights and street furniture (e.g. bus shelters). The focus of this RFP is on the City s facilities-related and ad hoc (e.g. water fountains, bridges etc.) expenses. Should street lights, traffic lights, street furniture and/or any other related fixture be included in the scope of work, the relevant information (e.g. number, type, etc.) will be provided as appropriate. See Answer to Question #6. No, the Chicago Department of Transportation (CDOT) manages the City s street lights, traffic lights, street furniture and related fixtures. The Department of Fleet and Facility Management (2FM) pays the bills for CDOT s accounts, but does not manage their asset portfolio. See Answer to Question #8. No. The City receives an electricity use tax and an infrastructure maintenance fee from ComEd, the delivery service company serving Chicago. The City s Franchise Agreement with ComEd required the utility to pay the City a franchise fee. However, the Illinois General Assembly enacted the Electricity Infrastructure Maintenance Fee law which, provides, in part, that an electricity deliverer paying an infrastructure maintenance fee is not required to pay a franchise fee for use public rights of way. A copy of the City-ComEd Franchise Agreement, expiring in 2020, can be found at 10

11 Addendum #2, RFP for Post Payment Energy Audit, Specification Number Section II: Answers to Questions submitted for Clarification on RFP Question 11) Does the City receive any franchise or ordinance consideration from the gas utility? Please provide a copy of the City s franchise agreement(s) if applicable. 12) Is the City negotiating or renegotiating any contracts for renewal of existing services, new services, or replacement services? 13) Is the City planning any changes to any contracted service or any provider in the next 12 months? 14) Does the City have internal staff that currently reviews City energy invoices and if so, how will those staff members interface with the Consultant. Answer as Exhibit 8, Franchise Agreement. No. Peoples Gas provides gas service in the Chicago pursuant to an 1855 State Charter. The City imposes an 8% tax on Peoples Gas. For information regarding Peoples tariff, please visit: The City is always pursing viable opportunities to reduce costs and increase efficiency. At this time, the City is discussing cost reduction opportunities with Exelon. For the purposes of this engagement only past and current contracts are part of the RFP s scope. See Answer to Question #12. Yes. There are currently internal staff members who reconcile, prepare and process payment to the various utilities. As deemed appropriate by 2FM, the Consultant will be introduced to and provided the necessary access to materials and persons so Consultant can complete the scope of work. City personnel will not report to Consultant, as described in section 48 of Exhibit 4 City of Chicago Standard Contract Terms and Conditions. The Consultant will also be provided a central point of contact from the Bureau of Energy and Capital Planning (2FM) to help facilitate any necessary conversations, access etc. In the case of natural gas, Nordic Energy, the City s energy manager, currently aggregates, reconciles and produces consolidated invoices to the City for both Peoples Gas and Conoco. The Consultant would be expected to work with Nordic; the utility/supplier and/other entities as necessary and appropriate. 11

12 Addendum #2, RFP for Post Payment Energy Audit, Specification Number Section II: Answers to Questions submitted for Clarification on RFP Question 15) Does the City have an inventory of the approximately 421 facilities? Please provide if available. Answer The list of City facilities can be found at as Exhibit 9, City Facilities, May The most updated facility list will be provided to the Consultant from internal systems after the contract Is fully executed. 16) How many electric accounts comprise the City s electric service? Please provide details as to type of account, size, etc. 17) What is the amount in dollars spent and kwh consumed by the City in the last fiscal year for electric service? Please break down by provider/vendor. 18) What is the amount in dollars spent and therms consumed by the City in the last fiscal year for natural gas service? Please break down by provider/vendor. 19) How many natural gas accounts comprise the City s natural gas service? Please provide details as to type of account, size, etc. The City has approximately 517 accounts with Exelon with FY 2011 usage of 881,396,489 kwh. Additional information about the type, size (usage) and will be provided to the Consultant after the contract is fully executed. Natural Gas Electricity 2011 budget $ 24,616,643 $ 71,133,290 # Accounts Usage 42,088,343 therms 881,396,489 kwh Supplier/Vendor Conoco/Peoples Gas Exelon/ComEd See Answer to Question #17. The City currently uses only one supplier for natural gas, Conoco Phillips (Conoco). For 2011, usage was approximately 42M therms and the budget was $24M for both Peoples Gas and Conoco. The City has a number of natural gas-related accounts; broken out into retail and transportation master accounts. ~90% of the City s gas consumption is under transportation accounts and those accounts are referred to as contracts. There are a number of sub-accounts that comprise any given contract. There are six (6) contracts and approximately 488 accounts with Peoples Gas. 12

13 Addendum #2, RFP for Post Payment Energy Audit, Specification Number Section II: Answers to Questions submitted for Clarification on RFP Question 20) Please provide a copy of the City s agreements with the providers including ConocoPhillips and Exelon. Answer The Conoco contract can be found at as Exhibit 10, Conoco Contract. The Exelon contract is publically available and can be found online at: cyselection/begin.do Enter the link into your browser; Select City of Chicago (Vendors, Contracts, Disclosures, Bid Tabulations and Payments) ; Press Continue ; Type Exelon in the search field; Press Search for results. 21) Does the magnitude / scope of this project include energy bills related to water pumping and/or wastewater treatment? 22) Please clarify the number of invoices the City pays currently each month. Yes. 2FM is responsible for the natural gas procured for the Jardine Water Filtration Plant and the City s 12 pumping stations. 2FM is not responsible for bills related to waste (sewage) water treatment as that process is managed by the Metropolitan Water Reclamation District of Greater Chicago (MWRD). At least monthly, the City makes payments using aggregated summary invoice sheets. Each summary is comprised of various accounts (usually per facility). On average the City will process 10 natural gas summary sheets and 6 electricity sheets but the number of actual invoices is typically equal to the number of accounts (~500 for each utility). For natural gas, there are six (6) contracts and approximately 488 accounts with Peoples Gas. For electricity, there are approximately 517 accounts with Exelon and there is usually one consolidated invoice from Conoco. 23) Please explain what specific errors are The City and its agents review invoices for errors as they are submitted. The City does not 13

14 Addendum #2, RFP for Post Payment Energy Audit, Specification Number Section II: Answers to Questions submitted for Clarification on RFP Question routinely found by the City during the normal course of business, given these errors are exempt from the commission payment. Answer routinely identify specific errors but has worked with its suppliers to resolve errors in the past. No specific errors are exempt from the commission payment. However, under the following conditions Consultant cannot submit for savings: - where unpaid (being processed) invoices may be held by the City and amidst reconciliation with Exelon, Conoco, Peoples and/or ComEd; - where recent payments (within 2 months) have been made but with the expectation that specific errors will be resolved; and, - where any systemic errors already identified by the City in recent invoices are being or are to be corrected in historical invoices. CITY OF CHICAGO DEPARTMENT OF PROCUREMENT SERVICES JAMIE L RHEE CHIEF PROCUREMENT OFFICER 14

15 CITY OF CHICAGO - DEPARTMENT OF PROCUREMENT SERVICES FRIDAY, JUNE 22, 2012 ADDENDUM NO. 2 To REQUEST FOR PROPOSAL ( RFP ) FOR Post Payment Energy Audit SPECIFICATION NO.: Consisting of Sections I III including this Acknowledgment. III. ADDENDUM RECEIPT ACKNOWLEDGMENT I hereby acknowledge receipt of Addendum No.2 to the RFP named above and further state that I am authorized to execute this Acknowledgment on behalf of the company listed below. Signature of Authorized Individual Title Name of Authorized Individual (Type or Print) Company Name Business Telephone Number Complete and Return this Acknowledgment by facsimile to: , Attn: Altha Riley, Contract Negotiator 15