The city’s effort to equip the Centennial Recreation Center with
solar power continues to be complicated by unexpected and uncertain
external factors, as the council split a vote to reject the most
recent bids Wednesday.
The city’s effort to equip the Centennial Recreation Center with solar power continues to be complicated by unexpected and uncertain external factors, as the council split a vote to reject the most recent bids Wednesday.
The council, acting as the Morgan Hill Redevelopment Agency board of directors, voted 3-2 to reject the most recent bids on the $2.5-million project that will install carports with solar panels throughout the parking lot of the CRC on West Edmundson Avenue. Key to the decision was a complaint from Fresco Solar, one of the losing bidders – and possibly the only qualified Morgan Hill company that showed interest in the project – which misunderstood the city’s instructions for submitting their qualifications and a proposal.
Voting against the motion to reject all bids were Mayor Steve Tate and Councilman Larry Carr, who were worried that rebidding the project to accommodate a local company that claimed it could deliver the same project at a better deal might set a bad precedent, and influence future contracts.
In favor of the rejection were council members Rich Constantine, Marilyn Librers and Gordon Siebert, who thought that taxpayers should be given a better opportunity to get the best deal at the best cost, and the fast-tracked process for selecting the recommended contractor – Cupertino Electric – might not have provided that opportunity.
“I believe the process was fair, but I think (Fresco) made a mistake,” Constantine said. “Because they made a mistake, I don’t want to punish the taxpayer. If I thought we were giving an unfair advantage to a company I wouldn’t have done it. If some other companies can shed some dollars off their bid that’s OK. Ultimately the taxpayers win, and that’s my reasoning” for rejecting the bids.
The solar power project came back to the council after Borrego Solar, the contractor unanimously selected for the project last month, backed out. That company determined that the project had morphed from the original proposal for a power purchase agreement “into more of a straight agreement to purchase the system itself,” Morgan Hill program administrator Tony Eulo said – and the company was not interested in such an arrangement.
The RDA-funded project was still on a fast track because of the uncertainty of the state’s budget, which may result in the elimination of the agency and a loss of local control over the money that would otherwise finance the solar power contract. So city staff only had a few days to send out requests for qualifications and bids to a network of area solar power companies, evaluate the proposals and make a recommendation to the council, Eulo explained.
Staff recommended Cupertino Electric to supervise the project, at a cost of $2.5 million. The project would offset about $115,000 per year in electricity costs at the CRC, so the project would eventually pay for itself at a rate of 4.56 percent, Eulo said.
On the eve of Wednesday’s council meeting, hours after staff announced its recommendation, Sean Kenny, CEO of Fresco Solar, sent them an email saying he was “shocked” at the recommendation. Kenny said his proposal included a team of four solar, construction and engineering companies that have vast and proven experience in such projects, and their bid “would have been substantially lower,” “There’s a lot of money going to be spent that doesn’t need to be spent,” Kenny said.
Eulo explained he and other bid evaluators followed strict rules for such a selection process, and they were unaware of the other companies’ involvement because it was not included on paper in the RFQ response. Instead, it was contained on an enclosed CD, which is not allowed by those rules. Staff disqualified the company from the process “with a heavy heart,” he said.
All five council members agreed that city staff followed the rules in selecting the best available deal, that qualified local companies should be preferred in the selection of contractors, and that the taxpayers’ interest comes first. At the root of the latest plot twist is the hurried timing of the process, even though a rebid will also be rushed due to uncertainty over the state budget.
“I thought I needed to hear from my colleagues what they were finding that (showed) that rejecting the bids was the only option we had,” Carr said in explaining his vote. “We were concerned about setting a precedent about rejecting a bid if someone just didn’t understand the process. I was trying to set the bar a little bit higher so we’re not setting a precedent. My colleagues said they thought the process was rushed, and that’s a legitimate reason.” He added that perhaps the dilemma will lead the council to develop ways to help local firms “compete better” for city or RDA contracts.
Council members rejecting the bids noted that localism was only a minor factor in their vote, and the primary reason was the need to save tax dollars. Constantine noted whether the funding source is the city’s general fund or the RDA, “It’s still taxpayers’ money. I don’t want to hurry and just spend the money as if it’s nothing.”
Eulo said the city could resend the requests for proposals by the end of this week, set a deadline and make a new recommendation on the project in time for the council’s April 27 meeting.
