Quotation for Liquid Chlorine

The Works and Utilities Committee recommends:

 (1)the adoption of the report dated June 16, 1998, from the Chief Financial Officer and Treasurer and the Commissioner of Works and Emergency Services, subject to amending the period of the contract to end on June 30, 1999; and

(2)that in the event the market prices for chlorine change for the suppliers in 1999, the Chief Financial Officer and Treasurer and the Commissioner of Works and Emergency Services be requested to report back to the Works and Utilities Committee on the impact to the suppliers.

The Works and Utilities Committee reports, for the information of Council, having referred the entire matter and the issue of pricing to the City Auditor, with a request that he submit a report to the appropriate committee on the issue of chemical pricing.

The Works and Utilities Committee submits the following joint report (June 16, 1998) from the Chief Financial Officer and Treasurer and Commissioner of Works and Emergency Services:

Purpose:

The purpose of this report is to advise the results of the Request for Quotation for the supply and delivery of liquid chlorine, used as a disinfecting agent in drinking water by the Water Supply Division at the F.J. Horgan Filtration Plant, the R.C. Harris Filtration Plant, the Island Filtration Plant, and the R.L. Clark Filtration Plant; and for chlorination of final effluent by the Water Pollution Control Division at the Humber Treatment Plant, the Highland Creek Treatment Plant and the Main Treatment Plant, for the period ending December 31, 1998, in accordance with specifications as required by the Works and Emergency Services Department, and to request the authority to award a contract to the recommended bidders.

Funding Sources:

Funds are available in the appropriate accounts for this project.

Recommendations:

It is recommended that:

(1)the quotations as noted below for the supply and delivery of liquid chlorine, used as a disinfecting agent in drinking water by the Water Supply Division at the F.J. Horgan Filtration Plant, the R.C. Harris Filtration Plant, the Island Filtration Plant, and the R.L. Clark Filtration Plant; and for chlorination of final effluent by the Water Pollution Control Division at the Humber Treatment Plant, the Highland Creek Treatment Plant and the Main Treatment Plant, for the period ending December 31, 1998, in accordance with specifications, be accepted, being the lowest quotations received:

(a)Netchem Incorporated for approximately 1,165 tonnes in 907.2 kg containers in the amount of $1,115,662.25 including Goods and Services Tax and all other charges (Ontario Retail Sales Tax exempt); and

(b)Prairiechem Incorporated for approximately 336 tonnes in 49.89 tonne rail cars in the amount of $152,796.00 including Goods and Services Tax and all other charges (Ontario Retail Sales Tax exempt);

(2)the appropriate officials be authorized to complete the necessary contract documents; and

(3)the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer submit a further report to the next meeting of this Committee with regard to a possible revision to the period of the contract.

Council Reference/Background/History:

Eleven firms were invited to submit quotations; five bids were received as summarized below for the supply and delivery of liquid chlorine, used as a disinfecting agent in drinking water by the Water Supply Division at the F.J. Horgan Filtration Plant, the R.C. Harris Filtration Plant, the Island Filtration Plant, and the R.L. Clark Filtration Plant; and for chlorination of final effluent by the Water Pollution Control Division at the Humber Treatment Plant, the Highland Creek Treatment Plant and the Main Treatment Plant, for the period ending December 31, 1998, in accordance with specifications as required by the Works and Emergency Services Department.

Comments and/or Discussion and/or Justification:

The following is a summary of the prices submitted for the supply and delivery of Liquid Chlorine,

Quotation No. 6606-97-00309:

(A) approximately 1,165 tonnes in 907.2 kg containers

(B) approximately 336 tonnes in 49.89 tonne rail cars

Price Per Tonne, Delivered,

Excluding Taxes *

Firm Name(A)(B)

 Netchem Incorporated$ 895.00No Quote

Welland Chemical Limited$1,040.00No Quote

HCI Stanchem Incorporated$1,040.00No Quote

Prairiechem IncorporatedNo Quote$ 425.00

PCI Chemicals Canada IncorporatedNo Quote$ 427.60**

* Above prices are subject to 7 percent Goods and Services Tax, Ontario Retail Sales Tax Exempt.

** Adjusted price including demurrage charge (which is incurred when rail cars are retained by the Works Department for longer than 15 days).

The Commissioner of Works and Emergency Services has evaluated the quotations and advises that considering the average retention time of 47.6 days per rail car (based on 1997 figures), the actual price from PCI Chemicals Canada Incorporated would be $427.60 per tonne which includes the bid price of $395.00 per tonne for the supply and delivery of chlorine and $32.60 per tonne demurrage charge on the rail car and would therefore be higher than Prairiechem Incorporated's bid of $425.00 per tonne.

As a first time bidder for the supply of chlorine to the Works Department, Netchem's ability to deliver with emphasis on product quality, safety and security of supply needed to be fully assessed. Concurrent with the evaluation of the quotations received for the supply of chlorine, unusual problems were noted in equipment used in the application of sulphur dioxide at the R.L. Clark Filtration Plant and the R.C. Harris Filtration Plant. The product used at the time of this problem had been supplied by Netchem Inc. With full recognition that the chlorine proposed for supply by Netchem is a different product from a different manufacturer, the importance of fully investigating any new sources of supply was nevertheless highlighted, given the severe consequences of any compromise in chlorine feed to public health. The impact of sulphur dioxide feed problems would be a more noticeable chlorinous taste in the treated water whereas chlorine feed problems may result in inadequate disinfection of water. This due diligence led to further unfortunate but necessary delays in recommending a supplier for our 1998 requirement. As a result, it is anticipated that deliveries from the recommended supplier would not start prior to the middle of June 1998, and a revised estimate of annual requirements is shown in this report.

The period stated in the Request for Quotation for this requirement was for the year 1998, a twelve-month period ending December 31, 1998, which is the typical length of the contract awarded for this requirement. Given the circumstances outlined above, further review is necessary to determine if the contract period and the corresponding quantities of this commodity contracted for, should be revised to reflect the delays in evaluation as detailed above. This matter will be reviewed with staff of Works, Purchasing and Materials Management and Legal Services, and a further report will be submitted to the next meeting of this Committee in this regard.

The Manager, Fair Wage and Labour Trades Office, has reported favourably on the firms recommended.

Conclusions:

This report requests authority for the appropriate officials to complete the necessary contract documents for the supply and delivery of liquid chlorine, used as a disinfecting agent in drinking water by the Water Supply Division at the F.J. Horgan Filtration Plant, the R.C. Harris Filtration Plant, the Island Filtration Plant, and the R.L. Clark Filtration Plant; and chlorination of final effluent by the Water Pollution Control Division at the Humber Treatment Plant, the Highland Creek Treatment Plant and the Main Treatment Plant for the period ending December 31, 1998, in accordance with specifications as required by the Works and Emergency Services Department to the lowest bidders, Netchem Incorporated in 907.2 kg containers in the amount of $1,115,662.25 including Goods and Services Tax and all other charges (Ontario Retail Sales Tax exempt), and Prairiechem Incorporated in rail cars in the amount of $152,796.00 including Goods and Services Tax and all other charges (Ontario Retail Sales Tax exempt).

Contact Names:

Lou PaganoHiroshi Taniguchi

Director, Purchasing andDirector, Water Supply Division

Materials Management DivisionTelephone: 392-8220

Telephone: 392-7312

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The Works and Utilities Committee reports, for the information of Council, having also had before it during consideration of the foregoing matter the following communications:

(1)(June 16, 1998) from Mr. Jassie Khurana, Netchem Inc., expressing concerns with respect to the delay in the award of the contract for the supply of liquid chlorine to Netchem Inc.; and

 (2)(June 17, 1998) from Mr. Harv Beazley, Regional Sales Manager (Ontario), HCI Stanchem Inc., stating that there are serious omissions within the report respecting the quotation for liquid chlorine supply.

Mr. Paul Khurana, President, and Mr. Jassie Khurana, Government Relations, Netchem Inc., appeared before the Works and Utilities Committee in connection with the foregoing matter.