HomeMy WebLinkAboutCOM 0210.007 2004-2006 ~1~~
RcvrwvaNe fncvgy !or the Ner! Generation
April 7, 2005
Bill Gray
Purchasing Agent
Purchasing Division
Department of Finance
County of Hawaii
25 Aupuni Street, Room l 18
Hilo, Hawaii 96720-4252
Subject: Barlow Response to County of Hawaii letter dated April 1, 2005 regarding answers to
questions concerning our proposal for RFP No. 2146
Dear Mr. Gray,
Barlow Projects has proposed a workable, proven, cost effective solution to the County of~
Hawaii's solid waste disposal crisis caused by the imminent closing of the South Hilo landfill.
This proposed solution meets the intent of the spirit of the RFQ in almost every respect and
offers the County a tipping fee for services in line with alternatives. Barlow does still wish to be
considered for this project and we sincerely believe that a mutually beneficial deal could be
negotiated with the County if given the opportunity. Following are our responses to the
questions you faxed us on 4/1/05 regarding our answers to your questions about our proposal for
County of Hawaii RFP No. 2 L46:
Section I -Qualifying Items
Ouestion 2: Performance Bond -Barlow has complied with the requirement that the facility be
privately financed. As a result, ownership must be clearly defined for under IRS regulations
and as this will be a privately financed and owned facility up until the time of transfer, we do
not feel that the requirement for a Contract Performance and Payment Bond applies. As
previously stated, Barlow will provide the County with any required security for the services
provided by the privately owned and operated facility including the $5 Million performance
bond requested by the County in the RFP. Bazlow will either provide a surety bond for this
amount or its performance will be "otherwise secured in a manner satisfactory to the
purchasing agency" as provided for in HRS Section 103D-324. While the surety bond is one
form of security that will be considered, Barlow must have the opportunity to pursue
alternative forms of security such as Irrevocable Letters of Credit due to the current volatility
of the surety markets.
Question 5: As stated above; Rarlnw is willing to work with the Co~:n!y ±o provide an
alternate form of security, or the $5 Million Performance Bond requested by the County in
the RFP. Barlow has strong financial backing and we are confident that, if given the chance,
2000 Vermont Drive, Fort Collins, Colorado, USA
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we can negotiate some mutually agreeable solution to this requirement. This issue cannot be
further clarified until after a definitive contract is negotiated.
Section II -Pricing Proposal
Barlow has provided an updated Form A3 with the subcategories for items A-G filled in.
This form is included with this document as Exhibit AAA. Barlow has made an attempt to
include all our costs in the limited categories provided on the County's form. However, the
structure of the form does not lend itself to breaking down the project costs as they were
developed. While we have attempted to provide you with the information requested in the
line items listed on the form, each line item is not a stand alone category and should not be
taken as a firm fixed price. What we are guaranteeing is the lump sum price listed in line H,
not each individual category.
Question This proposal includes all State and Federal sales, use and excise taxes during
operation and construction.
Question 2: All expenses, including debt service, are covered by the fec Barlow would
charge the County.
Question 3: The price for electricity sold to HELCO will be negotiated with HELCO once we
have a contract with the County of Hawaii. In our curcent estimate, energy revenues aze
based on selling an average of 3.5 megawatts to HELCO at $.11/KwH. We are comfortable
that it will he enough, along with revenues from tipping fees, tp cover all our expenses for
operating, maintaining and paying debt service expenses on the facilities.
Question 4: For a privately owned facility, access t SP will have a minimal impact on ~
the tipping fee, in the range of $3/Ton, because the us tax exempt debt will significantly
reduce the value of depreciation to the facility owner.
Concerning your comment about leveraged [ease arrangementst Barlow's financing
company believes that a leveraged lease is the most cost effective form of
financing for a
privately owned project of this nature.
Question 7: Bazlow believes that 6 trucks making 2 trips each per day for a total of 12 trip
total will be adequate for Phase I of the operation and that 2 trucks making 1-2 trips per day
for a total of 3-4 trips will be adequate once the Waste Reduction Facility (WTE) is built.
We have provided an estimate of waste quantities, trips necessary and costs in Table A and
Table B at the end of this document.
Question 8: Barlow agrees that we will be responsible -for the disposal of everything that
comes to the Re-Load facility with the exception of hazardous wastes and wastes that cannot
be legally disposed in a RCRA Subtitle D facility. Barlow will establish a regular waste
screening system for incoming loads, and will reject loads containing hazardous materials
from any source including County Transfer Station containers. Barlow wants it to be clear
that we are not offering to operate a hazardous or radioactive waste disposal center. Because
of the unique nature of the County's Transfer Stations, Barlow sees the potential
for uncontrolled dumping of hazardous materials. It will be Barlow's responsibility to screen
incoming waste for unacceptable materials, but it is the County's job to educate the public;
haulers and Transfer Station Attendants about what waste can and cannot enter the F.HRSS.
2000 Vermont Drive, Fort Collins, Colorado, USA
PH: (9'70) 226-8557 FAX: (970) 226-8559
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Haulers that repeatedly attempt to dispose of unacceptable materials at the facility will
risk the loss of disposal privileges. Barlow will discuss special arrangements for accepting
and disposing hazardous materials that are identified in transfer station trailers. Barlow will
expect the County to cooperate in informing, advising and possibly taking legal action
against those parties that continue to bring such waste (other than normal household
hazardous waste) to the facility. Hazazdous materials that escape screening and cannot be
placed with the hauler will be disposed by Barlow.
puestion 9: The Barlow proposal already discusses costs and pricing associated with
operating the Re-Load Building. We do not believe we have enough information about the
County of Hawaii's costs for trucking waste to be able to make a meaningful comparison of
Barlow's costs and the County's costs. However, we have provided an estimate of costs in
Table A and Table B at the end of this document. If the County wishes to meet with Barlow
to discuss this face to face we are certainly willing to look for areas in which we could
achieve "cost savings", including having the County truck the waste (or ash) to landfill.
Section III-Technical Issues
Question 1: Estimates we have from the DOH are that it could take them up to 18 months to
review a Covered Source Permit. This process will occur concurrently with other permitting
processes, as shown in Table C at the end of this document, but could potentially delay the
start-up of the WTE facility if it does indeed take this long. We would strongly encourage
the County and State of Hawaii to do anything within its power to expedite this permit
review process.
Question 2: In Exhibit DD of our previous submittal, we outlined typical Boiler outages.
These are two 5 day outages per Boiler per year. Because only one line will be down for .
maintenance at a time, during those outages 50% of the waste normally processed would
need to be diverted to landfill. Under normal circumstances, the quantity of this waste
should not be more than 2000 tons a year, spread over 4 occurrences. This amounts to an
extra 25 trucks per quarter, or 5 trucks per day during the 5 day outage.,
uestion 3_ The cost of a dump condenser can be added to our proposal cost (and fee) if the
County feels that this is important.
Question 5: Barlow would be happy to discuss our re-design and proposed operation of the
Re-Load Building when we meet.
Question 12: Barlow provided a very rough estimate of water use and discharge with the
proposal. That estimate showed a net excess water discharge of 50 gallons per minute. The
primary sources are cooling tower blow-down and RO waste. The discharge water quality is
likely to be quite good, but will depend on the quality of incoming water, and frequency of
blow-down activities required for operation of the equipment.
The method of discharge for this waste will be determined during the final design stage, and
:.:11 be dependent cr, local actors including: local water quahiy considerations, connection
distance to storm drains or sanitary sewers, subsurface geology at the site, and other site
specific factors. Options that are currently under consideration include deep injection,
2000 Vermont Drive, Fort Collins, Colorado, USA
PH: (970)226-8557 FAX: (970)226-8559
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industrial wastewater discharge to the storm drainage system, industrial wastewater dischazge
to the sanitazy sewer, TDS removal and recycling, dispersion in a dispersion pit, or
dispersion in a septic leach field.
Barlow is aware that certain options for wastewater disposal may be difficult due to the
unique environment, previous proposals, location of infrastructure and proximity to the South .
Hilo Landfill. We are fully prepared to address wastewater discharge during the EIS and
permitting phase of the WTE development.
Section IV -Other Questions
puestion 3: Barlow believes that the estimate we received from Isemoto, a respected
contractor on the island of Hawaii, is a good estimate. We can certainly discuss strategies for
expediting the process in a meeting with all parties, but the best way for the County to get
this facility built and operational in an expeditious manner is to award the contract as quickly
as possible.
puestion 4: Barlow is confident that a mutually acceptable contract can be arrived at.
Question 5: Barlow has already commented on our inability to provide the requested
contract performance and payment bond. However, Barlow is willing to work with the
County to provide an alternate form of security, or the $5 Million Bond requested by the
County in the RFP.
Question 6: The County has requested, and Barlow has complied with the requirement that
the facility be privately financed. As a result, ownership must be clearly defined under IRS
regulations. The Internal Revenue Service regulations on leases are also very clear. We are
using a lease because it is the lowest cost form of private financing and we aze trying to
provide the County with the lowest possible cost for the services we will provide. Leases do
not allow for the property to transfer at the end of the lease at no charge. Leases do require
that the transfer is at fair market value lout they do allow an independent appraiser to
calculate what that value is before the lease is signed. Again, this needs to be done by an
independent appraiser, but based on our understanding of how the appraising process works,
we would expect this number to be 20% of the original contract price plus an inflation factor '
which we would currently put at 2%. "Phis calculation would result in a market price as low
as $14 Million for both facilities. For tax reasons this has to be done by an independent
appraiser, but it can be confirmed before the contract is signed. Therefore, the County will
know what the purchase price will be before we sign a contract.
We hope that the answers provided above meet with your satisfaction. Barlow Projects looks
forward to discussing the advantages of our proposal in person with the County of Hawaii at
your earliest convenience. Please contact us if you have any questions.
Since/r~ely,
Ronald E. Bannore
Sr. VP-Business Development
Barlow Projects, Inc.
2000 Vermont Drive, Fort Collins, Colorado, USA
PH: (970) 226-8557 FAX: (970) 226-8559
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Table A
Long Haul Staffing & Costs Position
Before Full-Time Wages Per Cost Per
Waste Reduction Technolo Em to ee Year Year
O erations Su erintendent 1 $44,832.00 $44,832.00
E ui ment O rator III 9 $34,404.00 $309,636.00
Construction E ui ment Mechanic 2 $35 700.00 $71 400.00
Welder 1 $34,404.00 $34,404.00
Subtotal $460,272.00
Frin a Benefits estimated at 35% $161,095.20
Total Lon Haul Staffin 13 $621 367.20
O erations
E ui ment annual cost 5 rs # Lease Subtotal
Truck Tractor 6 $19,382.77 $116 296.65
Refuse Trailer 8 $19,305.37 $154,442.98
Fuel 2.00/ al bulk rice Gallons
12 loads/da x 170m roundtri x 359 da s/ r/6 m 122,060 $2.00 $ 244,120
Maintenance
Truck Tractor 6 $15,000.00 $90,000.00
Refuse Trailer 8 $3,000.00 $24,000.00
Estimated Total $628 850
Estimated Lon -Haul Q tons Av 2006 - 2008 73 814
Total Lon Haul O eratin Ex enditure $1 250 226.83
2000 Vermont Drive, Fort Collins, Colorado, USA
PH: (970) 226-8557 FAX: (970) 226-8559
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Table B
Long Haul Staffing & Costs Position
After Full-Time Wages Per Cost Per
Waste Reduction Technolo Em to ee Year Year
LONG HAUL
Staffin after incinerator
O rations Su erintendent 0 $44,832.00 $
E ui ment O erator III 3 $34,404.00 $103,212.00
Construction E ui ment Mechanic 1 $35,700.00 $35,700.00
Welder 0 $34,404.00 $ -
Subtotal $138,912.00
Frin a Benefits estimated at 35% $48,619.20
Total Lon Haul Staffin 4 $187 531.20
O erations
E ui ment annualcost,5 rs # Lease Subtotal
Truck Tractor 2 $19,383 $38,766
Refuse Trailer 3 $19,305 $57,916
Fuel 2.00/ al bulk rice Gallons
3 loads/da x 170m roundtri x 359 da s/ r/5 m 36,618 $2.00 $73,236
Maintenance
Truck Tractor 2 $15,000.00 $30,000.00
Refuse Trailer 4 $3,000.00 $12,000.00
Estimated Totai E211 918
Estimated Waste Ot .tons before combustion 2009 - 2028 74 579
Estimated Waste O tons after Combustion 22,374
Total Lon Haul O eratin Ex enditure 5399 448.87
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Exhibit AAA
Updated County Pricing form A3
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li any Kim William Takaba
MoYOr UireHOr
County of Hawaii Na~~ o=d
PURCHASING DIVISION
DEPARTMENT OF FINANCE Bill Gay
25 Aupuo~ Svee[, Room t 18 • Hilo, Hawaii 96720-0252 Parehasing Agee(
(808)961-8271 Fax (808)961.8248
April 1, 2005
Mr. Ronald E. Barmore Facsimile to 970-226-8559
Senior VP - t3usiness Development Four pages ~ hard copy to follow
BARLDW PROJECTS, INC.
2000 Vermont Drive
Fort Collins, Colorado 80525
SUBJECT: REQUEST FOR PROPOSAL N0. 21%: FINANCING, DESIGN, CONSTRUCTION AND
OPERATION OF A SORT STATION AND/OR MUNICIPAL SOLID WASTE REDUCTION
FACILITY FOR THE DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, COUNTY
OF HAWAI' I
Thank you for your response to our communication dated February 16, 2005. The RFP
evaluation committee has reviewed the Information provided on March 1, 2005 for the
"Proposal to design, build, own, operate and privateyfinance a Re-L.oad Facility and
Waste Reduction Facility at the East Hawall Regions! Sort Station". At this point, given
the information provided to date, the evaluation committee is unable to recommend to
our County Council that your firm has satisfied the requirements of the RFP. They are
scheduled to confer with the Council on Wednesday, Aprit 20, 2005.
The following are further questions and comments. If you still wish to be considered,
please provide your responses no later than Fridav Aoril 8' 2005, at 4:00 a.m.
Our major rnncerns can be summarized as follows:
1. What will be the ultimate cost to the County to own the facility?
2. Will you t7e able to meet our requirement of performance bonding?
~h~h2t are roil impari< of C~i~l D(„rp~5o Revenue Ror+.ds on any tipping faPC?
The following list follows the format and order of our questions asked of you in the
February 16 letter. We need further clarification as indicated in italics for the following:
I
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Mr. Ronald Barmore, Barlow Products, LLC April 1, 2005
RFP 1246 -Reload & Solid Waste Reduction Fadlltles Page 2 of 4
I
I. Qualifying Items
Oues[ion 2: 4.5.2-Contrail Guarantees (Proposal Exhibit F). The proposal does not
substantiate the ability of the proposer or its parent to provide the guarentees
I stated in the exhibit. A performance bond is a strict requirement of the RFP.
Question 5; 4.5.4-Financial Data (Proposal Ref. Section 2, page 23). The response
is not adequate. Considering the importance of this project, some form of
performance bonding is a requirement. Please state how you will fulfill this
requirement. A perfonnanm bond is a strict requirement of the RFP.
II, Prieing Proposal
Sa as to prevent misinterpretation and inadvertent misplacement of numbers, the
pridnq proposa/provided as Exh/bit B8, submitted in response to the County's
questions of 2/16/05, shou/d be completely filled out and resubmitted. The
submittal of single figures for items A through H in Ifie Contrail Prim t3reakdown is
unacceptable. We need ro understand Ghat yrn, have mnsiderrd all of the sub-Items
listed. Cost data for the Waste Reduction faa7fty should be provided to the level of
detail submitted for the Sort/Re/oad Facility.
Question 1: Certain components of the facility may not be exempt from Federal
and/or State excise taxes during construction. Please revisitthls matter as
exclusions of this nature are not acmptab/e.
Question 2: It is not clear from the Exhibit A4, where debt service expenses are
included, Please identify.
Question 3: Please also identify the expected revenues from sale of the benefidal
by products and the antiapated price thereof. Please identify,
Question 4: Please also indicate the approximate impact on the tipping fee in the
event the County elects to assist in obtaining Special Purpose Revenue Bonds.
For the previous /our questions, it appears the leveraged lease arrangement does not
permit least cost financing. Also, income from power generation revenues maybe a
critical component for cost reductions. Again we ask you to please provide this
information.
Question 7: Your estimate of the number of trucks that would be transporting
waste to the West Hawai' f Sanitary Landfill appears to be low and is inconsistent
with estimates Included In the Final Environmental Impact Statement-Construction
and Operation of the EHRSS. Please provide additional information to support your
estimates. Please explain further or re-calculate with our data as presented in the
Environmental Impact Statement.
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Mr. Ronald Barmore, Barlow Products, LLC April 1, 2005
RfP 12% -Reload & Solid Waste Reduction Facilities Page 3 of 4
Question 8: Please clarify tip Fee costs for residual wastes and unprocessed wastes.
The proposal appears to imply that the County will be required to waive these fees.
P/ease exp/ain. The RFP requires that al/ waste that /s delivered to the faUlity be
handled by the operator: If by 'pass through rost"you mean the County wiN waive
the tipping fees, this is not the intent of b9e County. P/ease re-ca/cu/ate your costs
based on no waiving of tipping fees.
Question 9: Please discuss costs and pricing associated with Barlow operating the
Re-Load building as well as trucking waste and/or residuals to the nearest landfill be
in South Hilo or Pu~ uanahulu. Please describe ernnomic impacts of your proposal if
County trucks any of the wastes. Please submit an amended offer, describing other
proposed changes to accomplish 'cost savings'
III. Technicallssues
Question 1: Please explain how the proposed facility may avoid the requirements
for a covered source air permit. Please refine the schedu/e for construction now
that a covered source pennlt is to be sought.
Question 2: Please provide an operation and maintenance schedule for typical
operating years with and without major turbine generator maintenance, Including
the amounts of refuse diverted during outage periods. P/ease indicate amount of
refuse diverted during total outages ar the quantity of wastes processed during
partial outages.
Question 3: Please discuss the Inclusion of a dump condenser to address turbine
generator outages. Our experience concludes that the cost of a dump rnndenser is
small and it is a worthwhile addition to the plant to minimize risk during
turbogenerator outages. Please exp/ain more fully.
I
Question 5: Please provide more detail on the proposed Reload facility including an
interior plan and an elevation. Information provided was minimal. We wi//need to
revisit b9is ifand when we meet i
Question 12: The water balance in Exhibit 0 indicates that cooling tower blowdown
will be used to wet the ash and that boiler blowdown will be discharged. Also the
RO regen waste quantity is unusually high, Please review this and indicate how I
u:asrwwater wi!! be disposed of. Wastewater dispasal r",ay berorx a cri~:a/ Ef~
issue. We wll! need a more refined est/mate prior to any award.
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Mr. Ronald Barmore, Barlow Products, LLC April i, 2005
RFP 1246 -Reload & Solid Waste Reduction Facilities Page 4 of 4
N. Other questions
Ouestfon 3: The 210-day period estimated for mnstrudlon of the Re-Load Facility
is currently unacceptable. Recent estimates regarding the anticipated closure date
for the South Hilo Sanitary Landfill indicate that the landfill will reach its maximum
permitted capacity during the first quarter of 2006. The County is working in many
ways to extend the life of the landfill. However, please comment on ways the Re-
load Facility could be built in a shorter time frame. We are interested !n discussing
fast-teal approad~es pr/or to any award. ^
Question 4: Your draft contract is under review by County attorneys. Many items
within your proposed contract are inconsistent with the requirements of the RFP and C , ~ ~
County of Hawaii Council RPSOlution 218 04 -Draft 2 (Exhibit A of RFP #2146). We
will use ourprotnlype c~tracY es a starting pe/ilt;br any negodat/on. This wil/bp ~ ?
discussed aRer tedrnica/ and f/nanda/lssuews have been tesW?ted. ,w,~i,,,~ u^^+~~ ,
Ouestion 5: Section Five, ExhibR P -Exceptions & Clarifications is of partiwlar
concern. Please clarify each exception, especially Section 1. Page 1, S1.P3, 52.1.P4,
S2.3.2.P6, and S4.5.4(b).P15, as these are acknowledgements of levels of inability
to satisfy the requirements of the RFP. There are further questions regaiding
Exapdons & Uarifkadons, mast Wobbly the penbrmanc>m bond issue. This a a
strict requirement of any County awanl.
Question 6: Your proposal does not conclude with the County owning the facility. ~~v
Buying it at'falr market value' is a problem, as it is vague. The County requires ~ e~-~-
owning it outright at the end of the contract. The RFP makes it dear that the County ~
must own the fadlity after tl?e opereting contract ends. The purpose of this is to ~ ~ c'-c /
have total predictability. This L~sue wilt result in reiedion of your orooasal. please
present a finandng plan Ghat cw~c/udes with the County owning the facility at the
end of the operating rnntract.
In the interest of saving time, I am taking the liberty of faxing this letter to you, with a
hard copy to be malted. Please contact me at the above address, 806-961-8440 or
bill grayC~co.hawaA.hi.us If there are any questions or rf I may be oP any other service
Sincerely,
c
Bill Gray
Purchasing Agent
cc: William Takata
Barbara 8e11