Resolution No. 7190d
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RESOLUTION NO. 7190
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION
OF AN ELECTRIC SYSTEM MAINTENANCE AGREEMENT BY
AND BETWEEN THE CITY OF VERNON AND RMI UTILITY
SERVICES
WHEREAS, the City Council of the City of Vernon adopted
Resolution No. 5598 on February 7, 1989, which approved and
authorized the execution of an Operation and Maintenance Agreement
("Agreement") by and between RMI Utility Services, Inc. ("RMIUS")
and the City of Vernon providing for the operation of portions of
the Vernon electrical system; and
WHEREAS, the City Council of the City of Vernon adopted
Resolution No. 6087 on April 27, 1992, which approved and
authorized the execution of an Amendment No. 1 to said Agreement
dated February 15, 1989, providing for an increase in both the
level of staffing and the scope of services; and
WHEREAS, the City of Vernon desires to enter into an
Electric System Maintenance Agreement, commonly referred to as a
"Renewal Agreement," with RMIUS that will replace the Agreement
dated February 15, 1989 and Amendment No. 1 dated April 27, 1992;
and
WHEREAS, said Renewal Agreement shall become effective
August 1, 1998 and terminate July 31, 2009.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon does
hereby find and determine that the recitals contained hereinabove
re
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are true and correct.
SECTION 2: The City Council of the City of Vernon hereby
approves the Electric System Maintenance Agreement (Renewal
Agreement), a copy of which has been presented to the City Council
concurrently with this resolution, and the City Council hereby
orders said Agreement to be received and filed by the City Clerk.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the Mayor and the City Clerk to execute said Agreement
for, and on behalf of, the City of Vernon.
SECTION 4: The City Clerk of the City of Vernon shall
certify to the passage of this resolution and thereupon and
thereafter the same shall be in full force and effect.
APPROVED AND ADOPTED this 28th day of July, 1998.
LEONIS C. MALBLIPG, MaycYr
ATTES
BRUCE V. MALKENHORST, City Clerk
-2-
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, BRUCE V. MALKENHORST, City Clerk of the City of
Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. 7190, was duly adopted by the City Council of the
City of Vernon at an adjourned regular meeting of the City Council
duly held on Tuesday, July 28, 1998, and thereafter was duly
signed by the Mayor of the City of Vernon.
BRUCE V. MALKENHORST, City Clerk
(SEAL)
-3-
ELECTRIC SYSTEM MAINTENANCE AGREEMENT
BETWEEN
RMI UTILITY SERVICES
AND THE
CITY OF VERNON
This Renewal Agreement is entered into this o? day of
Pa
1998, by and between RMI Utility Services ("RMIUS"), a
fornia Corporation, and the City of Vernon, a California Municipal Corporation
("Vernon"), each of which is also referred to individually as "Party" and both of
which are also referred to collectively as "Parties". RMIUS is a wholly owned
subsidiary of Resource Management International, Inc. (RMI).
This Renewal Agreement replaces the Original Agreement dated February 15, 1989
and Amendment No. 1, dated April 27,1992.
1. SCOPE OF SERVICES
1.1 For Purposes of -this Renewal Agreement, "Electric System" shall mean all
transmission and distribution facilities now or hereafter owned by Vernon for
providing electric service in the City of Vernon including, but not limited to,
transmission, overhead and underground distribution systems, street lighting
systems, transformers, and service lines. During the term of this Renewal
Agreement, RMIUS shall provide services with regard to Vernon's Electric
System consistent with Exhibit C which shall include, but not be limited to, the
following:
1.1.1 Provide all services and maintain Vernon's Electric System in a safe and
reliable condition. Such work shall include, but not be limited to,
switching, performing routine and emergency repairs, and construction on
Vernon's Electric System.
1.1.2 Make all modifications, extensions, additions, and improvements in and to
Vernon's Electric System, as shall from time to time be required or
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necessary to serve in a safe and reliable manner the electric power
requirements of Vernon and its customers, both present and future.
1.1.3 Furnish all labor, supervision, and services and in the event not furnished
by Vernon, transportation, equipment, materials, supplies, and tools of
whatsoever kind or nature as shall from time to time be required or
necessary to carry out the terms and provisions of this Renewal
Agreement, including, but not limited to maintenance of office and field
staffs, and maintenance headquarters within the city limits of Vernon, as
shall be required or necessary to meet the needs and requirements of
Vernon and its customers, both present and future.
1.1.4 Furnish to Vernon current accountings and reports, with supporting data
covering activities engaged in and work performed by RMIUS pursuant to
this Renewal Agreement.
1.1.5 Make electrical measurements and reports as requested by Vernon to
provide operational data on Vernon's Electric System.
1.1.6 Install transformers, switches, cutouts, lines, and other facilities on the
transmission and distribution systems as required for repairs,
replacements, new customers, and system expansion.
1.1.7 Remove underground and overhead facilities no longer needed.
1.1.8 Perform other work on underground and overhead systems as required.
1.1.9 Carry out troubleshooting activities including responding to customer
calls and complaints, traveling to various sites in Vernon, assessing and
estimating failures or damages, safely restoring service as quickly as
possible, and reporting on system and equipment status.
1.1.1OProvide all engineering and management support services as shall from
time to time be required and pre -approved by Vernon. RMIUS shall
provide to Vernon a copy of an agreement between RMIUS and RMI
under which RMI shall furnish such engineering and management
support services to RMIUS pursuant to this Renewal Agreement and
which provides that Vernon is a third Party beneficiary.
1.2 All work shall be performed in accordance with Vernon's standards, codes,
rules, regulations, and operating procedures. Where no such applicable code,
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rule, regulation, or operating procedure exists, RMIUS shall perform work in
accordance with good utility practice.
1.3 All work shall be performed pursuant to work authorizations as described in
Exhibit C attached hereto. Such exhibit may be revised from time to time by
mutual agreement of the Parties, consistent with the terms of this Renewal
Agreement.
1.4 If a new facility (customer substation, cogeneration substation, or transmission
line) is to be constructed by Vernon, RMIUS shall be permitted an opportunity
to submit a bid or proposal to construct any such facility. Vernon reserves the
right to permit the customer to construct any customer facilities and to negotiate
agreements with any contractors, including RMIUS, if Vernon is to construct
said facility. -
1.5 Staffing levels.
1.5.1 To perform the foregoing services, RMIUS shall provide a minimum level
of employee staffing and said staff shall be dedicated to perform service on
Vernon's Electric System. The employee staffing is as follows:
uantit Classification
1 Manager
1 Line Foreman
5 Lineman
1 Apprentice/Helper
2 Troubleshooter
1 Clerk/Secretary
1 Warehouse/Utility Worker
12 Total
RMIUS may supplement this level of staffing through the use of
subcontractors, including RMI, with pre -approval by Vernon, to the
extent necessary to perform such services. RMIUS shall not increase or
decrease this level of staffing by adding or deleting full-time employees
without the prior written approval of Vernon. In the event Vernon wishes
to increase or decrease the scope of the services provided for herein,
Vernon shall be permitted to increase or decrease said services upon
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providing four (4) months written notice to RMIUS, unless the scope of
services is increased or reduced by mutual agreement.
1.5.2 The City of Vernon shall have the option of making housing at reasonable
costs available to RMIUS for its employees dedicated to the City of
Vernon's service under the following conditions:
1.5.2.1 The employee will have to be an employee that is assigned to
respond to emergency services and is able and capable during the
occupancy of the housing unit to respond to said emergencies. In
the event that the individual is unable to respond to said
emergencies, then another employee of RMIUS shall be provided the
occupancy so that said employee can respond to emergency services.
1.5.2.2 Said occupancy shall not be provided within the city limits of the
City of Vernon but shall be provided in locations in close proximity
to the City of Vernon.
1.5.2.3 The employee shall sign an appropriate lease agreement with the
City of Vernon but RMIUS shall be responsible for certifying that the
employee is able to provide the emergency services and if RMIUS is
unable, to certify that said employee is able to provide said
emergency services, RMIUS shall cause the employee to terminate its
tenancy and recommend the assignment of a different employee to
said tenancy for the purpose of providing said emergency services.
1.5.2.4 The City of Vernon shall set the terms and conditions of the lease at
its sole discretion except for the requirement that the employee is
responsible for emergency services.
1.5.2.5 The employee shall agree to abide by all of the terms and conditions.
of the lease arrangement and in the event that the City of Vernon
must bring legal action to enforce the terms and conditions of the
lease arrangement, RMIUS shall reimburse the City of Vernon its
legal costs and expenses, including attorney's fees to enforce said
lease provisions.
1.5.2.6 The purpose and function of providing said housing is to insure to
the City of Vernon that an able bodied employee will be able to
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respond to an emergency if one occurs during 24 hours a day, 365
days a year.
1.5.2.7 The inability of an employee to physically respond to said
emergency calls for a period of ninety (90) days will immediately
cause said employee to be ineligible to continue to receive housing
services from the City of Vernon. When an employee has been
unable to physically respond to said emergency calls for thirty (30)
days, RMIUS shall certify, not later than the next business day, that
said employee will be able to provide emergency services before the
expiration of ninety (90) days from the date said employee first was
unable to respond, and if RMIUS is unable to so certify it shall cause
the employee to terminate his or her tenancy immediately and it
shall recommend the assignment of a different employee to said
tenancy for the purpose of providing said emergency services.
1.6 RMIUS shall not accept or bid for any work for the customers of Vernon located
within the City of Vernon unless Vernon provides its written consent and agrees
that such work shall not constitute a conflict of interest.
1.7 RMIUS agrees -,that- it shall provide services and maintain Vernon's Electric
System for and on behalf of Vernon, subject to and in accordance with good
utility practice and within the terms and provisions of this Renewal Agreement
and direction given by Vernon's authorized representative. It shall also respond
to the requirements of Vernon for any and all Vernon city purposes and of all
Vernon customers both present and future of Vernon's Electric System and shall
provide safe, proper, efficient and reliable services as provided under good
utility practice.
1.8 An organization chart is attached hereto as Exhibit- B. Such exhibit may be
revised from time to in accordance with Section 1.5.1.
2. FEES FOR SERVICES
For services provided by RMIUS to Vernon pursuant to this Renewal Agreement,
Vernon shall pay RMIUS in accordance with the rates and charges set forth in
Exhibits A -la and A -lb "RMIUS FEES FOR SERVICES;' attached hereto.
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3. BILLING AND PAYMENT
RMIUS shall submit a monthly statement to Vernon setting forth the amount due
for service and itemizing amounts due for expenses. Vernon shall pay the full
amount of such statement within thirty (30) days after receipt. Any sums billed, not
disputed in written form setting forth specified exceptions and unpaid after thirty
(30) days from the date of receipt, shall be subject to a late payment charge equal to
the lesser of one and one-half percent (11/2%) or the maximum rate permitted by law,
for each month or fraction thereof past due.
4. INDEPENDENT CONTRACTOR
RMIUS shall provide services to Vernon as an independent contractor, not as an
employee of Vernon, and shall obtain and maintain in effect during the term of this
Renewal Agreement appropriate licenses to provide the services described herein.
RMIUS shall not have or claim any right arising from employee status.
5. TERM OF RENEWAL AGREEMENT —SUSPENSION OF WORK
5.1 This Renewal Agreement shall become effective August 1, 1998, and, unless
terminated earlier -in accordance with Section 5.2, this Renewal Agreement shall
be effective for a term of eleven (11) years..
5.2 Not withstanding any other provision of this Renewal Agreement, either Party
may terminate this Renewal Agreement by giving one (1) year advance written
notice to the other Party; provided, however, Vernon may terminate this
Renewal Agreement upon sixty (60) days written notice for material breach of
this Renewal Agreement.
5.3 Upon termination of this Renewal Agreement, RMIUS shall have no further
obligation to provide services to Vernon. If this Renewal Agreement is
terminated prior to completion of the service to be provided hereunder, RMIUS
shall render a final bill for services to Vernon within thirty (30) days after the
date of termination, and Vernon shall pay RMIUS for all fees earned and
expenses incurred prior to the date of termination in accordance with Section 3.
5.4 In the event that Vernon has just and reasonable cause to believe that electric
service to its customers is in jeopardy as a result of RMIUS' performance or
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failure to perform hereunder, Vernon shall so notify RMIUS in writing. If
RMIUS fails to correct such problem within ten (10) days after receipt of said
notice, Vernon may suspend this Renewal Agreement until such problem is
corrected.
6. INSURANCE
6.1 RMIUS shall maintain in effect, employer's liability insurance, comprehensive
general liability insurance (bodily injury and property damage) in an amount
equal to five million dollars ($5,000,000) annual aggregate, and comprehensive
automobile liability insurance (bodily injury and property damage) in an
amount equal to 5 million dollars ($5,000,000) annual aggregate. Said insurance
policy shall provide for thirty (30) days written notice prior to termination or
change, and Vernon and its officers, employees, and agents shall be named as
additional insured on said policy. Vernon shall reimburse RMIUS for (i) the
total cost of obtaining and maintaining the first one million dollars of said
insurance coverage and (ii) up to forty thousand dollars ($40,000) of the cost of
obtaining and maintaining the next four million dollars of said insurance
coverage. Upon.renewal of said policies, but not less than annually, the Parties
shall review the cost of the additional four million dollars of insurance coverage.
In the event that there has been a significant increase in the cost of said
additional insurance coverage, the Parties shall agree upon the extent to which
Vernon shall reimburse RMIUS for such increase in costs.
6.2 RMIUS shall obtain and thereafter maintain in effect, if available, such insurance
coverage as may be requested in writing by Vernon, the cost of which will be
reimbursed to RMIUS by Vernon.
6.3 RMIUS shall comply with all applicable workers' compensation laws.
7. LIABILITY
7.1 RMIUS shall indemnify, defend, and hold harmless Vernon, its directors,
officers, partners, employees and agents from any and against any and all
liability, claims, demands, damages, losses, and expenses, including but not
limited to attorneys fees, for which RMIUS is determined to be legally liable
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resulting from negligent acts, errors, or omissions by its subcontractor, RMI, in
the provision of professional engineering services pursuant to this Renewal
Agreement. RMIUS' obligation to indemnify, defend, and hold harmless
Vernon as provided herein is expressly limited to the proceeds of RMI'S
applicable insurance coverage or one million dollars ($1,000,000), whichever is
greater. RMIUS shall provide to Vernon an agreement between RMIUS and
RMI wherein RMI agrees to accept liability as mentioned herein limited to the
applicable insurance coverage for RMI or one million dollars ($1,000,000),
whichever is greater. Liability, claims, demands, damages, losses, or expenses
resulting from negligent acts, errors or omissions whether active or passive, by
Vernon, its directors, officers, partners, agents, employees, or by others are
excluded from RMIUS' obligations pursuant to this Section 7.1.
7.2 RMIUS shall also indemnify, defend and hold harmless Vernon, its directors,
officers, partners, employees, and agents from and against any and all liability,
claims, demand, damages, losses, and expenses, including but not limited to
attorney's fees, for injuries to person or damage to property for which RMIUS is
determined to be legally liable, resulting from negligent acts, errors, or
omissions by RMIUS, its directors, officers, agents and employees in the
provision of service hereunder. RMIUS' obligation to indemnify, defend and
hold harmless Vernon as provided herein is expressly limited to the proceeds of
RMIUS' applicable insurance maintained in accordance with Section 6.1.
Liability, claims, demand, damages, losses, or expenses resulting from negligent
acts, errors, or omissions, whether active or passive, by Vernon, its directors,
officers, partners, agents, employees, or by others are excluded from RMIUS'
obligations pursuant to this Section 7.2.
7.3 Nothing in this Renewal Agreement shall be construed to create a duty to, any
standard of care with reference to, or any liability to any person not a party to
this Renewal Agreement.
7.4 Neither Party shall be liable to the other Party for incidental or consequential
damages.
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8. AUTHORIZED REPRESENTATIVES
Within thirty (30) calendar days after the date of execution of this Renewal
Agreement, each Party shall designate by written notice to the other Party a
representative who is authorized to act on its behalf in the implementation of this
Renewal Agreement and with respect to those matters contained herein which are
the function and responsibilities of the authorized representatives. Either Party may
at any time change the designation of its authorized representative by written notice
to the other Party.
9. OWNERSHIP OF DATA, INFORMATION, AND DOCUMENTATION
All data and information collected and obtained by RMIUS shall be the property of
Vernon and shall be stored and filed at the maintenance headquarters located within
the city limits of Vernon and RMIUS hereby relinquishes any and all claims of
ownership to any and all documents and/or information obtained in performing
services for Vernon relating to Vernon's Electric System; provided, however, that
RMIUS may keep copies of such data, information, and documentation as necessary
to perform service hereunder and, in addition, for historical purposes; provided
further, that RMIUS—shall be prohibited from using such data, information, and
documentation in any way adverse to Vernon other than for the purposes of
litigation between RMIUS and Vernon pertaining to this Renewal Agreement or the
services provided hereunder.
10. SUCCESSORS IN INTEREST
This Renewal Agreement shall be binding on, and inure to the benefit of, each
Party's successors in interest, including their heirs, legatees, assignees, and legal
representatives. This Renewal Agreement shall not be assigned by RMIUS unless
Vernon consents to such an assignment, in writing, which consent shall be at
Vernon's sole discretion, in which event this Renewal Agreement, shall inure to the
benefit of its successor in interest.
M
11. WAIVER
Any waiver at any time by either party of its rights with respect to a default under
this Renewal Agreement, or with respect to any other matters arising in connection
with this Renewal Agreement, shall not be deemed a waiver with respect to any
subsequent default or other matter.
12. SEVERAL OBLIGATIONS
Except where specifically stated in this Renewal Agreement to be otherwise, the
duties, obligations, and liabilities of the Parties are intended to be several and not
joint or collective. Nothing contained in this Renewal Agreement shall be construed
to create an association, trust, partnership, or joint venture or impose a trust or
partnership duty, obligation, or liability on or with regard to either Party. Each
Party shall be individually and severally liable for its own obligations under this
Renewal Agreement.
13. AMENDMENT
All changes or modifications to this Renewal Agreement shall be in writing and
signed by both Parties.
14. GOVERNING LAW
This Renewal Agreement shall be construed and interpreted according to, and the
rights of the Parties shall be governed by, the laws of the State of California.
15. ARBITRATION
Any controversy or claim arising out of or relating to this Renewal Agreement, or
the breach thereof, shall be settled by arbitration in accordance with the
Construction Industry Rules of the American Arbitration Association then in effect,
subject to the express provisions of this Renewal Agreement. The Parties agree to
adopt the provisions of Title 9 of Part III of the California Code of Civil Procedure,
Section 1280 et sea. as applicable to said arbitration.
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16. FORCE MAJEURE
Neither Party shall be considered to be in default in the performance of any of its
obligations under this Renewal Agreement (other than obligations of said Party to
pay costs and expenses) when a failure of performance shall be due to an
uncontrollable force. The term "uncontrollable force" shall mean any cause beyond
the control of the Party affected, including but not restricted to flood, earthquake,
storm, fire, lightening, epidemic, war, riot, civil disturbance or disobedience, labor
dispute, labor or material shortage, sabotage, restraint by court order or public
authority, and action or nonaction by or inability to obtain the necessary
authorization or approvals from any governmental agency or authority, which by
exercise of due diligence such Party could not reasonably have been expected to
avoid and which by exercise of due diligence it has been unable to overcome.
Nothing contained herein shall be construed so as to require either Party to settle
any strike or labor dispute in which it may be involved; provided, however, if
RMIUS notifies Vernon that it will be unable to perform services hereunder as a
result of a labor dispute or shortage, Vernon may, at its option, use its own staff or
other contractors to perform such services at Vernon's expense, in which case
Vernon shall compensate RMIUS only for those employees of RMIUS which are
performing work for Vernon. Either Party. rendered unable to fulfill any of its
obligations under this Renewal Agreement by reason of an uncontrollable force
shall give prompt written notice of such fact to the other Party and shall exercise
due diligence to remove such inability with all reasonable dispatch.
17. ENTIRE RENEWAL AGREEMENT
17.1 This Renewal Agreement constitutes the complete and final expression of the
agreement of the Parties and is intended as a complete and exclusive statement
of the terms of their agreements and supersedes all prior and contemporaneous
offers, promises, representations, negotiations, discussion, communications,
and agreements which may have been made in connection with the subject
matter hereof.
17.2 The following exhibits attached hereto are incorporated by reference as if fully
set forth herein:
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Exhibit A-1a: RMIUS FEES FOR SERVICES (Effective August 1,1998)
Exhibit A-1b: RMIUS FEES FOR SERVICES (Effective February 15,1999)
Exhibit A-2: RMI FEES FOR SERVICES
Exhibit B: VERNON-RMIUS - ORGANIZATION CHART
Exhibit C: WORK AUTHORIZATIONS
Exhibit D: MAINTENANCE SCHEDULE/PLAN
18. SEVERABILITY
If any of the provisions of this Renewal Agreement are found or deemed by a court
of competent jurisdiction to be invalid or unenforceable, they shall be considered
severable from the remainder of this Renewal Agreement and shall not cause the
remainder to be invalid or unenforceable.
19. NOTICES
19.1 Any notice, demand, information, invoice, report, or item otherwise required,
authorized, or provided for in. this Renewal Agreement, unless otherwise
specified herein, shall be deemed properly given if delivered in person or sent
by United States -Mail, First Class postage. prepaid:
To RMI Utility Services: RMI Utility Services, Inc.
3100 Zinfandel Drive, Suite 600
Rancho Cordova, CA 95670
OR
P. O. Box 15516 - T
Sacramento, CA 95852-1516
To Vernon: City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
Attention: City Clerk
19.2 All notices shall be deemed effective upon receipt by the Party to whom such
notice is given. Either Party may, at any time, by notice to the other Party,
designate different or additional persons or different addresses for the giving of
notices hereunder.
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20. SIGNATURE CLAUSE
The signatories hereto represent that they are authorized to enter into this Renewal
Agreement on behalf of the party for whom they sign.
City of Vernon, a California RMI Utility Services, a
Municipal Corporation California Corporation
All
By:�"'
L opus C. Malburg
Its Mayor
Attest:
By: dM_�
John S. Forman
Its President
Approved as to Form:
By:
Bruce V. Malkenhorst David B. Brearley
City Clerk City Attorney
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EXHIBIT A-1a
RMIUS FEES FOR SERVICES
(Effective August 1,1998)
1. EMPLOYEES OF RMIUS
Labor and related costs for employees of RMIUS providing services pursuant to this
Renewal Agreement will be billed as follows:
Total Costs = A + B + ((A + B) x 0.10) + (A x 0.13)
Where:
A = Wages paid to employees including, but not limited to, wages paid during
vacation, holidays, overtime, overtime meal periods, stand-by periods, and safety
meetings.
B = Labor overheads which include but are not limited to, FICA, workers'
compensation, unemployment insurance, pension and profit sharing, medical
insurance, and life insurance; provided, that the first three (3) years of this Renewal
Agreement total Labor Overheads which are computed on the basis of straight -time
wages shall not exceed 37 percent of total straight -time wages paid during each
year; provided further, that the 37 percent ceiling is based on the existing workers'
compensation cost. To the extent that any governmental entity determines that
labor should be reclassified such as to produce a greater cost than otherwise
anticipated, the Parties shall revise the 37 percent ceiling accordingly.
0.10 = RMIUS' management fee charged at ten percent (10%) of Wages plus -Labor
Overheads.
0.13 =. RMIUS' administrative and general expenses charged at thirteen percent
(13%) of Wages.
Vernon shall compensate RMIUS for all hours worked by each employee, and for all
other hours during which the employee is compensated by RMIUS in connection
with this Renewal Agreement including, but not limited to, vacation, holidays,
overtime, overtime meal periods, stand-by periods and safety meetings, so long as
such dedicated employee is available to perform services on Vernon's Electric
System.
A-la-1
RMIUS shall consult with Vernon and Vernon shall have the right to consult with
RMIUS relating to the qualifications of the employees who will be assigned and
dedicated to work on Vernon's Electric System. Further, RMIUS and Vernon will
work together in the event that Vernon is able to or willing to provide additional
consideration which would permit RMIUS the ability to offer additional fringe
benefits in order to obtain employees who could provide reliable standby and
emergency services.
RMIUS shall submit sufficient accounting data with each billing period which will
enable Vernon to audit the expenses and costs provided for herein and permit
Vernon to identify the wages paid for each labor classification for employees of
RMIUS.
The management fee of ten percent (10%) and the administrative and general
expenses charged at thirteen percent (13%) shall fully compensate RMIUS for the
administrative activities that are necessary for RMIUS to provide the services
provided for herein.
2. SUBCONTRACTORS OF RMIUS (except for RMI)
Vernon shall compensate RMIUS for the actual cost of subcontractors used to
provide services hereunder plus seven and one-half percent (71/2%) as administrative
overhead.
3. RMI AS SUBCONTRACTOR
Vernon acknowledges and agrees to the use of RMI by RMIUS as a subcontractor
under this Renewal Agreement.
Vernon shall compensate RMIUS for its actual cost of using RMI provided, that
compensation for labor shall be equal to eighty percent (80%) of its then -current
standard billing rates for all employees. RMI's current standard fee schedule is
included in this Renewal Agreement as Exhibit A-2 and shall be revised from time
to time.
The time expended by any employee of RMI traveling to the City of Vernon shall
not be billed under this Renewal Agreement unless that employee actually provides
services which have been pre -approved by Vernon during the time of said travel;
however, Vernon recognizes that if any such employee is asked to travel to the City
A-1 a-2
of Vernon, Vernon shall be billed for the greater of eight (8) hours or the actual time
during which such employee provided services to Vernon.
4. MATERIALS, SUPPLIES AND EXPENSES
Vernon shall normally supply all material and supplies required for routine work
by RMIUS pursuant to this Renewal Agreement. RMIUS shall supply all materials
and supplies required by RMIUS which are not supplied by Vernon in addition to
those which RMIUS is requested by Vernon to supply. Before purchasing materials
or supplies, RMIUS shall check with Vernon to _ assure that such materials or
supplies are not available from Vernon. Vernon shall compensate RMIUS for all
expenses incurred for such materials and supplies including, but not limited to,
equipment, machinery, transportation, tools, fuel, utilities, and taxes at RMIUS'
direct cost, plus five percent (5%) as administrative overhead.
5. MISCELLANEOUS BILLING MATTERS
The following billing instructions are established for billing purposes and can only
be changed by mutual agreement of the parties.
5.1 Labor Negotiations
RMIUS will not bill. the City of Vernon for time or expenses related to the
negotiation of issues with the IBEW.
5.2 Employee Relations
RMIUS will not bill the City of Vernon for time or expenses related to
performance/disciplinary proceedings other than that incidental to_ daily
operations by the staff located in Vernon.
5.3 Insurance Negotiations
RMIUS will not bill the City of Vernon for time and expenses related to any
negotiations with the RMIUS insurance carrier related to obtaining insurance
coverage.
5.4 Contract Negotiations
RMIUS will not bill the City of Vernon for time and expenses related to
negotiating the maintenance agreement with the City.
A-1 a-3
5.5 Insurance Investigations
RMIUS will not bill the City of Vernon for time spent discussing or investigating
insurance issues unless the request for the investigation specifically comes from
the City.
5.6 Insurance Costs
RMIUS will not add the 5% administrative fee to the cost of insurance.
5.7 Personnel Recruitment Expenses
RMIUS will not bill the City of Vernon for costs associated with interviewing
and hiring of RMIUS employees in the City of Vernon. Such costs that will not
be billed include advertisement in various media, pre -employment physical
examinations, and pre -employment reference checks.
5.8 Sacramento Administrative Services
RMIUS will not add administrative costs for services performed by RMIUS
Sacramento employees unless specifically pre -approved by the City.
5.9 Late Payment Charges
RMIUS will not bill the City of Vernon for late,payment charges incurred by
RMIUS in paying its invoices.
5.10Bank and Credit,Card Fees
RMIUS will not bill the City of Vernon any bank fees and credit card fees since
all materials purchased are billed with 5% overhead charges.
5.11Invoice Processing
A date will be stamped on the RMIUS monthly invoice by the City of Vernon
upon presentation by the RMIUS Vernon Division Manager. This will start the
30 day invoice payment time. If questions arise on the invoice that are not
resolved within one week of the date of the initial date stamp, a new date stamp
will be provided, which will reset the 30 day invoice processing period.
A-1 a-4
EXHIBIT A -lb
RMIUS FEES FOR SERVICES
(Effective February 15, 1999)
1. EMPLOYEES OF RMIUS
Labor and related costs for employees of RMIUS providing services pursuant to this
Renewal Agreement will be billed as follows:
Total Costs = A + B + ((A + B) x 0.09) + (A x 0.12)
Where:
A = Wages paid to employees including, but not limited to, wages paid during
vacation, holidays, overtime, overtime meal periods, stand-by periods, and safety
meetings.
B = Labor overheads which include but are not limited to, FICA, workers'
compensation, unemployment insurance, pension and profit sharing, medical
insurance, and life insurance; provided, that the first three (3) years of this Renewal
Agreement total Labor Overheads which are computed on the basis of straight -time
wages shall not exceed 37 percent of total straight -time wages paid .during each
year; provided further, that the 37 percent ceiling is based on the existing workers'
compensation cost. To the extent that any governmental entity determines that
labor should be reclassified such as to produce a greater cost than otherwise
anticipated, the Parties shall revise the 37 percent ceiling accordingly.
0.09 = RMIUS' management fee charged at nine percent (9%) of Wages plus Labor
Overheads.
0.12 = RMIUS' administrative and general expenses charged at twelve percent (12%)
of Wages.
Vernon shall compensate RMIUS for all hours worked by each employee, and for all
other hours during which the employee is compensated by RMIUS in connection
with this Renewal Agreement including, but not limited to, vacation, holidays,
overtime, overtime meal periods, stand-by periods and safety meetings, so long as
such dedicated employee is available to perform services on Vernon's Electric
System.
A-lb-1
RMIUS shall consult with Vernon and Vernon shall have the right to consult with
RMIUS relating to the qualifications of the employees who will be assigned and
dedicated to work on Vernon's Electric System. Further, RMIUS and Vernon will
work together in the event that Vernon is able to or willing to provide additional
consideration which would permit RMIUS the ability to offer additional fringe
benefits in order to obtain employees who could provide reliable standby and
emergency services.
RMIUS shall submit sufficient accounting data with each billing period which will
enable Vernon to audit the expenses and costs provided for herein and permit
Vernon to identify the wages paid for each labor classification for employees of
RMIUS
The management fee of nine percent (9%) and the administrative and general
expenses charged at twelve percent (12%) shall fully compensate RMIUS for the
administrative activities that are necessary for RMIUS to provide the services
provided for herein.
2. SUBCONTRACTORS OF RMIUS (except for RMI)
Vernon shall compensate RMIUS for the actual cost of subcontractors used to
provide services hereunder plus five percent (5%) as administrative overhead.
3. RMI AS SUBCONTRACTOR
Vernon acknowledges and agrees to the use of RMI by RMIUS as a subcontractor
under this Renewal Agreement.
Vernon shall compensate RMIUS for its actual cost of using RMI provided, that
compensation for labor shall be equal to eighty percent (80%) of its then -current
standard billing rates for categories of senior consultant and below, and sixty-five
percent (65%) of the rates established for supervising consultants and above. RMI's
current standard fee schedule is included in this Renewal Agreement as Exhibit A-2
and shall be revised from time to time.
The time expended by any employee of RMI traveling to the City of Vernon shall
not be billed under this Renewal Agreement unless that employee actually provides
services which have been pre -approved by Vernon during the time of said travel;
A-1 b-2
however, Vernon recognizes that if any such employee is asked to travel to the City
of Vernon, Vernon shall be billed for the greater of eight (8) hours or the actual time
during which such employee provided services to Vernon.
4. MATERIALS, SUPPLIES AND EXPENSES
Vernon shall normally supply all material and supplies required for routine work
by RMIUS pursuant to this Renewal Agreement. RMIUS shall supply all materials
and supplies required by RMIUS which are not supplied by Vernon in addition to
those which RMIUS is requested by Vernon to supply. Before purchasing materials
or supplies, RMIUS shall check with Vernon to assure that such materials or
supplies are not available from Vernon. Vernon shall compensate RMIUS for all
expenses incurred for such materials and supplies including, but not limited to,
equipment, machinery, transportation, tools, fuel, utilities, and taxes at RMIUS'
direct cost, plus three percent (3%) as administrative overhead.
5. MISCELLANEOUS BILLING MATTERS
The following billing instructions are established for billing purposes and can only
be changed by mutual agreement of the parties.
5.1 Labor Negotiations
RMIUS will not bill the City of Vernon for time or expenses related to the
negotiation of issues with the IBEW.
5.2 Employee Relations
RMIUS will not bill the City of Vernon for time or expenses related to
performance/disciplinary proceedings other than that incidental to daily
operations by the staff located in Vernon.
5.3 Insurance Negotiations
RMIUS will not bill the City of Vernon for time and expenses related to any
negotiations with the RMIUS insurance carrier related to obtaining insurance
coverage.
5.4 Contract Negotiations
RMIUS will not bill the City of Vernon for time and expenses related to
negotiating the maintenance agreement with the City.
A-lb-3
5.5 Insurance Investigations
RMIUS will not bill the City of Vernon for time spent discussing or investigating
insurance issues unless the request for the investigation specifically comes from
the City.
5.6 Insurance Costs
RMIUS will not add the 3% administrative fee to the cost of insurance.
5.7 Personnel Recruitment Expenses
RMIUS will not bill the City of Vernon for costs associated with interviewing
and hiring of RMIUS employees in the City of Vernon. Such costs that will not
be billed include advertisement in various media, pre -employment physical
examinations, and pre -employment reference checks.
5.8 Sacramento Administrative Services
RMIUS will not add administrative costs for services performed by RMIUS
Sacramento employees unless specifically pre -approved by the City.
5.9 Late Payment Charges
RMIUS will not bill the City of Vernon for late payment charges incurred by
RMIUS in paying its invoices.
5.1013ank and Credit Card Fees
RMIUS will not bill the City of Vernon any bank fees and credit card fees since
all materials purchased are billed with 3% overhead charges.
5.11Invoice Processing
A date will be stamped on the RMIUS monthly invoice by the City of Vernon
upon presentation by the RMIUS Vernon Division Manager. This will start the
30 day invoice payment time. If questions arise on the invoice that are not
resolved within one week of the date of the initial date stamp, a new date stamp
will be provided, which will reset the 30 day invoice processing period.
A-lb-4
EXHIBIT A-2
RMI FEES FOR SERVICES
Professional and support service by RMI shall be billed at the following rates, along
with the multiplier provided in Section 3 of this Exhibit A-2:
Managing Executive Consultant $213 per hour
Principal Executive Consultant $198 per hour
Executive Consultant $182 per hour
Principal Consultant $166 per hour
Supervising Consultant $156 per hour
Senior Consultant $135 per hour
Associate Professional $116 per hour
Analyst $ 99 per hour
Research Assistant $ 85 per hour
Technician $ 67 per hour
Offices Services $ 55 per hour
The above rates_,_ shall be adjusted each year, commencing January 1, 1999, to
reflect the change in rates officially established by the Board of Directors'of RMI.
Reproduction, printing, communications, computer services, and other
miscellaneous support services shall be billed at cost based rates for such
services as determined from time to time and officially established by the Board
of Directors of RMI.
All travel, food, lodging, and miscellaneous expenses associated with the
provision of service hereunder, excluding. automobile mileage, shall be billed at
cost. Automobile mileage shall be billed at the Internal Revenue Service
approved reimbursement rate.
Any applicable sales taxes imposed on services rendered shall be billed at cost.
A-2-1
RMIUS Executive
Oversight
1 Clerk/Secretary
EXHIBIT B
VERNON - RMIUS
ORGANIZATION CHART
City of Vernon
Executive Director
Utilities Department
Director
Utilities Department
Vernon Authorized
Representative
RMIUS - Vernon
Division Manager
1 Line Foreman
5 Lineman
1 Apprentice/Helper
2 TroubleShooter
1 Warehouse/Utility Worker
RMI Executive Oversight
RMI Support Staff
EXHIBIT C
WORK AUTHORIZATIONS
All work by RMIUS for the City of Vernon will be accomplished under approved
work authorizations, and will be scheduled with Vernon (with the exception of
emergency work).
1. WORK AUTHORIZATIONS
Work authorizations fall under one of three categories:
1.1 Major Work: Major modifications, extensions, additions, and improvements,
will be accomplished under pre -approved work orders. Large maintenance jobs
are defined as those estimated in advance to take more than five (5) crew days.
1.2 Routine Work: Routine maintenance work will be completed under pre -
approved standing work orders specifically established for these activities.
Routine work will include line patrol, switching, replacement of minor
components, minor modifications and additions, and other routine work
normally required on electric utility systems. RMIUS and Vernon will
collaborate in establishing a number of standing work orders for routine
maintenance work:
1.3 Emergency Work: Emergency repairs will be initiated as soon as possible by
RMIUS under a dispatch order. RMIUS will document the work performed at
the start of the next business day after the work is initiated.
2. SCHEDULING OF WORK
No later that 10:00 a.m. of each Thursday, RMIUS shall provide Vernon's
authorized representative with a proposed plan and schedule of work for the
following week. No later than 2:00 p.m. of that same day, Vernon"s authorized
representative shall approve or make modifications to the proposed plan and
schedule. Once approved, the plan and schedule shall be RMIUS' authorization to
perform work during the following week. The timing of such submittals and
meetings may be changed by mutual agreement of RMIUS' and Vernon"s
authorized representatives. Concurrent with the submission of its proposed plan
and schedule, RMIUS shall submit a status report on the previous week's work.
C-1
EXHIBIT D
MAINTENANCE SCHEDULE/PLAN
1. MAINTENANCE SCHEDULE/PLAN
RMIUS will prepare an annual maintenance schedule to plan and manage the
routine maintenance activities associated with the Vernon Electric System.
Routine maintenance tasks to be incorporated into the schedule will include the
following:
➢ insulator washing,
➢ street light patrol,
➢ customer substation inspection,
➢ manhole inspection,
➢ distribution circuit patrol inspection, and
➢ transmission system patrol inspection.
As major construction and rehabilitation/modification projects are developed,
they will be incorporated into the maintenance schedule.
2. PROVIDING THE SCHEDULE/PLAN TO VERNON
RMIUS will prepare the schedule utilizing computer based software in December
of each year for the following calendar year. The draft schedule will be provided to
Vernon for review, and comments from Vernon will be incorporated into the
schedule. Monthly status updates of the schedule will be provided to Vernon as
part of the monthly invoice process.
D-1
h�
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro-Tem
WM. 'BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator/City Clerk
FAX (323) 826-1438
1�,-
r r (9
O0,
il`f
4 e .
k
94
ERIC T. FRESCH
Acting City Attorney
FAX: (323) 826-1433
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Light & Power
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
November 26, 2003
Via Facsimile and U.S. Mail
(312) 573-5676 facsimile
Philip P. Steptoe
General Counsel
NAVIGANT CONSULTING
615 North Wabash Avenue
Chicago, Illinois 60611
BRUCE W. OLSON
Police Chief
FAX: (323) 826-1481
Re: Cessation of Services by RMI Utility
Services Pursuant to the Electric System
Maintenance Agreement between RMI Utility
Services and the City of Vernon
Dear Mr. Steptoe:
As you know, on February 7, 1989, the City
Council of the City of Vernon approved the Operation and
Maintenance Agreement by and between RMI-Utility Services,
Inc. ("RMIUS") and the City of Vernon. On April 27, 1992,
the Vernon City Council approved Amendment No. One to the
Agreement. Thereafter, on July 28, 1989, the Vernon City
Council approved another agreement with RMIUS which
replaced the February 7, 1989 Agreement ("Renewal
Agreement"). The Renewal Agreement became effective on
August 1, 1989 and was scheduled to terminate on July 31,
2009.
By letter dated August 19, 2003, Navigant
Consulting, Inc. ("NCI"), requested that the City terminate
RMIUS's responsibilities under the Renewal Agreement no
later than December 1, 2003. NCI had previously advised
Vernon Staff that it desired to exit the business of
outsource utility operations field services. Further, NCI
advised that RMIUS was encountering problems in obtaining
Philip P. Steptoe
November 26, 2003
Page 2
linemen to comply with the staffing requirements in the
Renewal Agreement.
After receiving and considering your August 19th
request, the Vernon City Council determined on November 18,
2003, to have RMIUS stop providing services under the
Renewal Agreement as of the end of the day on November 30,
2003.
My understanding is that City Staff and RMIUS
have been working on a transition to take place of on
December 1, 2003. I am advised that all tasks necessary
for the transition, including inventory matters, have been,
or will be completed before the end of this month.
Under the Renewal Agreement the City was required
to pay the premium for RMIUS's insurance. The City paid
the annual premium of $196,038.00 for the term that ends on
March 1, 2004. The City paid this amount with the
expectation that the Renewal Agreement would continue and
that the insurance would be required at least through the
present policy term. Nevertheless, this will not occur.
Because RMIUS will no longer be providing
services under the Renewal Agreement, the City is entitled
to a pro rata credit for the annual premium. The policy
will be effective for another 25% of the policy term.
Therefore, the City should be entitled to a 25% credit of
the annual premium, which would equal $49,009.50.
Please call me if you should have any questions.
Sincerely,
cfl--t&A-ate al,, .v
Eduardo Olivo
Legal Counsel
CC: - General Counsel
RMI Utility Services, Inc.
3100 Zinfandel Drive, Suite 600
Rancho Cordova, California 95670
- City Administrator
- Director of Light & Power Department
OFFICE OF THE CITY CLERK
INTER -OFFICE MEMORANDUM
Date: July 29, 1998
TO: Ken DeDario, Director of Utilities
FROM: Gloria J. Orosqbt,2hief Deputy City Clerk
RE: Agreement with RMI Utility Services for Electrical
System Maintenance
Dear Ken:
Per your request, attached hereto is the above -referenced
agreement which was approved by the Finance Committee on July 27,
1998, and subsequently approved by City Council on July 28, 1998.
I have also attached a copy of Resolution No. 7190.
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro-Tem
Wm. "BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL McCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator/City Clerk
FAX: (213) 581-7924
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (213) 583-8811
July 22, 1998
Finance Committee
City of Vernon
Honorable Members:
DAVID B. BREARLEY
City Attorney
FAX: (818) 330-5818
KEVIN WILSON
Director of Community Services & Water
FAX: (213) 588-2761
KENNETH J. DeDARIO
Director of Light & Power
FAX: (213) 583-1983
DAVE TELFORD
Fire Chief
FAX: (213) 581-1385
LOUIS ROSENKRANTZ
Police Chief
FAX: (213) 581-1178
The City Attorney's office and the Director of Utilities have
reviewed the Electric System Maintenance Agreement between
Resource Management International Utility Services (RMIUS),' Inc.,
and the City of Vernon.
This renewal Agreement replaces the Operation and Maintenance
Agreement between RMIUS and the City of Vernon dated February
15, 19_c�*�land Amendment No. 1 dated April 27, 199,94which
terminate on February 15, 1999. RMIUS has agreed to
significant reductions in costs and staffing levels which will
help provide for a more cost-effective overall operation while
maintaining the reliability of the electric system.
Benefits of retaining RMIUS versus a new contractor are outlined
in a memorandum by the Director of Utilities dated July 21, 1998
(attached). It is hereby recommended that an Electric System
Maintenance Renewal Agreement, by and between RMIUS, Inc., and
the City of Vernon, be approved.
Very truly yours,
Bruce V. Malkenhorst
Director of Finance
BVM/gst
enclosures
1h,
DATE: July 21, 1998
TO: Bruce V. Malkenhorst, City Administrator
FROM: Kenneth J. DeDario, Director of Utilities K4L�
SUBJECT: City of Vernon/RMI Utility Services Renewal Agreement
I recommend approval of the attached Electric System Maintenance Agreement between RMI
Utility Services (RMIUS) and the City of Vernon (Renewal Agreement). This Renewal
Agreement replaces the Operation and Maintenance Agreement between RMI Utility Services,
Incorporated and the City of Vernon dated February 15, 1989, and Amendment No. 1 dated
April 27, 1992 which terminate February 15, 1999. RMIUS has agreed to significant reductions
in costs and staffing levels which will help provide for a more cost-effective overall operation
while maintaining the reliability of the electric system. The City Attorney has reviewed this
Renewal Agreement.
Some of the benefits of retaining RMIUS versus a new contractor are as follows:
• RMIUS staff are very familiar with the City electric system. Response time to
outages is very short due to the experience and knowledge base that exists with
RMIUS.
• RMIUS staff is mainly made up with qualified lineworkers. Across the United
States, utilities are having difficulties hiring and retaining lineworkers. Large
utilities such as Pacific Gas & Electric, Southern California Edison and the Los
Angeles Department of Water & Power are offering bonuses to hire and/or retain
lineworkers. The bonuses range from $7,000 to $10,000. If the City were to hire
a new contractor, we would risk losing the services of RMIUS' lineworkers, who
would be inclined to hire on with other utilities for such bonuses.
• If a new contractor is brought in to maintain the electric system, the City would
have to implement a transition program to allow the new contractor to learn the
electric system. This transition period is estimated to take six months, at a
significant cost to the City, approximately $750,000, Major equipment, such as
bucket trucks, cannot be shared between two contractors; therefore, a second set
of tools and equipment would have to be either purchased or rented during the
transition period.
• Significant savings to the City have been included in the Renewal Agreement:
► The management fee has been reduced from 10% to 9%,
► The administrative and general expenses have been reduced from 13% to 12%.
► The City's cost of utilizing Resource Management International (RMI) as a
Subcontractor through RMIUS is reduced from 80% to 65% for
Supervising Consultant and above and from 85% to 80% for Senior
Consultant and below of RMI's then current billing rate.
► RMI fees for oversight of managerial representatives higher than RMIUS'
president are eliminated from the fee schedule.
► Miscellaneous support services from RMI will be billed at cost; the 10%
overhead charge is eliminated.
► The subcontractor (other than RMI) administrative overhead fee has been
reduced from 7.5% to 5%.
► The Materials, Supplies and Expenses administrative overhead fee has been
reduced from 5% to 3%.
► Expenses relating to contract negotiations, labor negotiations, insurance
negotiations and investigations and administrative services will not be billed
to the City.
► Expenses incurred by RMIUS related to personnel recruitment including
advertisement in various media, pre -employment physical examinations and
reference checks will not be billed to the City.
► Late payment charges and bank and credit card fees incurred by RMIUS
will not be billed to the City.
If you have any questions or comments, please contact me. Thank you for your consideration.
KJD: dm
Attachment
DATE: May 11, 1998
TO: Bruce V. Malkenhorst, City Administrator
FROM: Kenneth J. DeDario, Director of Light & Power /��
SUBJECT: RMI Utility Services Renewal Agreement
I received a call this morning around 8:15 a.m. from John Forman of Resource Management
International, Inc. (RMI) concerning the proposed RMI Utility Services (RMI-US) Renewal
Agreement. Mr. Forman stated that Lloyd Harvego asked him to call me to pass on
Mr. Harvego's concerns with respect to the proposed changes and modifications spelled out in
David Brearley's letter to Mr. Harvego dated May 6, 1998. Mr. Forman asked if there was
anything he and I could do. I told Mr. Forman no, that I thought the best thing was to have Mr.
Harvego call you. Mr. Forman said that Mr. Harvego wanted to go through me first and asked
that I pass on the following comments to you:
• Mr. Harvego acted very negatively towards the letter,
• Mr. Harvego was disappointed, because he thought that Mr. Forman and I had
worked through all the details,
• Mr. Harvego had OK'd the final proposal and is now concerned about the process
with a complete change in concept,
• Mr. Harvego said that, if negotiations were to start over again with you,
everything is back on the table including staffing such as substation, metering, etc.,
• Mr. Harvego also stated that cutting the percentages takes any profit out of the job
mainly because of the reduced staff level and all the additional overheads
(Miscellaneous Billing Matters) that are now their responsibility because of the
City's insistence over the years, and finally,
• Mr. Harvego said that if the City insists on the percentages stated in the letter,
RMI-US may just have to shut down.
I told Mr. Forman that I would pass this information on to you, but I didn't know what would
happen from this point.
To refresh you memory, there is a difference of approximately $50,000 per year in the proposed
changes to the RMI-US Renewal Agreement noted in Mr. Brearley's letter to Mr. Harvego. This
$50,000 represents about a 3% decrease in the budgeted $1,675,000 cost to the City but about a
22% decrease in "profit" from about $232,000 to $181,000 for RMI-US. If RMI-US withdraws
its proposal and the City decides to use another contract service company, the $550,000 total
additional cost for the 11-year term would be easily eaten up in transition costs.
If you need any more information or have any questions or comments, please contact me. Thank
you.
KJD: dm
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON REGARDING THE CESSATION OF SERVICES OF RMI
UTILITY SERVICES PURSUANT TO THE ELECTRIC SYSTEM
MAINTENANCE AGREEMENT BETWEEN RMI UTILITY
SERVICES AND THE CITY OF VERNON
WHEREAS, on February 7, 1989, the City Council of the City of
Vernon adopted Resolution No. 5598, which approved the Operation
Maintenance Agreement and
("Agreement") by and between RMI Utility
Services, Inc. ("RMIUS") and the City of Vernon; and
,WHEREAS, the Agreement provided for RMIUS to operate
and maintain the City's electric system; and
WHEREAS, on April 27, 1992, the City Council of the Cityof
Vernon adopted Resolution No. 6087 which a
approved Amendment No. 1 to
the Agreement, providing for an increase in the level of staffing
the scope of services; and and
WHEREAS, on July 28, 1998, the City Council of the City of
Vernon adopted Resolution No. 7190, which approved another agreement
with RMIUS which replaced the Agreement (the "Renewal Agreement"'))Agreement"); and
WHEREAS, the Renewal Agreement became effective on August 1
1998 and is not scheduled to terminate until July 31, 2009; and '
` WHEREAS, Section 5.2 of the Renewal Agreement provides that
either Party may terminate this Renewal Agreement by giving g one (1)
,ear advance written notice to the other Party..."; and
WHEREAS, Navigant Consulting, Inc. ("NCI"), RMIUS's parent
ompany, has advised Vernon's staff that it desires to exit the
usiness'of outsourced utility operations field services;
and
WHEREAS, in the past, NCI has threatened to invoke the Force
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Majeure clause in the Renewal Agreement because of the difficulties it
claims that it has encountered in obtaining linemen to comply with the
staffing requirementsin the Renewal Agreement; and
WHEREAS, the City disputes that NCI has the legal right to
invoke the Force Majeure clause; and
WHEREAS, by letter dated August 19, 2003, NCI requested that
the City terminate RMIUS's responsibilities under the Renewal
jAgreement no later than December 1, 2003;-and
WHEREAS, by letter dated September 4, 2003, NCI advised City
staff that it was providing written notice under Section 5.2 of the
Renewal Agreement of it-s intent to terminate the Renewal Agreement, no
later than one year from September 4, 2003; and
WHEREAS, the City did not receive any such written
termination notice before September 4, 2003; and
WHEREAS, the City Council has never waived the written
notice requirement in the Renewal Agreement; and
WHEREAS, because of the actions taken by RMIUS/NCI, the City
was forced to negotiate an agreement with Petrelli Electric, Inc., to,
provide for the replacement of the services being provided by RMIUS
under the Renewal Agreement; and
WHEREAS, the City Council has considered RMIUS's/NCI's
desires to stop providing services under the Renewal Agreement as of
December 1, 2003; and
WHEREAS, the maintenance of the City's electric system is of
paramount importance; and
WHEREAS, the City Council believes that the City would be
best served by retaining a contractor that desires to continue
providing such services and is not threatening to terminate their
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services while their agreement is ongoing; and
WHEREAS, although the City Council will allow RMIUS to stop
providing the services required under the Renewal Agreement as of
November 30, 20031 it does not intend, in any way, to waive any of the
rights that have accrued or may accrue to the City on or prior to
November 30, 2003.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The recitals contained herein are true and
Icorrect.
SECTION 2: The City Council hereby approves November 30,
2003, as the last day for services to be provided by RMIUS under the
Renewal Agreement.
SECTION 3: The City's Legal Counsel is hereby authorized to
send a letter to RMIUS/NCI, advising of the City Council's decision.
SECTION 4: The City Clerk of the City of Vernon shall
certify to the passage of this resolution; and thereupon and
thereafter the same shall be in full force and effect'.
APPROVED AND ADOPTED this 19th day of November, 2003.
ATTEST:
BRUCE V. MALKENHORST, City Clerk
EONIS C. MALBUkG, Mayo
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STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANGELES )
I. BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution No.
8315, was duly adopted by the City Council of the City of Vernon at a
regular meeting of the City Council duly held on Wednesday,
November 19, 2003, and thereafter was duly signed by the Mayor of the
City of Vernon.
(SEAL)
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BRUCE V. MALKENHORST, City Clerk
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