Meeting of the Tenders Committee

 

 

Date:                 Wednesday 28 August 2019

Time:                8.30am

Venue:

Council Chamber

Hawke's Bay Regional Council

159 Dalton Street

NAPIER

 

Agenda

 

Item       Subject                                                                                                                  Page

 

1.         Welcome/Notices/Apologies 

2.         Conflict of Interest Declarations  

3.         Confirmation of Minutes of the Tenders Committee held on 15 February 2017

Decision Items

4.         Request not to tender for SkyTEM surveys                                                                  3  

 

 


HAWKE’S BAY REGIONAL COUNCIL

Tenders Committee  

Wednesday 21 August 2019

Subject: Request not to tender for SkyTEM surveys        

 

Reason for Report

1.      Hawke’s Bay Regional Council has made provision in the Long Term Plan for airborne electromagnetic (AEM) surveys of the Heretaunga and Ruataniwha aquifer systems. Furthermore, the Provincial Growth Fund (PGF) has accepted an application for additional funding to expand this programme of work, to include the Otane and Poukawa aquifer systems. The PGF investment also supports the development of 3D geological models and groundwater flow models, which will be informed by the AEM data.

2.      Contracts have been negotiated with GNS Science and SkyTEM Australia Ltd, to deliver these services. Approval is requested to not pursue a competitive tender process for this work, and to approve delegation for the Chief Executive to sign the contracts.

3.      Approval is also requested to contract Project Haus Limited for project management services, without pursuing a competitive tender process.

Options Assessment

4.      The following options and anticipated outcomes have been considered:

Option

Anticipated outcome

A.  Engage the identified service providers without a competitive tendering process

Surveys with associated analysis and modelling will be completed on time, with the highest quality work being delivered within realistic budgets

B.  Engage service providers through a competitive procurement process

Staff believe the identified service providers would ultimately be successful with their proposals under a competitive process, but the timelines would be compromised and the surveys would be delayed until the following summer. The reasons for anticipated delays are described in this report.

C.  Do nothing

Airborne surveys would not be undertaken and commitments in the Long Term Plan and Provincial Growth Fund agreement would not be delivered.

Background

5.      A programme of work relating to airborne electromagnetic surveys of the Heretaunga, Ruataniwha, Otane and Poukawa aquifer systems has been developed with support from GNS Science and Project:Haus.

6.      Along with this support, SkyTEM Australia Ltd have provided advice and a formal proposal (attached) and quote for flying the aquifer surveys from January to March 2020.

7.      The successful PGF application was developed and supported by considerable effort from Project:Haus – a project management company based in Central Hawke’s Bay.

8.      The work programme for this research is scheduled to commence September 2019 and will be completed December 2022. Timeframes for scheduling the SkyTEM surveys during optimal flying conditions dictate that flying must commence in January 2020. The completed survey will then provide resistivity data that are the basis of further objectives of the work programme. Objectives are:

8.1.      Complete airborne electromagnetic surveys of the Heretaunga, Ruataniwha and Otane/Poukawa aquifer surveys

8.2.      Develop quality assured resistivity models from the collected SkyTEM data

8.3.      Undertake a simple groundwater-relevant assessment of the resistivity models for Heretaunga Plains, Ruataniwha Plains and Otane/Poukawa Basin

8.4.      Complete a more complex groundwater-relevant assessment of the resistivity models for Heretaunga Plains and Ruataniwha Plains considering factors such as confinement status and groundwater-surface water interaction (i.e., clay fraction models)

8.5.      Develop Leapfrog Geological Models using the resistivity models for Heretaunga Plains and Ruataniwha Plains, for the purposes of visualisation, conceptual understanding of the aquifer systems and for informing groundwater flow models

8.6.      Refine existing Numerical Groundwater Models using the resistivity models for Heretaunga Plains

9.      Along with delivering services to meet objectives 8.1 to 8.6 above, service providers for this work programme are required for:

9.1.      Communication and community engagement

9.2.      Project planning and management

10.    To achieve successful completion of this work programme by December 2022, it is essential to outsource major components of this work.

Strategic Fit

11.    This proposal underpins actions and outcomes listed in the 2017-2021 Strategic Plan as things that council will continue to do; and will do differently:

12.    Water Quality, Safety and Uncertainty. Kia kounga, kia haumaru, kia pūmau te pai o te wai

12.1.    Aquatic ecosystems are protected and enhanced for all to safely enjoy, and all water users have knowledge on what water is available to meet their needs

12.1.1.   Land use is managed to ensure pathogens and contaminants are being reduced, and water is being allocated sustainably to highest value use

12.1.2.   Identify/protect Hawke’s Bay’s outstanding freshwater bodies

12.1.3.   Better understand trends/risks for each catchment

12.1.4.   Work with stakeholders in high risk areas to design viable solutions

12.1.5.   Ensure efficiency of water use

12.1.6.   Investigate alternative sources

12.2.    Smart, Sustainable Land Use. Kia koi, kia ukauka te whakamahinga o te whenua

12.2.1.   Focus on managing the effects of intensive land use/irrigation

13.    The proposal also links to Sustainable Services and Infrastructure in relation to:

13.1.    transforming natural resources to economic prosperity; along with

13.2.    providing regional leadership and enhancing relationships and partnerships (especially with identification of safe drinking water supplies)

14.    Drivers include the NPS-FM and objectives set in RRMP Tukituki Plan Change 6, along with the future TANK plan change.

15.    The information obtained from the AEM data will contribute to the Council’s commitment and investment into regional water security and its role in adapting to climate change.


Discussion

16.    This discussion identifies the reasons that staff consider these contracted services should not be engaged via a competitive procurement process. 

17.    Firstly, the project schedule requires that contracts for these services are established promptly. While the PGF application for funding has been accepted, contract negotiations have taken some time (although this is nearing a successful resolution).  As a consequence of this delay, it has not been possible to commit to contracts with service providers.

18.    Anticipating that the PGF contract is close to being signed, staff recommend that a decision is made regarding the procurement of services. This will enable service contracts to be secured without further delay, when the PGF funding agreement is struck.

19.    The need for prompt engagement of service providers is driven by the requirement to commence the airborne surveys in January 2020: to ensure the survey occurs during the period identified as optimum weather for flying and to ensure the overall programme timeframes are met. In order for flying to commence in January, SkyTEM will need to start preparation in October for mobilisation no later than end of November 2019 (to avoid NZ Customs rush in December). A contract with SkyTEM is therefore required to be signed no later than end of September 2019. This leaves insufficient time for a competitive tendering process and contract negotiation.

20.    With the surveys anticipated to take at least 32 days production time under ideal weather conditions, any anticipated delay of survey commencement is likely to require postponement of the operation until the following summer.

21.    Furthermore, other prerequisite tasks need to be initiated by service providers without delay. These tasks include development of a comprehensive project and HSE plan, community engagement, media and communications activities, along with liaison and logistics planning with SkyTEM Australia. Development of the full project plan is particularly urgent, because this is a prerequisite to the contract agreement for PGF funding. Engagement of services from both GNS Science and Project Haus is required in order to complete the project plan.

22.    Along with timeliness, the identified suppliers offer unique services that staff consider justify a non-competitive procurement process. These are listed below.

AEM surveys and data delivery

23.    In order to match aircraft operators to operational requirements, SkyTEM will manage the procurement of a suitably qualified air transport operator. This allows SkyTEM to ensure that CAA and HSE needs are met. For this reason, we are not separately securing an aircraft operator.

24.    SkyTEM Australia have provided a proposal (attached) with quote for flying surveys throughout the Heretaunga, Ruataniwha and Otane/Poukawa aquifer systems from January to March 2020.

25.    SkyTEM are globally recognised as offering the most advanced airborne electromagnetic system for mapping aquifer systems. The technology that enables acquisition of high resolution data, both near-surface and at depth, is unique to SkyTEM and is not offered by any other provider in the world.  

26.    SkyTEM have an excellent interpretation team including principal scientists with extensive international experience in delivering similar projects. This provides confidence in contract delivery from the proven track record of completing large government airborne surveys within budget and on time.

27.    At today’s (13 August, 2019) exchange rate, the quote of AUD $1.098M from SkyTEM Australia for flying the surveys, delivering data and initial inversions is equivalent to NZD $1.168M. This quote is subject to revision to accommodate fluctuations of helicopter and fuel pricing, along with unanticipated standby charges due to adverse weather conditions. Therefore, the SkyTEM survey budget has been rounded up to NZD $1.2M to allow some contingency.

28.    Staff consider that the SkyTEM technology and track record cannot be achieved by any other provider in the world and there would be no benefit from a competitive procurement process for this part of the work programme.

Data processing, analysis and modelling

29.    GNS Science have attached a work brief as a proposal for providing services to meet objectives 8.2 to 8.6 listed above. The work brief is attached to this agenda item.

30.    There are several reasons why staff consider that GNS Science is uniquely able to deliver the services required for SkyTEM data processing, analysis, development of hydrogeological models and revisions of the Heretaunga groundwater models:

30.1.    GNS Science are uniquely able to be contracted under a Master Services Agreement between HBRC and GNS Science that commenced 1 September 2018. This enables service agreements to be made with a work brief that avoids inevitable delays due to legal and contractual ambiguity

30.2.    GNS Science have internationally recognised capability in hydrogeological, geophysical and groundwater modelling research and have reserved capacity to provide the specialist expertise that is required to meet objectives 8.2 to 8.6 listed above. A list of GNS specialists that will be engaged in the SkyTEM work programme is included in the attached work brief

30.3.    In 2017, GNS Science assisted HBRC with a business case to collect SkyTEM data and use these data to improve knowledge of the groundwater systems within the Heretaunga Plains and Ruataniwha Plains. Consequently, HBRC approved funding within the Long Term Plan (LTP) for this purpose

30.4.    GNS Science have completed planning of this work, with Stage 1 (survey and logistics planning) and Stage 2 (Preliminary TEM soundings) reports delivered to HBRC in 2019

30.5.    Furthermore, GNS Science also assisted HBRC with preparation of the application to the Provincial Growth Fund (PGF), which extends the LTP programme of work

30.6.    An in-kind contribution of $300,000 has been committed by GNS Science to support the SkyTEM work programme

30.7.    GNS Science are intimately familiar with the Heretaunga groundwater flow and transport models, which will be revised after the SkyTEM data are available. Success of the Heretaunga groundwater modelling to inform the TANK plan change was achieved because of the significant contribution of GNS modellers (over an 18 month period) to the model development, calibration, scenario simulations and uncertainty analysis. GNS modellers are uniquely positioned to undertake the challenging task of revising these models after SkyTEM data acquisition

31.    GNS Science have quoted a contract value of $1.849M (excluding GST) to deliver the services listed in the attached work brief

Project Management

32.    To successfully achieve the objectives listed in paragraph 8, specialist project planning and project management services are required to ensure that this complex work programme is delivered on time and within budget.

33.    Along with project scheduling, budgeting and resourcing, the project plan also needs to include:

33.1.    Project governance and management structures

33.2.    Community engagement plan

33.3.    Media and communications plan

33.4.    Risk identification and management plan

33.5.    Change management plan

33.6.    Contract Management including liaison and reporting to the PDU

34.    Project Haus Limited has been identified as uniquely able to provide these services because they are:

34.1.    Based in Central Hawke’s Bay and is a project management company with unique knowledge and awareness of regional water management issues. The company has extensive experience with planning and delivering large government projects, and has been in business under the current company structure for nine years

34.2.    Very familiar with the SkyTEM work programme, objectives, stakeholders, key service providers and PGF requirements, due to the significant effort that they delivered to prepare the successful PGF application. Subsequent meetings and engagement with HBRC Executive, PGF staff and GNS Science have strengthened these relationships

34.3.    Proven performers with other HBRC projects including the Erosion Control Scheme, Whakaki pilot project, Tukituki Taskforce Group and development of the HBRC PGF applications. Furthermore, Project:Haus constructive internal relationships and a strong understanding of HBRC internal policy and procedures.

34.4.    ProjectHaus staff rates represent good value for money and are very reasonable in comparison to other providers of a similar nature

35.    Staff consider it is essential to engage Project Haus immediately. A key reason for this urgency is the requirement to develop a comprehensive project plan before the PGF contract will be signed. Furthermore, to initiate this work programme and ensure that the surveys commence in January as scheduled, key components of the project plan need to be actioned without delay: for example, project governance needs to be established immediately and community engagement needs to commence in October. These activities require outsourcing and Project Haus is uniquely available and specialised to provide the services

36.    The service rates for Project Haus are:

36.1.    $135/hr for Director Amanda Langley to deliver project management set up, oversight and risk management. Amanda will ensure that links are established and benefits are leveraged across the various projects within the work programme

36.2.    $100/hr for Associate Libby Tosswill to deliver services including reporting, financial control/budgeting, coordination and support to the team in development of communications

37.    Staff consider a basis of actual time and reasonable costs is appropriate for this contract, due to the fluid nature of project planning and delivery. Staff have estimated a maximum of $117,000 would be appropriate as a ceiling for the contract over a two year period, which is within the financial delegation of the Chief Executive. However, due to urgency to establish this contract, along with the unique services provided by Project Haus, it is recommended to engage these services without a competitive procurement process. 

Summary of discussion

38.    Staff research has identified that suppliers identified in this discussion offer services that are unique, due to at least one of the following:

38.1.    Technology and specialist services that are not offered by any other provider

38.2.    A very limited pool of providers that meet the unique needs of this work programme

38.3.    A vested interest in the work programme through funding contribution

38.4.    The AEM programme is dependent on knowledge and previous experience with HBRC’s working environment, along with prerequisite services that the supplier has delivered to HBRC

38.5.    Knowledge and experience with the PGF application process and/or acknowledgement and acceptance of the supplier’s contribution to the work programme in the PGF documentation

39.    In summary, a competitive procurement process is not recommended by staff due to the unique services that these suppliers can deliver, along with the very high probability that the surveys would be delayed by a year if a competitive tendering process was undertaken.

Considerations of Tangata Whenua

40.    Greater understanding of the aquifer systems in Hawke’s Bay will inform options to address issues that affect Tangata Whenua. For example, improved knowledge of groundwater and surface water interaction is required in some locations including Bridge Pa. The airborne surveys will address these knowledge gaps and enable modelling to identify realistic and feasible solutions to problems that affect groundwater levels and culturally important stream flows.

41.    Discussion with Regional Planning Committee members resulted in favourable comments from Tangata Whenua representatives, with a remark that the airborne surveys are akin to “… giving Papatūānuku a scan”.

42.    Staff consider that obligations under legislative documents including Iwi planning documents, Treaty Settlement legislation, RMA, Local Government Act, Biosecurity Act, Transport Act and Reserves Act are not relevant to this work programme

Financial and Resource Implications

43.    Provision is made for all of the services and works set out in this agenda item within Council’s Long Term Plan and the anticipated PGF funding. Additional in-kind contribution of $300,000 has been committed by GNS Science. Funding streams are identified in Table 1.

Table 1. Funding sources for the airborne electromagnetic survey work programme

Source of Funding

$ (excluding GST)

Status/Commentary

Provincial Growth Fund

2.154M

Subject to contract

HBRC cash contribution

1.644M

In Long Term Plan

HBRC in-kind contribution

0.210M

In Long Term Plan

GNS Science in-kind contribution

0.300M

Confirmed

Total:

4.308M

 

44.    Resources from the PGF are anticipated to be secured under contract with Hawke’s Bay Regional Council in the near future. In the meantime, agreement to the recommendations of this agenda item will allow service contracts to be entered into as soon as the PGF funding is secured.

45.    Contracts for services that exceed funding within the Long Term Plan will not be established until PGF funding is fully committed under contract with Hawke’s Bay Regional Council.

Decision Making Process

46.    Council is required to make every decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements in relation to this item and have concluded:

46.1.   The decision does not significantly alter the service provision or affect a strategic asset.

46.2.   The use of the special consultative procedure is not prescribed by legislation.

46.3.   The decision does not fall within the definition of Council’s policy on significance.

46.4.   The persons affected by this decision are all persons with an interest in the region’s management of natural and physical resources under the RMA.

46.5.   The decision is not inconsistent with an existing policy or plan.

46.6.    Given the nature and significance of the issue to be considered and decided, and also the persons likely to be affected by, or have an interest in the decisions made, Council can exercise its discretion and make a decision without consulting directly with the community or others having an interest in the decision.

 

Recommendations

That the Tenders Committee:

1.      Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted Significance and Engagement Policy, and that Council can exercise its discretion under Sections 79(1)(a) and 82(3) of the Local Government Act 2002 and make decisions on this issue without conferring directly with the community and persons likely to be affected by or to have an interest in the decision.

2.      Authorises the Chief Executive to negotiate directly and, if able, enter into contracts with SkyTEM Australia, GNS Science and Project:Haus, for the provision of services to Hawke’s Bay Regional Council from 1 September 2019 until 30 June 2022, as described in this report.

3.      Directs staff that Recommendation 2 is made on the basis that contracts for services that exceed funding within the Long Term Plan will not be established until PGF funding is fully committed under contract with Hawke’s Bay Regional Council.

 

Authored by:

Dr Jeff Smith

Team Leader/Principal Scientist – Hydrology/Hydrogeology

 

Approved by:

Iain Maxwell

Group Manager Integrated Catchment Management

 

 

Attachment/s

1

SkyTEM proposal

 

 

2

GNS Science Work programme

 

 

  


SkyTEM proposal

Attachment 1

 

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SkyTEM proposal

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SkyTEM proposal

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GNS Science Work programme

Attachment 2

 

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GNS Science Work programme

Attachment 2

 

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