Meeting of the Tenders Committee
Date: Wednesday 6 November 2013
Time: 3.00 pm
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Venue: |
Council Chamber Hawke's Bay Regional Council 159 Dalton Street NAPIER |
Agenda
Item Subject Page
2. Conflict of Interest Declarations
Decision Items
3. Makara Dam
Wednesday 06 November 2013
Reason for this report
1. On 31 May 2012 a sinkhole was identified in the Makara No 1 Dam high on its upstream face directly above the low level discharge pipe. This sinkhole compromises the structural integrity of the dam, and has resulted in HBRC:
1.1. Reducing the flood detention capacity of the dam by excavating a temporary spillway at a lower level than the permanent spillway, following advice from Consulting Engineers experienced in dam construction and rehabilitation;
1.2. Investigating the cost of reinstatement of the dam;
1.3. Investigating alternative options for the provision of a similar level of flood protection to downstream properties to that provided by the dam; and
1.4. Assessing the relative benefit that the Scheme and each of the alternative options provides to each property within the Scheme.
1.5. Working through a special consultative process with the community in accordance with the Local Government Act 2002 (LGA) with regard to the preferred option for ongoing provision of flood protection to the Makara Valley properties and how the work should be funded.
1.6. Agreeing how the repair project will be funded.
1.7. Completing a detailed design for the dam repairs and seeking tenders for that work.
2. Tenders have now been received for the supply of pipes and repair of the dam. This paper summarises the tenders received and seeks approval from the HBRC Tenders Committee, in accordance with the terms of reference for the Committee, and a decision of Council at its 29 May 2013, to award the contract for the pipe installation and earthworks.
Background
3. The Upper Makara Catchment Control Scheme is one of 25 Schemes managed by HBRC under the Soil Conservation and Rivers Control Act 1941. The Scheme is located approximately 30 km due south of Hastings, and 20 km due east of Waipawa.
4. The catchment (approximately 7645 ha) spans the steep hill country above Elsthorpe, the flat valley floors as well as the flat area around the village of Elsthorpe. The main streams in the catchment are the Makara Stream, the Wharemate Stream, and the Silver Range Stream. The Wharemate and the Silver Range Streams drain into the Makara Stream, which flows through the Elsthorpe Valley to the Tukituki River.
5. The need for the Catchment Control Scheme was initiated in August 1971 following a period of severe storms which caused significant erosion on properties in the catchment and flooding through Elsthorpe. A further flood in October that year and widespread flooding in 1974 resulted in further damage and problems for the local community.
6. The Scheme was designed to improve stability and productivity of 800 hectares of flats and 2225 hectares of hill country.
7. The Scheme design incorporated a combination of 5 flood detention dams, some stopbanking, and significant channel improvements along with soil conservation works on the steep hill country using retirement planting. The Makara No 1 dam is the Scheme’s largest flood detention dam.
Tenders
Manufacture and supply of pipes
8. Tender prices were sought from manufacturers of reinforced concrete pipes for the manufacture and supply of pipes. Separate tenders were called because special non standard pipes are required for the project which require specific design. The pipes will operate under pressure when the water level in the dam is above the level of the inlet, and they are sited under the dam embankment which is 12m high above the top of the pipes.
9. The pipes will replace the 70m long corrugated steel discharge pipe which has corroded allowing the formation of the sinkhole in the dam.
10. Tender documents were delivered to two local companies that produce concrete pipes, with one tender received by the closing date. This was:
Humes Pipeline Systems $212,789.40
11. This contract has been awarded to Humes Pipeline Systems on 23 October 2013 under the delegation of the Chief Executive.
Pipe installation and Earthworks
12. This contract relates to the excavation of the dam, laying of concrete pipes, reconstruction of the dam plus associated channel works as part of the repair of the dam.
13. Tenders for pipe installation and earthworks were advertised in Hawke's Bay Today on 25th September and 28th September 2013.
14. Tender documents were requested by nine companies, all from Hawke's Bay.
15. Three tenders were received by the closing date. These were:
HBRC Works Group $548,022
Tractor Repairs HB Ltd $551,976
Ken Scheele $685,000 (non-complying)
15.1. The Engineer's estimate was $870,365.
16. The HBRC Works Group are the contracting business unit of the HBRC, and has successfully carried out many civil engineering works for HBRC and other Councils and external clients throughout the region.
17. Their tender price of $548,022 is the lowest received, and as all the non-priced attributes are passed, it is recommended that the tender from the HBRC Works Group be accepted.
Financial implications
18. On 29 May 2013 Council resolved to:
18.1. Adopt the recommendations of the Hearing Panel. (Note this hearings panel was established by HBRC to consider submissions on the Statement of Proposal adopted by Council in accordance with the LGA Special Consultative Process requirements. A copy of the Statement of Proposal and Hearing Panel’s report are available on request)
18.2. Agree to proceed with the work necessary to complete the design, tender and construction of the remedial work, with consideration of the tender for construction to be considered by the HBRC Tenders Committee subject to tenders resulting in the final project cost not exceeding 115% of the estimated project cost of $1,204,000.
18.3. Include the following changes into the Annual Plan 2013/14 to be adopted at its meeting on 26 June 2013.
18.4. Pursuant to Section 16(4)(b) of the Local Government (Rating) Act 2002 (the Act) amends the existing Differential for the Upper Makara Catchment Control Scheme, being a Targeted Rate, by boundary changes in accordance with Map (reference).
18.5. Pursuant to Section 17 of the Act, the category of land for setting a Targeted Rate will be based upon area of land within each rating unit as set out in Clause 4 of Schedule 2 of the Act.
18.6. Pursuant to Section 18 of the Act each rating unit within the Upper Makara Catchment Control Scheme will be rated on the area of land, as listed in Clause 5 of Schedule 3 of the Act. The rates will be calculated in accordance with the relevant Differential category, as amended, from 1 July 2013.
18.7. Changes to budgets for the Upper Makara Scheme to provide for the detailed design, tendering and construction of the No 1 dam.
19. Staff have revised the project estimate based on the prices that are recommended to be accepted in this paper. The revised project cost is $1,280,000. (See attached spreadsheet for the makeup of this estimate.) At the time of writing this briefing a building consent has not been issued. Staff and the dam design engineer have responded to a number of further information requests from the consenting authority, Waikato Regional Council, regarding design issues. Staff hope that a consent will be issued prior to the Tenders Committee meeting on 6 November. The project estimate is based on the current design.
20. Note the earthworks contract includes a contingency of $50,000 to cover any unforeseen or unplanned issues. At this stage it is known that there will be some fencing costs that will need to be met, however details of fencing have yet to be considered in detail by the owner of Paeroa Station within which the dam is sited.
21. In accordance with the Council decision of 29th May 2013, 60% of the project cost will be met from Council’s regional disaster reserve fund, and the remaining 40% will be met from the Upper Makara Scheme funds.
22. HBRC annual Plan 2013/14 provides for this project to be constructed and funded. Scheme funding will partially be met from a loan of $220,000 repaid over a 20 year period. Targeted rates paid by the Scheme beneficiaries were increased from $31,321 in the 2012/13 financial year to $83,321 in this financial year. Staff have reviewed long term financial models and are satisfied that the targeted rates as set, subject to them increasing annually in line with increases in operational costs, are adequate to appropriately fund scheme costs.
Decision Making Process
23. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:
23.1. The decision does not significantly alter the service provision or affect a strategic asset.
23.2. The use of the special consultative procedure is not prescribed by legislation.
23.3. The decision does not fall within the definition of Council’s policy on significance.
23.4. The persons affected by this decision are the beneficiaries of the Makara Scheme who have been consulted with regarding the issue through a special consultative process culminating in Council’s decision to proceed with the project at their meeting on 29 May 2013.
23.5. Options that have been considered include were set out in the Statement of Proposal which formed part of the special consultative process.
23.6. The decision is not inconsistent with an existing policy or plan.
23.7. 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.
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That the Tenders Committee, in accordance with the delegated powers set out in the Committee’s Terms of Reference, and in accordance with the decision of Council dated 29 May 2013: 1. Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted policy on significance 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 due to the nature and significance of the issue to be considered and decided. 2. Notes that the Chief Executive under her delegated authority has approved the award of the contract for the manufacture and delivery of pipes to Humes Pipeline Systems. 3. Awards the Pipe Installation and Earthworks contract to HBRC Works Group for the sum of $548,022. |
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Mike Adye Group Manager Asset Management |
Liz Lambert Chief Executive |
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1View |
Project Estimates |
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Tenders Committee
Wednesday 06 November 2013
SUBJECT: Harvesting Tangoio Soil Conservation Reserve
Reason for Report
1. An area of approximately 27.4ha of pinus radiata forest is ready to be harvested within the Tangoio Soil Conservation Reserve. The area is incorporated within Stands 2.01 and 2.02 in the Reserve Stand Record system. Stands 2.01 and 2.02 fall within the area shown as SW1 on the map attached (Appendix 1). This area is immediately south of White Pine bush.
2. Staff have sought advice from Forestry specialists P F Olsen on the best approach to optimise the value to HBRC for the harvest. A copy of their advice is attached for Committee member information (Appendix 2).
3. Priced proposals were sought from forest companies operating in Hawke’s Bay on the basis of a Managed Graded Log Sale approach.
4. This paper summarises the proposals received and recommends that the harvesting and sales contract be awarded.
Background
5. The Tangoio Soil Conservation Reserve (Tangoio SCR) consists of approximate 550ha of steep land adjacent to the Napier-Wairoa State Highway 2 about 30km north of Napier. The reserve comprises two blocks of land; a northern block of 213.6 ha in vicinity of the “Devil’s Elbow” and a southern block of 337 ha. Approximately 350ha of this land is planted in commercial forest.
6. In 1945 the Soil Conservation and Rivers Control Council and the Main Highway Board jointly acquired the land that became the Tangoio SCR. In April 1988 Government Department restructuring led to the Hawke’s Bay Catchment Board taking over responsibility for management of the Reserve. In November 1989 management and control of the Reserve was vested in Hawke’s Bay Regional Council.
7. The land, forest crop and a fund of approx. $3m which are the net proceeds from the Reserve since its vesting with the HB Catchment Board, remain the property of the Crown. The fund is however held by HBRC, but its use is restricted to meet the costs of management of the TSC Reserve. This fund is referred to later in this paper as the TSCR fund.
8. The prime purpose of the Tangoio SCR is to protect the highway. Secondary purposes are to improve the landuse of the area, generally improve the stability of the slopes, reduce the amounts of sediment entering the Tararere Stream which drains into the Aropaoanui river, and the Karoaara Stream which drains into the Te Ngarue River, demonstrate and promote soil conservation within the wider Hawke’s Bay Region, improve recreational opportunities within the general area of the reserve and protect cultural and heritage values.
9. A Treaty Settlement Bill for the Maungaharuru – Tangitu Iwi is currently under select committee process, and is expected to be passed into law late 2013 or early 2014. That Bill makes provision for;
9.1. Any funds held in the TSCR fund and not required for the management of the Reserve shall be available to transfer to a Catchments Fund provided for in the Maungaharuru-Tangitū Deed.
9.2. HBRC to manage the Reserve Fund and use its best endeavours to jointly agree with Maungaharuru Tangitu Trust (MTT), the post settlement body responsible for managing the Treaty settlement outcome, the use of the fund, including the financial forecasts for the TSCR fund and the surplus amount available for transfer to the Catchments Fund and when such surplus may be transferred. The primary purpose of the TSCR fund shall be to meet the costs of managing the Reserve in accordance with Section 16 of the Soil Conservation Act. It is acknowledged that this includes afforestation of a portion of the Reserve as set out in section 134 of that Act.
9.3. The establishment of the Catchments Fund in accordance with the Treaty Settlement Legislation for Maungaharuru-Tangitū Trust. Money held in the TSCR fund surplus to the funds necessary to meet the cost of managing the Reserve, may be used for avoiding, remedying or mitigating soil erosion and its effects on the environment (as defined in Section 2 of Resource Management Act 1991) and maintaining the physical, chemical and biological qualities of soil in the catchments. The catchments referred to are Esk, Te Ngarue, Waipātiki and Arapawanui (also known as Aropaoanui) (catchments).
10. The Management Plan for the Reserve is currently being reviewed and updated to reflect the arrangements now in place as a result of the imminent MTT Treaty Settlement legislation. This Management Plan will need to be adopted by Council. Staff expect this to occur in early 2014 following a period of consultation on the draft Management Plan with MTT, other key stakeholders in the Reserve, and neighbouring land owners. At that time staff will provide more details on the Reserve and its management to Council.
Proposals received
11. In October proposals were invited from three local forest companies. Pan Pac Forest Products, Forest Management NZ and Rayonier. Proposals were received from Pan Pac and Forest Management NZ on 22 October as requested. Rayonier declined to participate in the process citing staffing levels being insufficient to complete the proposal in time.
12. Forest Inventory data and mapping were provided to invitees. Bids included harvest plans (showing roading and skidsite positions and costs), marketing plans showing log prices, log transport costs, harvest costs and overheads.
13. It is important to note that the grade mixes are indicative and non-binding in a sales process of this type and export log prices are subject to changes in export market price, shipping and foreign exchange.
14. The two proposals offered similar net income amounts excluding engineering (roading and landings) costs (Pan Pac $1,129,416; and Forest Management NZ $1,134,465) based on the grade mixes projected, with logging, cartage and management fees taken into account.
15. The Pan Pac proposal has a significant advantage in engineering costs, $57,154, being less than half those provided by FMNZ. Pan Pac proposed to achieve this by logging downhill. This results in Pan Pac providing a higher net return to HBRC.
16. A decision matrix was used to assess the two proposals taking into account environmental, marketing, financial risk and strategic criteria with weightings applied to each. Both proposals were of very high quality. Both companies have excellent operational, environmental and health and safety capability.
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Description |
Pan Pac |
Forest Management |
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a |
Estimated income net of harvesting and transport costs |
$1,129,416 |
$1,134,465 |
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b |
Engineering (roading and landing construction) costs |
$57,154 |
$138,913 |
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c |
Weighted attribute score |
91% |
79% |
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Assessment ((a-b)xc/1,000,000) |
0.976 |
0.786 |
17. A key area of difference in the weighted attribute score was in marketing strategy, with Pan Pac offering a wider range of domestic options at competitive prices across most grade types.
18. Pan Pac were assessed as offering the more robust proposal largely as they are able to offer a reduced financial risk from the mix of domestic and export options across the range of log grades, and stronger pricing for domestic grades.
19. A mix of domestic and export sales options can be critical in the event of an export downturn once harvesting has commenced.
20. It is therefore recommended that the proposal submitted by Pan Pac be accepted as their non-price attributes are superior, and the net income from the project is expected to be higher.
21. Pan Pac has harvested previous blocks within Tangoio Soil Conservation Reserve successfully.
Financial and Resource Implications
22. The 2013/14 Annual Plan provided for an income of $480,000 from the harvest and sale of this area of forest. The net income will be considerably higher than this.
23. Offsetting this income is the cost of constructing a runoff lane and acceleration lane on SH2 to allow for the safe operation of log harvesting traffic. Staff are negotiating with NZTA regarding the specifications for this however the cost of this work is expected to be between $50k and $90k depending on the extent of work required. A contract for this work will be let to a suitable contractor under the delegation of the Chief Executive.
24. Replanting of the block is provided for in budgets for the 2014 winter.
25. The net return from this harvesting operation is expected to be approximately $990,000 excluding the cost of replanting. This amount will be credited to the Tangoio Soil Conservation Reserve fund.
Decision Making Process
26. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:
26.1. The decision does not significantly alter the service provision or affect a strategic asset.
26.2. The use of the special consultative procedure is not prescribed by legislation.
26.3. The decision does not fall within the definition of Council’s policy on significance.
26.4. There are persons directly affected by this decision, however it should be noted that the Maungaharuru Tangitu Treaty Settlement Bill will allow for surplus funds held in the Tangoio Soil Conservation reserves account not required for the ongoing management of the Reserve to be transferred to a separate account for soil conservation and environmental enhancement work within the Waipatiki, Esk, Arapawanui, and Te Ngarue catchments.
26.5. Organisations providing proposals would consider the option providing the best return to HBRC.
26.6. The decision is not inconsistent with an existing policy or plan.
26.7. 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.
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That the Tenders Committee: 1. Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted policy on significance 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 due to the nature and significance of the issue to be considered and decided. 2. Awards the harvesting of Stands 2.01 and 2.02 of the Tangoio Soil Conservation Reserve and marketing of the harvested timber using a Managed Graded Log Sale approach, with an estimated return to HBRC of $1,129,416, less engineering costs, costs associated with safe traffic access to SH2, and replanting costs, to Pan Pac Forest Products Limited; and delegates the Chief Executive to enter into a contractual arrangement with Pan Pac to optimise the return to HBRC. |
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James Powrie Land Services Advisor |
Mike Adye Group Manager Asset Management |
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Liz Lambert Chief Executive |
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1View |
Appendix 1 - map |
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2View |
Appendix 2 - letter |
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