Procurement Process Review
Kern Power Plant Demolition Incident
November 14, 2012
Introduction: This report summarizes the review conducted by Pacific Gas and Electric Company (PG&E)
into its procurement process used to hire Cleveland Wrecking Company (CWC) on the Kern Power Plant
(KPP) demolition project. The report first gives an overview of the process that was used for the KPP
demolition project, with a focus on the portions of the process that involve safety. Next, the report describes
the corrective actions that PG&E identified as part of the investigation of the KPP demolition project
incident. The corrective actions proposed in this report are consistent with an enterprise-wide Contractor
Safety Program under development at PG&E. PG&E anticipates that additional measures and process
improvements may result from implementation of this Contractor Safety Program. As a result, the corrective
actions proposed herein should be considered interim and subject to refinement based on new insights and
the final results of PG&E's Contractor Safety Program initiative.
PG&E Procurement Process: PG&E employed a comprehensive REP evaluation process which included
Go/No-Go criteria for safety, fmancials and notice of violations. Thereafter, bid proposals were scored on a
weighted scoring mechanism to rank the bids before moving on to interviews with the highest ranked
bidders, and finally, awarding a contract.
Phase I Review Process
In order to be considered for Phase 11 (Scorecard Evaluation), bidders are required to meet minimum,
Go/No Go, criteria described below for a) Safety, b) Financial Viability, and c) Notice of Violations. Failure
to meet the minimum criteria in any of these areas would result in excluaon from Phase 11 evaluations and
remaining procurement process. The minimum safety criteria for bidders to qualify for next phase of
procurement process are:
? 3 most recent years of data from OSEIA 300 Logs = No Fatalities
supporting that program.
Bidders were required to submit safety data for their last three years as well as safety data for their three
most critical subcontractors. The information received from bidders was reviewed by PG&E project team
(Power Generation, Sourcing and Safety) to determine if the bidder met the minimum threshold criteria.
Phase II Review Process
Bidders were scored using a predetermined weighted scoring mechanism which included factors such as
commercial, technical, pricing and diversity. Based on this scoring, PG&E inter viewed the two (2) most
competitive bidders to clarify their proposals and delve deeper into various
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aspects including safety. Also, PG&E requested that these selected bidders submit their "Best and Final"
price for their proposals after the clarifications during the bidder interviews.
The award decision was made using the total score assessed for each bidder after a final adjustment to the
technical or commercial portions of the scoring based upon the results of these interviews and the receipt
of the Best and Final proposals from the two (2) most competitive Bidders.
Evaluation results for Kern Power Plant Demolition RFP
On December 7, 2011, PG&E issued a Request for Proposals based on a turnkey contract whereby the
successful bidder would assume total responsibility for the demolition and removal of all structures,
equipment, foundations and footings from the site in compliance with all laws, permits and safety
requirements. Contractor safety history and safety plan for this specific scope of work, contractor
capability, expertise in demolition work, financial viability, supplier diversity and price were the key
factors in evaluating the bids. The Go/No Go filter was then applied utilizing information on safety
record, financial viability, and notice of violations.
Phase I: Go/No-Go (Safety. Financial viability and Notice of Violations)
TOTAL SUMMARY Wrecking BIDDER 2 BIDDER 2 BIDDER 4 BIDDER 5
Go/No Go 100% GO GO GO GO NO GO*
Phase II: Scorecard Commercial, Technical, Pricing anc Diversity"
TOTAL SUMMARY Wrecking BIDDER 2 BIDDER 2 BIDDER 4 BIDDER 5
Total Commercial Score REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED
Total Technical Score REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED
Total Pricing Score** REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED
Total Diversity Score REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED
Overall Total Score REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED
REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED
'"BIDDER 5 has Safety Issues and scored as "No-Go" **Total Evaluated Price
Kern Power Plant Demolition RFP Evaluation Scorecard
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As part of the RFP process, PG&E required each B idder to submit safety related information for the Bidder
and three (3) most critical subcontractors. Safety related submission information for this project RFP is
shown in Attachment 1 of this document. All bidders' submittals to the RFP scored by the PG& E RFP team
were based on pre-established evaluation criteria.
After evaluation of bidder proposals, on Friday, February 3, 2012, the two most competitive Bidders, one of
which was CWC, were interviewed extensively by the PG&E RFP team. During these interview meetings the
Bidders made presentations about their proposals, including their safety programs. These presentations were
followed by a question and answer session addressing all aspects of the proposal, including safety. The
PG&E RFP team was satisfied with both teams' answers to their questions.
Based on the bidding process, pre-established selection criteria and responses to bidder interview questions,
Cleveland Wrecking Company ("CWC") was the successful bidder and was awarded the contract.
PG&E's Enterprise-Wide Contractor Safety Program: In April 2012, PG&E embarked on an initiative to
improve contractor safety by implementing an enterprise-wide Contractor Safety Program to enhance and
track safety performance of its contractors. This initiative involves benchmarking PG&E's contracting
procedures and contractor safety programs against other utilities and suppliers, developing enterprise wide
contractor safety metrics and then developing the Contractor Safety Program. This program will be
implemented on a pilot basis during 2013. After evaluating the results of the pilot program, PG&E plans to
roll out the program on an enterprise-wide basis.
Enhancements Identified During the KPP Investigation: While the Contractor Safety Program is in the
early stages of development, there are some process improvements that have already been identified related
to hiring contractors that are relevant to projects similar to the KPP demolition project. In particular, there are
three contracting process enhancements shown in the table below that PG&E is considering in its Contractor
Safety Program development process to address issues identified during PG&E's investigation of the KPP
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Issue Associated with Current Practice Recommended Process Enhancements
Under Review in Contractor Safety Program
1. PG&E requires safety data for previous Perform a longer look back into contractors'
three (3) years including the current past safety performance. For large and higher
year. Information prior to 3 years was risk construction projects, require safety
not required. Safety issues such as a records and relevant documentation for
serious incident prior to 3 years may not previous five (5) years.
PG&E will consider increasing the time
period to 5 years for bidder's to meet the
minimum safety criteria.
2. PG&E accepted and reviewed data on PG&E will consider requiring backup
EMR rate and OSEIA data supplied by documentation for EMR and OSEIA data.
bidders without requiring backup
documentation. There is a risk that some
of the information submitted by bidders
3. Regulators and the public are concerned PG&E will consider on-boarding a third-
that there is not enough independent party company to verify contractors' safety
oversight of PG&E's evaluation of records for future projects. This is expected to
contractor safety records. be over and above PG&E's own review of
contractors' safety programs and could reveal
more information on contractors' safety
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