Membrane Replacement & Installation Proposal To: City of Ashland Attention: Mr. David Gies City of Ashland Address: 20 East Main Street Ashland, OR 97540 Laura Black From: Regional Lifecycle Manager, Western USA GE Water & Process Technologies Canada o/a ZENON Environmental Corporation 3239 Dundas Street West, Oakville, Ontario, Canada L6M 4B2 Tel: 905 465 3030 Fax: 905 465 3050 Date: Email: Telephone No.: Fax No.: No. of Pages: August 17, 2010 giesd@ashland.or.us 541 552 2335 541 552 2364 9 including cover Email: Laura. Black@ge.com 905 465 3030 x3715 Cell 905 464 3038 905 465 3050 Telephone No.: Fax No.: Cc: Scott Hortop, Jim Imrie, Julie Hatch, Ed Coulter, Seth Ginter, Dennis Favret Proposal No.: Subject: Membrane Replacement Project No.: 42377063 500127 Ashland Secondary Effluent Treatment Plant, 1259 Oak Street, Ashland, ADF 2.78 MGD, ZeeWeed® 500c, 4 Plant: Trains, 10 Cassettes/Train, 26 Modules/Cassette, 1040 Total Modules. Substantial Completion Date – Oct 17, 2002 City of Ashland – Membrane Replacement 42377063 ©GE August 16, 2010 Page 1 of 9 1 Introduction This proposal is provided at the request of The City of Ashland to replace their ZeeWeed® 500c membranes. This proposal is to replace one full train (260 modules) of the original installed modules. Pricing is based on guaranteed replacement pricing of CAD$1000/module which expires April 4, 2011 10 years from original purchase order date of April 5, 2001. The 3 year prorated warranty expired on October 16, 2005. The plant is experiencing elevated turbidities related to fiber/urethane bond breakdown as a result of aggressive chlorination during membrane shutdown for approximately the first 5 years of operation. 2 Scope – GE 2.1 Membrane Module Supply 260 ZeeWeed® 500c DW membrane modules, 250 square feet Individually bagged, boxed and crated for ocean shipment. . No Cassette frames included. We have assumed that your current cassette frames can be used with the new membrane modules. Includes supply of associated cassette hardware as required: Cassette connection hoses, clamps, and camlocks should be replaced every 3 years. We have assumed that hoses, clamps, camlocks and camlock seals are in good condition and able to be reused. 2.2 Delivery Terms CIP -Delivery will be on the basis of CIP The City of Ashland, Ashland, OR (Carriage and Insurance Paid, INCOTERMS 2000). GE will manage clearance of the shipment through customs. Duties will be charged to The City of Ashland at cost in the final billing. Origin - Delivery of ZeeWeed® membranes originates from the GE Water & Process Technologies, ZENON Membrane Products (ZEM), Bláthy Ottó u 4, Oroszlány, 2840 Hungary facility. Temperature - UF membranes cannot be allowed to freeze and may require temperaturecontrolled freight and handling according to the season and the planned routing. Delivery Schedule - Delivery of membrane modules is typically 16 weeks after receipt of order. Definitive Membrane Module availability will not be confirmed until a Purchase Order is received from The City of Ashland and acknowledgement of a Purchase Order is issued by GE Water. City of Ashland – Membrane Replacement 42377063 ©GE August 16, 2010 Page 2 of 9 2.3 Membrane Module Warranty All GE membranes are supplied with a standard 2 Year Full Replacement Seller’s ZeeWeed® Membrane Module Warranty against manufacturing defects. For details of the warranty coverage on the membrane modules supplied, please see Section 8. 2.4 Installation and Assistance Not Included. GE recommends that a trained Field Service Representative assist with all membrane installation. Please request a quotation 60 days in advance of a planned installation. 3 Delivery Schedule Delivery of membrane modules is typically 14-18 weeks after receipt of order. Membrane Module availability will not be confirmed until a Purchase Order is received from Client and acknowledgement of a Purchase Order is issued by GE Water. 4 Product Support One of the ways that GE has clearly distinguished itself from other membrane manufacturers is the range of services and support offered to our customers based on the many years of experience in UF membrane filtration. Included with any membrane replacement are the following services: Local Support - GE has a global network of GE Water & Process Technologies service personnel that can deploy at short notice. These personnel have access to all the latest tools, procedures and equipment to provide the optimum assistance and support to plant operators. Technical Support - For the life of each system supplied by GE, plant operators have telephone access to a skilled GE technical support specialist who will assist Plant Operators in troubleshooting of system problems during business hours. Hours of Operation & Telephone Numbers Daytime Hours of Operation: Telephone, toll free in North America: Telephone from outside of North America, Email address for Daytime Hours: 5 8:30am to 5:00pm Monday to Friday, Eastern Time Zone GMT-5 1-866-271-5425 1 905-465-3030 and ask for Technical Support Technicalservice.oakville@ge.com Scope – Ashland Clear shipment from Customs. Pay all applicable taxes, duty or tariffs. Currently US Customs is applying a 3.9% tariff on the import for membrane modules. Pay local sales tax. City of Ashland – Membrane Replacement 42377063 ©GE August 16, 2010 Page 3 of 9 6 Receive, offload, handle and store membranes/cassettes at the plant prior to installation. Provide for all crane and forklift requirements. Cassette connection hoses, clamps, and camlocks should be replaced every 3 years. No requirement for hose or hose clamp replacements is anticipated. If these are required, this will be part of The City of Ashland’s scope. Prices Adjustments Guaranteed Replacement Price CAD$ Current USD:CAD Exchange Rate Aug 13 , 2010 Exchange rate Factor CPI at April 2001 CPI at July 2010 CPI Factor Original module sq ft Current module sq ft Surface Area Factor Adjusted Price at August 13, 2010 USD$ Bag, Box & Crate Fee 3.9% duty Total Price Per Module 1000.00 0.9574 95.74% 176.9 218.011 123.24% 220 250 113.64% 1,340.84 135.00 57.56 1,533.40 Total Estimated Freight 260 398,684.00 $31,000.00 All prices exclude sales tax This quote assumes that the membranes being replaced were supplied under project # 500127. For final verification, Ashland will supply serial numbers of the replaced modules when installation is executed. If it is found that the replaced modules are not related to project # 500127, additional charges may apply. City of Ashland – Membrane Replacement 42377063 ©GE August 16, 2010 Page 4 of 9 7 Terms and Conditions of Sale A - Specific Terms and Conditions 1 Name ZENON Environmental Corporation is the name of the legal entity providing services and is an affiliate of GE Water & Process Technologies Canada. Purchase Orders and Checks should be made out using the name ZENON Environmental Corporation. Short Form: Where a short reference is required in this document, for convenience, we are called simply GE. GE 2 Payment Terms On approved credit, payment terms are Net 30 Days. Service Visits will be invoiced after a service is completed. Membrane Invoices will be issued as follows: 25% with acceptance of Purchase Order 75% with shipping documents supplied to Carrier 3 Price Validity Prices quoted are valid up to thirty (30) days after the date of issue of the proposal unless confirmed with a Purchase Order. 4 No Title to Process Materials At no time will Seller be deemed to have taken title to Effluent Water, Influent Water, sewage sludge, Non-standard Substances, Hazardous Materials, harvested fibers or any other materials or substances processed at the site or treated by Seller pursuant to this Agreement. Seller does not take responsibility for or provide waste characterization, disposal facility selection, or disposal. The Buyer is responsible for all wastes and waste disposal from the plant. Wastes may include, but are not limited to water system reject waste, used RO or ultrafiltration membranes, clean-in-place related wastes and wastewaters, spent media, used granulated activated carbon, cartridge filters, equipment and consumables, lubrication/oil contaminated debris/rags, other maintenance related wastes, lab analysis residuals, and office waste. 5 Transfer of Title on Membrane Modules Full title transfer on cassettes and membrane modules will be passed to the Ashland immediately upon shipment from the manufacturing plant of GE Water & Process Technologies. City of Ashland – Membrane Replacement 42377063 ©GE August 16, 2010 Page 5 of 9 B – General Terms and Conditions of Sale 1. Exclusive Terms and Conditions. Together with any other terms the parties agree to in writing, these Terms and Conditions of Sale form the exclusive terms (“Agreement”) whereby Buyer agrees to purchase, and Seller agrees to sell Goods and provide advice, instruction and other services in connection with the sale of those Goods (“Services”). Notwithstanding any provisions communicated in any way by Buyer to Seller prior to this Agreement including any terms contained in any request for quote by Buyer, Buyer agrees that this Agreement will control the relationship by accepting Goods and Services from Seller, even if Buyer sends to Seller other terms and conditions to which Seller may not respond. 2. Buyer Obligations. Seller will not control the actual operation of either Buyer’s systems or Goods at the site, and unless otherwise specifically agreed in writing, installation of Goods shall be the responsibility of Buyer. Goods and Services provided hereunder are based upon the information Buyer makes available to Seller, and Seller reserves the right to utilize the most compact and feasible design compatible with sound engineering practices, and to make changes in details of design, construction and arrangement of Goods unless precluded by limitations (including, but not limited to actual space and feedwater/substance quality specifications) specified by Buyer in writing at the time an order is placed. If no such limitations are specified, Seller shall not be held responsible for incompatibility of the Goods and Services due to changes in feedwater/substance quality specifications or site conditions nor for incompatibility with actual space or design limitations, which were not initially disclosed by Buyer and become apparent at a later date. For Services to be accurate and Goods to work as intended, Buyer must fulfill the following obligations (“Obligations”): (a) provide Seller complete and accurate information and data relevant to the scope of work to be provided, such as information related to Buyer’s site conditions, systems, related equipment and processes, feedwater or other substances to be treated or measured with the Goods, including any hidden, unapparent, or changing conditions that may affect the effectiveness of the Goods; (b) operate all related systems and the Goods within the agreed to control parameters or, if none, within industry customary operating conditions; (c) maintain all related systems and Goods in good operating condition and repair; and (d) maintain and handle Goods in a proper and safe manner. If Buyer fails to fulfill the foregoing Obligations, Seller shall be relieved of any obligations with respect to warranties or any other commitments made to Buyer in writing, and Seller shall have no liability for any loss, damage or injury which Buyer may sustain or for which Buyer may be liable. Buyer is solely responsible for the operation of Buyer’s systems, including ensuring that the systems are operated and maintained properly and comply with all laws, rules, regulations, license conditions and orders. Seller will not operate, inspect or maintain Buyer’s systems or act as a licensed operator as defined by local regulatory authorities. 3. Delivery. Title and risk of loss or damage to Goods as well as containers and tanks in which Goods are contained, except as provided for in section 8 of this Agreement, shall pass to Buyer upon delivery to carrier at designated shipping point. Delivery dates indicated by Seller are only approximate. Quotations and proposal drawings provided by Seller show only general style, arrangement and approximate dimensions and weight. 4. Payment and Prices. Unless otherwise specified in writing, payment is due net thirty (30) days from the date of Seller’s invoice. If Seller shall have any doubt at any time as to Buyer's ability to pay, Seller may decline to make deliveries except on receipt of satisfactory security. The prices quoted herein do not include taxes. Buyer shall be directly responsible, and reimburse Seller, for the gross amount of any present or future sales, use, excise, value-added, or other similar tax applicable to the price, sale of delivery of any products or services furnished hereunder. Buyer shall furnish Seller with evidence of exemption acceptable to the taxing authorities if applicable. For multi-year agreements, pricing stated shall remain firm for 12 months, after which Seller shall be entitled to adjust pricing upward on an annual basis according to the designated formula used by Seller in Buyer’s country and which shall be notified to Buyer. Unless otherwise specified, all prices are FOB point of shipment. Buyer agrees to reimburse Seller for collection costs, including 2% interest per month, should Buyer fail to timely pay. Buyer shall have no rights to any setoffs of any nature relating to any payments due under the Agreement. Notwithstanding the terms set forth herein or of any agreement or acceptance of Seller’s quotation, Seller reserves the right at any time and from time to time by notice in writing to the Buyer to (a) increase Prices (or impose temporary price adjustments) based on increases in the cost of base components for the Goods or Services provided, where the increase is due to increased global demand, limited supply, temporary product shortages, allocation of supply, or such other similar inflationary pressures; and (b) impose a surcharge equal to any increase in the cost of the Goods or Services as a result of a modification of exchange rates, taxes or other levies imposed by public authorities. 5. Payment for Excessive Usage; Lost and Damaged Goods. If payment for Goods is based on some factor other than the actual amount of Goods delivered (e.g., payment is for a fixed amount, or based on usage or production), then Buyer agrees to pay for all Goods (a) consumed as a result of Buyer’s failure to comply with Obligations as set forth in Section 2; or (b) lost or damaged after delivery to Buyer. Buyer shall provide Seller all information necessary to calculate amounts due and enable Seller to audit those records. 6. Consigned Goods. Buyer shall bear all risk of loss and damage to all consigned Goods in Buyer’s possession or control, notwithstanding Buyer’s exercise of reasonable care. Seller shall have the right to enter Buyer’s premises at all reasonable times to inspect such Goods and related records. Upon request, Buyer agrees to return such Goods to Seller pursuant to Seller’s shipping instructions. 7. Limited Warranties. Seller warrants that the Goods shall conform to published specifications and shall be free from defects in material and workmanship when at all times operated in accordance with Seller’s written instructions; and that the Services will be performed with the degree of skill which can reasonably be expected from a seller engaged in a comparable business and providing comparable services under comparable circumstances. Under no circumstances do Services include the operation, inspection or maintenance of Buyer’s systems or acting as a licensed operator as defined by local regulatory authorities. Unless otherwise provided in any Warranty Schedule that may be attached hereto, the foregoing warranties are valid: (a) for Chemicals, the earlier of, the shelf-life of the product, or 6 months from their date of delivery or the provision of Services; (b) for Consumables, including Filters and Membranes, 12 months from their date of delivery, (c) for Goods other than Chemicals and Consumables, the earlier of, 15 months from receipt, or 12 months from start-up/first use. Unless expressly agreed in a "Performance Warranty Document" signed between the parties on a separate basis, there is no performance warranty on Goods and Services or warranty on process results. For Goods not manufactured by Seller, the warranty shall be the manufacturer’s transferable warranty only. Any claim for breach of these warranties must be promptly notified in writing or the claim will be void. Seller’s sole responsibility and Buyer’s exclusive remedy arising out of or relating to the Goods or Services or any breach of these warranties is limited to, at Seller’s option: (a) replacement of nonconforming Goods or refund of purchase price of the non-conforming Goods; and (b) re-performance of the Services at issue, or a refund of the amount paid for the Services at issue. No allowance will be made for repairs or alterations made by Buyer without Seller's written consent or approval. Goods may not be returned to Seller without Seller's written permission. Seller will provide Buyer with a "Return Material Order" number to use for returned goods. Buyer, as the original purchaser, is not entitled to extend or transfer this warranty to any other party. The foregoing warranties are in lieu of and exclude all other warranties, statutory, express or implied, including any warranty of merchantability or of fitness for a particular purpose. City of Ashland – Membrane Replacement 42377063 8. Use of Equipment, Tanks, and Containers. Semi-bulk containers (SBCs) owned by Seller shall be used only for the storage of Goods approved by Seller and Buyer shall return to Seller all SBCs owned by the Seller in an "empty " condition, as defined by appropriate transport or environmental regulations. Title to, and risk and ownership of, all equipment, product containers (e.g., pails, drums, recyclable intermediate bulk containers "IBC"), and tanks supplied to Buyer shall pass to Buyer as provided for in Section 3 of this Agreement, except that returnable SBCs shall remain property of Seller, unless otherwise stated in Seller’s documentation. 9. Compliance with Laws; Permits. Buyer is responsible for compliance with all laws and regulations applicable to the operation of its systems and to the storage, use, handling, installation, maintenance, removal, registration and labeling of all Goods from and after Buyer’s receipt of the Goods, as well as for the proper management and disposal of all wastes and residues associated with the Goods (including but not limited to containers, excess or off-spec product, testing wastes (e.g., spent or expired lab reagents and test kits) and signing manifests for waste transport and disposal.. Buyer agrees to ensure that all Goods and Services provided to Buyer for export are exported only in compliance with applicable export control laws and regulations. Permits and licenses which are required to operate apparatus or equipment or to use the Goods, shall be procured by Buyer at Buyer’s sole expense. Buyer shall be responsible for and procure all permits, licenses, exemptions, authorizations and approvals necessary to the operation of its systems, including but not limited to permits related to liquid and solid waste handling and discharge, air and water emissions, sound, safety, etc. Seller shall not be liable if any such permit, license, exemption, authorization or approval is delayed, denied, revoked, restricted, violated or not renewed and Buyer shall not be relieved thereby of its obligations to pay Seller in accordance with this Agreement. 10. Force Majeure. Neither party will be responsible to the other (and no event of default will be deemed to have occurred) if uncontrollable events make it impracticable or commercially unreasonable for either party to perform under the terms of this Agreement, provided no force majeure shall apply to Buyer’s obligation to pay in a timely manner for Goods and Services. Scheduled delivery dates are subject to extension when a force majeure event occurs. 11. Confidentiality and Intellectual Property. Both parties agree to keep confidential the other party’s proprietary non-public information, if any, which may be acquired in connection with this Agreement. Buyer will not, without Seller’s advance written consent, subject Goods to testing, analysis, or any type of reverse engineering. Seller retains all intellectual property rights including copyright which it has in all drawings and data or other deliverables supplied or developed under this Agreement, subject to Buyer’s right to use such drawings and data for its own use without additional cost. Buyer acknowledges that Seller is in the business of selling the Goods subject to this Agreement and agrees that it will not file patent applications on the Goods, or processes and methods of using the Goods, without Sellers express written permission. Buyer further agrees that in any event any such patents will not be asserted against Seller or its customers based upon purchase and use of such Goods. Buyer shall be fully liable for any infringement of patent rights of third parties arising out of the products supplied hereunder where the construction, and other characteristics of such products including modification of the Goods and Services, is prescribed to the Seller, or completed independently, by the Buyer or agent(s). Buyer shall fully defend and indemnify the Seller in case of such claim(s). Any software Seller owns and provides pursuant to this Agreement shall remain Seller’s property. Seller provides to Buyer a limited, non-exclusive and terminable license to such software for the term of this Agreement. Buyer agrees not to copy, sub-license, translate, transfer, reverse engineer, or decode the software. Unless otherwise expressly agreed by Seller, this license shall terminate and the software shall be returned to Seller upon termination of this Agreement, or the material breach of the terms in this section. Buyer shall defend and indemnify Seller in respect of any claim or liability suffered by Seller in connection with infringement of any third party rights based on design, specifications or requirements prescribed by Buyer or its agent. 12. Limitation on Liability. Except where expressly communicated to Seller, Seller shall have no liability for incompatibility of Goods with Buyer’s actual space or design limitations. To the extent permitted by law, the total liability of the Seller for all claims arising out of or relating to the performance or breach of this Agreement or use of any Goods or Services shall not exceed the annual contract value of this Agreement. Seller shall not be liable for any advice, instruction, assistance or any services that are not required under this Agreement or for which Seller does not charge Buyer. In no event will either party be liable to the other for lost profits or revenues, cost of capital or replacement or increased operating costs, lost or decreased production, claims of Buyer’s customers for such damages or any similar or comparable damages, or for any incidental, special, consequential or indirect damages of any type or kind, irrespective of whether arising from actual or alleged breach of warranty, indemnification, product liability or strict liability, or any other legal theory. If Buyer is supplying Seller’s Goods or Services to a third party, Buyer shall require the third party to agree to be bound by this clause. If Buyer does not obtain this agreement for Seller’s benefit for any reason, Buyer shall indemnify and hold Seller harmless from all liability arising out of claims made by the third party in excess of the limitations and exclusion of this clause. 13. Conflicts; Survival, Assignment. If there is any conflict between this Agreement and any written proposal or quotation provided by Seller, then the terms and conditions set forth in the proposal or quotation shall prevail. If any term or condition of this Agreement or any accompanying terms and conditions are held invalid or illegal, then such terms and conditions shall be reformed to be made legal or valid, or deleted, but the remaining terms and conditions shall remain in full force and effect, and the Agreement shall be interpreted and implemented in a manner which best fulfills our intended agreement. This Agreement may only be assigned by Seller to any affiliate. 14. Termination and Cancellation. This Agreement and any performance pursuant to it may be terminated or suspended by either party if the other party (a) is the subject of bankruptcy or insolvency proceedings; or (b) defaults in its material obligations under this Agreement, and such default is not cured within thirty (30) days. Upon the termination of this Agreement: (a) Buyer agrees to pay for all Goods in Buyer’s possession or for which title has passed to Buyer, at current prices or at such other prices as have been agreed to in writing; and (b) all amounts owing, if any, for the equipment or tanks relating to those Goods shall immediately become due and shall be paid within thirty (30) days of receipt of an invoice. In the event of cancellation of an order by Buyer, a cancellation charge will be made against the Buyer, in proportion to the work completed by Seller, or obligated against the order, plus any cancellation charges assessed against Seller by Seller’s suppliers. 15. Governing Law and Dispute Resolution. This Agreement shall be governed by the substantive laws of the State of New York. The UN Convention on the International Sale of Goods shall not apply. In the event of a dispute concerning this Agreement, the complaining party shall notify the other party in writing thereof. Management level representatives of both parties shall meet at an agreed location to attempt to resolve the dispute in good faith. Should the dispute not be resolved within thirty (30) days after such notice, the complaining party shall seek remedies exclusively through arbitration. The seat of arbitration shall be the federal district court in Philadelphia, PA,, and the rules of the arbitration will be the Commercial Arbitration Rules of the American Arbitration Association, which are incorporated by reference into this clause. ©GE August 16, 2010 Page 6 of 9 8 Seller’s Warranty - ZeeWeed® Membrane Modules 2 Year Full Replacement This schedule sets out the warranty with respect to ZeeWeed® Membrane Modules (“Membrane Modules”). No other warranties, expressed or implied are made in connection with the sale of these products, including, without limitation, warranties as to fitness for any particular purpose or use or merchantability of these products. The warranty provided herein will be the exclusive and sole remedy of the Customer, and in no event will the Seller be liable for any special, direct, indirect or consequential damages, including, without limitation, loss of profits. This warranty is not transferable. 1 Product This warranty applies to only the Membrane Modules supplied under the Contract of Sale. Membrane Module means a complete Membrane Module. This warranty does not cover air piping to the Membrane Module, permeate piping from the Membrane Module, piping connection fittings, connecting hardware and cassette frames with their associated components including but not limited to spacers, aerator tubes, aerator assemblies, screen, module dummies or module blanks. Identification: Membrane Modules are shipped by the Seller with a serial number identification which confirms their place in the cohort set of Membrane Modules covered by this Membrane Module warranty. 2 Seller GE Water & Process Technologies Canada is the name of the Seller and is the Seller offering this warranty. The Seller may assign this warranty to other GE affiliates. 3 Customer Customer means the City of Ashland 4 Project Project means purchase of the membrane modules as outlined in this proposal # 42377063 5 Contract of Sale Contract of Sale means the sales contract governing the sale of Membrane Module(s) between the Customer and the Seller or its GE affiliate. 6 Scope of Warranty The Seller warrants that its Membrane Module(s) will be free of defects due to faulty materials or errors in manufacturing workmanship. Regular Membrane Module inspection and normal fiber repair shall be the responsibility of the Customer. All replacement Membrane Modules will be shipped on the basis of INCOTERMS 2000 EXW GE Manufacturing facility. All ancillary costs including but not limited to bagging, boxing, crating, freight, freight insurance, applicable taxes, import duties, brokerage, receiving, forklift services, storage at site, re-attachment hardware, hose/clamp/camlock replacement, crane services, installation, fiber repair materials, glycerin flushing, commissioning and waste disposal are the responsibility of the Customer. Full Replacement Replacement – Full Replacement means that in the case of a valid warranty claim for a Membrane Module failure, the Customer receives a replacement Membrane Module and does not pay for the value of use of the Membrane Module prior to failure. 7 Warranty Start Date This warranty will start on the earlier of: a) The date that installation of the original Membrane Module(s) has been substantially completed, or City of Ashland – Membrane Replacement 42377063 ©GE August 16, 2010 Page 7 of 9 b) Six months from the date of shipment of the original Membrane Module(s) to the Customer. 8 Warranty Duration Total Warranty Duration: Duration a total of 24months 24months composed of a Base Period and an Extended Period. Base Period with Full Replacement: Replacement 24 months All purchasers of ZeeWeed® Membrane Modules are entitled to this Base Period of Full Replacement warranty coverage without purchasing an extended Seller’s Warranty. Extended Period with Full Replacement: Replacement a total of 0 months following the Base Period Replacement Membrane Modules are covered by warranty only to the extent of the warranty of the original Membrane Module which has been replaced. At all events, this warranty shall expire and be of no force or effect 24 months following the Warranty Start Date. 9 Notification of Claim All claims filed under this warranty shall be made in writing by the Customer within 30 days of identifying a defect. The Customer shall provide the following information: 1) A description of the defect giving rise to the claim; 2) Photographs showing the manufacturing defect; 3) The serial number(s) of the Membrane Module(s) which is (are) the subject of the warranty claim; and 4) Operating data and repair history for the life of Membrane Modules which are the subject of a warranty claim. 10 Verification of Claim After receipt of written notification of a defect, the Seller will promptly undertake such investigations as, in the Seller's opinion, are necessary to verify whether a defect exists. The Seller reserves the right to require additional data as necessary to validate claims. The Customer may, in the course of these investigations, be requested to return Membrane Module(s) to the Seller for examination. The Seller may also conduct reasonable tests and inspections at the Customer’s plant or premises. If the results of the investigation do not validate the defect claimed, the Customer will reimburse the Seller for all reasonable expenses associated with said investigation, including expenses for all tests, inspections, and associated travel. 11 Satisfaction of Claims The Seller will have the right to satisfy claims under this warranty in a flexible manner. Such flexibility may include the repair of existing Membrane Modules or changes in operating protocols or Membrane Module replacement or by upgrading failed Membrane Modules with newer Membrane Module(s) that may embody design and efficiency improvements. The Customer consents to the supply of replacement Membrane Modules which may be of a different design than original Membrane Modules. 12 Operating Information To maintain the Membrane Module warranty, membrane system operation records from initial start-up date until claim must be maintained by the Customer and made available to the Seller upon request. Records must be provided in sufficient detail to verify uninterrupted compliance with the Seller’s Operations and Maintenance Manual prepared by the Seller and supplied to the Customer as part of the Contract. At a minimum, operation data must include information on feed water quality, temperatures, flows, trans-membrane pressures, aeration rates, permeate quality, cleaning intervals, cleaning chemical concentrations, elapsed time since start-up, relevant analytical data and reporting of any screen bypass events. The Customer shall maintain and share access to a single reference copy in electronic form of a Membrane Module map containing the history of activity by Membrane Module. The Customer shall log its procedures performed related to a Membrane Module including relocation of Membrane Modules, repairs, replacements and any other noteworthy events. The Customer authorizes the Seller to conduct any reasonable review of operation and maintenance records or to inspect facilities where Membrane Modules are installed, upon reasonable notice to the Customer. Such reviews and/or inspections are intended to also assist the Seller and the Customer in detection of membrane system faults and to optimize the care and operation of the Membrane Modules. City of Ashland – Membrane Replacement 42377063 ©GE August 16, 2010 Page 8 of 9 13 Limitation of Warranties Occurrence of any of the following as reasonably determined by the Seller will void this warranty: a. A material failure to operate the membrane system in accordance with Seller’s Operations and Maintenance Manual supplied to the Customer as part of the Contract, including material failure to adhere to the Seller’s specified Membrane Module cleaning procedures and the use of anything other than Seller-approved Membrane Module cleaning agents. b. Failure to adhere to the preventive maintenance program as presented in the Seller’s Operations and Maintenance Manual. c. Failure to ensure correct operation and/or functioning of the screening equipment. d. Introduction of destructive foreign materials into the Membrane Module tanks. Destructive foreign materials may include natural or human-made materials that are introduced into the membrane system influent channel or tanks originating from construction and maintenance activities or from inadequate pretreatment or from aquatic species including clams and snails or from damage to the tank or tank coating. Sand and other materials that are naturally present in the influent will not be considered destructive foreign materials. The Customer shall be responsible to maintain correct function of the screen mechanism and to flush tanks of accumulated sand at the tank bottom. e. Failure to install and maintain operating data acquisition and electronic data transmission functions at the plant. f. Physical abuse or misuse, incorrect removal or installation of Membrane Modules by non-Seller personnel including fiber damage caused by operator error in handling of Membrane Modules or cassettes. g. Unauthorized alteration of any components or parts originally supplied by the Seller. h. Intentional damage. 14 Return Procedure In the event that the return of a Membrane Module is required pursuant to this warranty, the Customer will first obtain a Return Goods Authorization (RGA) number from the Seller. Membrane Module(s) shipped to the Seller for warranty examination must be shipped freight prepaid. If the Customer desires temporary replacement Membrane Module(s) to replace those alleged to be defective and returned to the Seller for warranty examination, the Customer shall be responsible for the cost associated with any such replacements until examination of the returned Membrane Modules pursuant to this warranty is complete. Any Membrane Module examined by Seller as part of a warranty claim where the Membrane Module is subsequently found to be performing as warranted or where a Membrane Module failure is not covered under the warranty will be returned to the Customer, freight collect. Doc. Control: JH Filename: City of Ashland - Membrane Replacement - 42377063 - August 16, 2010.doc Last Modified: 12/15/2009 8:45 AM Technical Review: Commercial Review: SH 8/17/2010 1:44 PM City of Ashland – Membrane Replacement 42377063 ©GE August 16, 2010 Page 9 of 9 FORM #9 SPECIAL PROCUREMENT REQUEST FOR APPROVAL To: City Council, Local Contract Review Board From: Michael Faught, Public Works Director Date: September 14, 2010 Subject: REQUEST FOR APPROVAL OF A SPECIAL PROCUREMENT In accordance with ORS279B.085, this request for approval of a Special Procurement is being presented to the City Council for approval. This written request for approval describes the proposed contracting procedure and the goods or services or the class of goods or services to be acquired through the special procurement and the circumstances that justify the use of a special procurement under the standards set forth ORS 279B.085(4). 1. Requesting Department Name: Public Works Department, Wastewater Treatment Plant 2. Department Contact Name: 3. Type of Request: X Michael Faught and David Giess Class Special Procurement 4. Time Period Requested: From 5. Total Estimated Cost: Contract-specific Special Procurement To: $429,684.00 6. Short title of the Procurement: Membrane Filter Replacement Supplies and/or Services or class of Supplies and/or Services to be acquired: The City of Ashland wastewater treatment plant needs to replace failing membrane filters in order to meet the established regulatory requirements for phosphorous removal. These requirements are established under the current National Pollutant Discharge Elimination System permit (NPDES). The City of Ashland needs to purchase new membrane filters from GE Water and Process Technologies in order to replace the failing ones within the membrane treatment system. The City is seeking to purchase ten new ZeeWeed 550c-250 filtration modules. The filter modules represent a very important component in the treatment system. If the City of Ashland fails to meet the treatment requirements of the NPDES permit it can be fined by the Department of Environmental Quality (DEQ). 7. Background and Proposed Contracting Procedure: Provide a description of what has been done in the past and the proposed procedure. The Agency may, but is not required to, also include the following types of documents: Notice/Advertising, Solicitation(s), Bid/Proposal Forms(s), Contract Form(s), and any other documents or forms to be used in the proposed contracting procedure. Attach additional sheets as needed. Background: Direct Award. Form #9 - Special Procurement – Request for Approval, Page 1 of 4, 9/15/2010 8. Justification for use of Special Procurement: Describe the circumstances that justify the use of a Special Procurement. Attach relevant documentation. This is a special procurement for goods due to the fact that GE Water and Process Technologies manufacture the only membrane filters that are known to work directly with the existing membrane filtration system. There is another manufacturer of membrane filters, but the City of Ashland’s consultant engineer handling wastewater items informed the City that their would be additional studies and pre-design that would need to be accomplished to verify if the membranes would work within the confines of the existing system. In addition, the membranes from the other manufacturer create a decrease in square-footage and thus a reduction in treatment ability. The treatment plant currently uses ZeeWeed 500c-220 and -250 membranes in its treatment trains without issue. Currently their can be a lead time of 90-150 days for arrival of the membrane filters after purchase. The membranes need to be installed and tested by April 2011 in order to go online in May of 2011. The membranes need to be online from May to November of each year in order to meet the phosphorous removal requirements. The City of Ashland currently has a price guarantee from GE for purchase of membrane filters. This purchase guarantee was established when the City of Ashland installed the original GE membrane filter modules in 2002. 9. Findings to Satisfy the Required Standards: This proposed special procurement: ___X____ (a) will be unlikely to encourage favoritism in the awarding of public contracts or to substantially diminish competition for public contracts because: GE Water and Process Technologies currently manufacture the existing filter membranes at the treatment plant and have the ability to deliver the product in the time frame necessary in order to meet regulatory requirements. (Please provide specific information that demonstrates how the proposed Special Procurement meets this requirement.); and ____X___ (b)(i) will result in substantial cost savings to the contracting agency or to the public because: By using the existing price guarantee from GE, not having to do additional engineering studies/predesign for the other membrane filtration manufacturer that could create additional costs for system changes and meeting the timelines required by regulatory issues the City of Ashland will generate a cost savings. (Please provide the total estimate cost savings to be gained and the rationale for determining the cost savings); or ___X____ (b)(ii) will otherwise substantially promote the public interest in a manner that could not practicably be realized by complying with the requirements of ORS 279B.055, 279B.060, 279B.065, or 279B.070, or any rules adopted thereunder because: The GE membrane filters are a known commodity that work directly within the existing treatment system. The additional cost, time, reduction in capacity and possible DEQ fines possible associated with choosing the other manufacturer would not be in the City’s best interest. (Please provide specific information that demonstrates how the proposed Special Procurement meets this requirement.) Form #9 - Special Procurement – Request for Approval, Page 2 of 4, 9/15/2010 Public Notice: Pursuant to ORS 279B.085(5) and OAR 137-047-0285(2), a Contracting Agency shall give public notice of the Contract Review Authority's approval of a Special Procurement in the same manner as a public notice of competitive sealed Bids under ORS 279B.055(4) and OAR 137-047-0300. The public notice shall describe the Goods or Services or class of Goods or Services to be acquired through the Special Procurement and shall give such public notice of the approval of a Special Procurement at least seven (7) Days before Award of the Contract. After the Special Procurement has been approved by the City Council, the following public notice will be posted on the City’s website to allow for the seven (7) day protest period. Date Public Notice first appeared on www.ashland.or.us – 9-22-2010 PUBLIC NOTICE Approval of a Special Procurement First date of publication: 9-22-2010 A request for approval of a Special Procurement was presented to and approved by the City Council, acting as the Local Contract Review Board, on 9-21-2010 The class special procurement was processed to purchase ten new ZeeWeed 500c-250 Filtration Modules. The filtration modules represent a unique component at the City of Ashland’s wastewater treatment plant. They provided for phosphorous removal from May to November of each year. The removal of phosphorous is a requirement of the current National Pollutant Discharge Permit for the City of Ashland. It has been determined based on written findings that the Special Procurement will be unlikely to encourage favoritism in the awarding of public contracts or to substantially diminish competition for public contracts, and result in substantial cost savings or substantially promote the public interest in a manner that could not be realized by complying with the requirements that are applicable in ORS 279B.055, 279B.060, 279B.065, or 279B.070. An affected person may protest the request for approval of a Special Procurement in accordance with ORS 279B.400 and OAR 137-047-0300. A written protest shall be delivered to the following address: City of Ashland, Kari Olson, Purchasing, 90 N. Mountain Avenue, Ashland, OR 97520. The seven (7) protest period will expire at 5:00pm on September 28th, 2010. This public notice is being published on the City’s Internet World Wide Web site at least seven days prior to the award of a public contract resulting from this request for approval of a Special Procurement. Form #9 - Special Procurement – Request for Approval, Page 3 of 4, 9/15/2010 Authority to enter into a Special Procurement: Section 2.50.090 Exemptions from Formal Competitive Selection Procedures G. All Public Contracts shall be based upon Competitive Sealed Bidding (Invitation to Bid) or Competitive Sealed Proposals (Request for Proposal) pursuant to ORS 279A – 279C and the Model Rules except for the following: Special Procurements – a public contract for a class special procurement, a contract specific procurement or both, based upon a contracting procedure that differs from procedures described in ORS 279B.055, 279B.060, 279B.065, 279B.070. The contracting approach may be custom designed to meet the procurement needs. 1. Special procurements shall be awarded in accordance with ORS 279B.085 and all other applicable provisions of law. ORS 279B.085 Special procurements. (1) As used in this section and ORS 279B.400: (a) “Class special procurement” means a contracting procedure that differs from the procedures described in ORS 279B.055, 279B.060, 279B.065 and 279B.070 and is for the purpose of entering into a series of contracts over time or for multiple projects. (b) “Contract-specific special procurement” means a contracting procedure that differs from the procedures described in ORS 279B.055, 279B.060, 279B.065 and 279B.070 and is for the purpose of entering into a single contract or a number of related contracts on a one-time basis or for a single project. (c) “Special procurement” means, unless the context requires otherwise, a class special procurement, a contract-specific special procurement or both. (2) Except as provided in subsection (3) of this section, to seek approval of a special procurement, a contracting agency shall submit a written request to the Director of the Oregon Department of Administrative Services or the local contract review board, as applicable, that describes the contracting procedure, the goods or services or the class of goods or services that are the subject of the special procurement and the circumstances that justify the use of a special procurement under the standards set forth in subsection (4) of this section. (3) When the contracting agency is the office of the Secretary of State or the office of the State Treasurer, to seek approval of a special procurement, the contracting agency shall submit a written request to the Secretary of State or the State Treasurer, as applicable, that describes the contracting procedure, the goods or services or the class of goods or services that are the subject of the special procurement and the circumstances that justify the use of a special procurement under the standards set forth in subsection (4) of this section. (4) The director, a local contract review board, the Secretary of State or the State Treasurer may approve a special procurement if the director, board, Secretary of State or State Treasurer finds that a written request submitted under subsection (2) or (3) of this section demonstrates that the use of a special procurement as described in the request, or an alternative procedure prescribed by the director, board, Secretary of State or State Treasurer: (a) Is unlikely to encourage favoritism in the awarding of public contracts or to substantially diminish competition for public contracts; and (b)(A) Is reasonably expected to result in substantial cost savings to the contracting agency or to the public; or (B) Otherwise substantially promotes the public interest in a manner that could not practicably be realized by complying with requirements that are applicable under ORS 279B.055, 279B.060, 279B.065 or 279B.070 or under any rules adopted thereunder. (5) Public notice of the approval of a special procurement must be given in the same manner as provided in ORS 279B.055 (4). (6) If a contracting agency intends to award a contract through a special procurement that calls for competition among prospective contractors, the contracting agency shall award the contract to the offeror the contracting agency determines to be the most advantageous to the contracting agency. (7) When the director, a local contract review board, the Secretary of State or the State Treasurer approves a class special procurement under this section, the contracting agency may award contracts to acquire goods or services within the class of goods or services in accordance with the terms of the approval without making a subsequent request for a special procurement. [2003 c.794 §57; 2005 c.103 §8d; 2007 c.764 §7] OAR 137-047-0285 Special Procurements (1) Generally. A Contracting Agency may Award a Contract as a Special Procurement pursuant to the requirements of ORS 279B.085. (2) Public Notice. A Contracting Agency shall give public notice of the Contract Review Authority's approval of a Special Procurement in the same manner as public notice of competitive sealed Bids under ORS 279B.055(4) and OAR 137-047-0300. The public notice shall describe the Goods or Services or class of Goods or Services to be acquired through the Special Procurement. The Contracting Agency shall give Affected Persons at least seven (7) days from the date of the notice of approval of the Special Procurement to protest the Special Procurement. (3) Protest. An Affected Person may protest the request for approval of a Special Procurement in accordance with ORS 279B.400 and OAR 137-047-0700. Form #9 - Special Procurement – Request for Approval, Page 4 of 4, 9/15/2010