REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
July 26, 2022
FROM
WILLIAM L. GILBERT, Director, Arrowhead Regional Medical Center
SUBJECT
Title
Agreement with Fresenius USA Marketing, Inc. for Purchase of the AquaBplus B2 Reverse Osmosis System
End
RECOMMENDATION(S)
Recommendation
Approve Agreement with Fresenius USA Marketing, Inc. for the purchase of the AquaBplus B2 Reverse Osmosis System, including a 12 month equipment warranty, in the amount of $399,026, including estimated taxes.
(Presenter: William L. Gilbert, Director, 580-6150)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The total cost of $399,026 plus applicable taxes is funded by State Medi-Cal, Federal Medicare, private insurances, and other departmental revenue. The Reverse Osmosis (RO) System is part of an approved and funded Capital Improvement Program (CIP) (WBSE 10.10.1141). Adequate appropriation and revenue have been included in the Arrowhead Regional Medical Center (ARMC) 2022-23 budget.
|
Equipment and Training |
Cost |
|
RO Equipment and Associated Fees |
$360,581 |
|
System Technician Training |
$2,000 |
|
Freight |
$8,500 |
|
Estimated Sales Tax |
$27,945 |
|
Total |
$399,026 |
BACKGROUND INFORMATION
Approval of the agreement will allow ARMC to replace the current RO system, which has reached the end-of-life stage and is no longer supported by the vendor as of April 2022.
The Fresenius USA Marketing, Inc. (Fresenius) AquaBplus B2 RO system is equipped with a secondary purification system that will activate should the primary purification system fail. The RO system currently in use does not allow a secondary backup solution due to physical size and limited footprint of the water treatment area. The Fresenius primary and secondary RO system will physically fit in the water treatment area. In addition, ARMC dialysis machines are manufactured by Fresenius which would secure functional specification and uniformity with the new RO platform. This more efficient system will eliminate downtime and dialysis treatment delay due to the secondary backup system and will also save 10 percent of water recovery annually thus preventing water waste.
The RO system is essential to the operation of ARMC’s chronic dialysis clinic, which serves up to 140 patients up to three times per week. A more efficient system will also streamline compliance with International Organization for Standardization (ISO) dialysis water quality standards.
The agreement with Fresenius incorporates the same terms and conditions of the Dialysis Machine Supplies Agreement between the County and Fresenius for disposable supplies used in Fresenius dialysis machines, which was approved by the Board of Supervisors on April 12, 2022 (Item No. 7), to the extent they are not inconsistent, which include the following non-standard contract terms:
1. Fresenius is permitted to assign the agreement to entities controlled by or under common ownership with Fresenius or in the event of a merger or consolidation of Fresenius without the consent of the County.
• Under the County standard contract, the contractor must obtain the prior approval of the County before assigning the contract.
• Potential Impact: Fresenius may assign the agreement to a third party without the County’s approval. This could allow the agreement to be assigned to a business with which the County is legally prohibited from doing business due to issues of Federal debarment or suspension and conflict of interest.
2. The agreement does not include certain standard County insurance requirements, including the waiver of subrogation, proof of coverage, naming the County as an additional insured, severability of interests, acceptability of insurance carrier, insurance review, and failure to procure coverage.
• The County standard contract requires contractors to carry appropriate insurance at limits and under conditions determined by the County’s Risk Management Department.
• Potential Impact: Without all of the standard provisions addressed above, the County has no reassurance that Fresenius will maintain adequate and sufficient insurance with a reputable insurer during the term of the agreement to provide coverage to the County in the event of a claim. Insufficient coverage could result in expenses that exceed the total contract amount, leaving the County financially liable for the claims.
3. The County agrees to defend and indemnify Fresenius for any claims that arise out of the County’s gross negligence or willful misconduct in the administration of any Fresenius products to patients.
• The County standard contract does not include any indemnification or defense by the County of a Contractor.
• Potential Impact: By agreeing to indemnify Fresenius, the County could be contractually waiving the protection of sovereign immunity. Claims that may otherwise be barred against the County, time limited, or expense limited could be brought against Fresenius without such limitations and the County would be responsible to defend and reimburse Fresenius for costs, expenses, and damages, which could exceed the total contract amount.
ARMC recommends approval of the agreement, including the non-standard terms, to replace the current RO system with a more efficient system which will improve care and increase the capacity for additional patients to receive dialysis.
PROCUREMENT
This is a non-competitive procurement based on functional specifications as the Fresenius AquaBplus B2 platform is the only system on the market that supports a secondary purification system that can be used if the primary system fails. County Purchasing supports this non-competitive justification.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Charles Phan, Deputy County Counsel, 387-5455) on June 23 2022; Purchasing (Ariel Gill, Lead Buyer, 777-0722) on June 29, 2022; ARMC Finance (Chen Wu, Finance and Budget Officer, 580-3165) on July 1, 2022; Finance (Jenny Yang, Administrative Analyst, 387-4884) on July 6, 2022; and County Finance and Administration (Diana Atkeson, Deputy Executive Officer, 387-5423) on July 7, 2022.