ML021330439

Declaration of Ronald Battles in Support of Motion for Authorization to Lncur and Pay Certain Procurement Expenses

ML021330439
Person / Time
Site:	Diablo Canyon
Issue date:	04/29/2002
From:	Battles R Pacific Gas & Electric Co
To:	Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California
References
01-30923 (DM), 94-0742640
Download: ML021330439 (5)

Text

1 JAMES L. LOPES (No. 63678)

JANET A. NEXON (No. 104747) 2 JULIE B. LANDAU (No. 162038)

HOWARD, RICE, NEMEROVSKI, CANADY, 3 FALK & RABKIN A Professional Corporation 4 Three Embarcadero Center, 7th Floor San Francisco, California 94111-4065 5 Telephone: 415/434-1600 Facsimile: 415/217-5910 6

Attorneys for Debtor and Debtor in Possession 7 PACIFIC GAS AND ELECTRIC COMPANY 8

9 UNITED STATES BANKRUPTCY COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 SAN FRANCISCO DIVISION 12 In re Case No. 01-30923 DM PACIFIC GAS AND ELECTRIC Chapter 11 Case HOWARD 13 COMPANY, a California corporation,

""ýCID/ 14 Date: May 20, 2002 FUK Debtor. Time: 1:30 p.m.

Place: 235 Pine Street, 22nd Floor

, o,1C- 15 San Francisco, California Federal I.D. No. 94-0742640 16 17 DECLARATION OF RONALD BATTLES IN SUPPORT OF MOTION 18 FOR AUTHORIZATION TO INCUR AND PAY CERTAIN PROCUREMENT EXPENSES 19 20 21 22 23 24 25 26 27 28 ~1J1r DECLARATION OF RONALD BATTLES

1 I, Ronald Battles, declare:

2 1. I am a Manager in the Purchasing Department for Pacific Gas and Electric 3 Company ("PG&E"), the debtor and debtor-in-possession in this Chapter 11 case. I am 4 responsible for overseeing the procurement of technical, maintenance and construction 5 service contracts for PG&E. This declaration is submitted in support of PG&E's Motion for 6 Authorization to Incur and Pay Certain Procurement Expenses (the "Motion"). Defined 7 terms used herein shall have the meanings set forth in the Motion. I make this declaration 8 from personal knowledge and if called as a witness, could and would testify competently to 9 the matters set forth herein.

10 2. PG&E holds approximately 3,500 contracts for goods and services, 11 including, for example, contracts for wood pole replacement, tree trimming and brush 12 removal, facility construction and maintenance, and software license agreements. Many of HOWARD13 the goods and services represented by these contracts are essential to day to day operations RILE SD14 and generally require a vendor's specialized knowledge or equipment. A majority of these

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,JC. 15 contracts service a single line of business and will either be retained by the Reorganized 16 Debtor or assigned to one of the New Entities. However, approximately 1,200 of PG&E's 17 existing contracts represent goods and services that are currently shared among two or more 18 of the business lines. In most cases, the existing "shared" contract will be retained by the 19 Reorganized Debtor; in a limited number of cases, the existing "shared" contract will instead 20 be assigned to the New Entity that represents the largest user of the applicable goods or 21 services. As a result, the New Entities (and in a limited number of cases, the Reorganized 22 Debtor) will need approximately 1,200 new contracts ("New Contracts") for the goods and 23 services that are currently shared.

24 3. PG&E's typical procurement process involves the solicitation of 25 competitive bids from three or more pre-qualified vendors. The vendor qualification process 26 may involve one or more of the following: verification of a potential vendor's experience 27 and quality through reference checks, a financial assessment of potential vendors, 28 manufacturing plant site inspections and sample product analysis. After vendors have been DECLARATION OF RONALD BATTLES 1 pre-qualified, PG&E develops specifications regarding the goods and services to be 2 provided. Specifications may include engineering and design standards, performance 3 criteria, and commercial and legal terms and conditions. In conjunction with development 4 of the specifications, PG&E establishes its vendor selection criteria, which might include 5 such factors as cost, delivery or construction schedule, and participation in PG&E's vendor 6 diversity program. PG&E then provides the vendors with instructions regarding the bidding 7 process, collects and evaluates the bids, and makes a vendor selection based on the vendor 8 selection criteria. The final step in the process is to document and enter into a written 9 contract with the vendor, based on PG&E's previously developed specifications and the 10 vendor's bid proposaL 11 4. PG&E does not always use a bidding process for new procurement 12 contracts, for example, in situations where only one vendor meets the qualification criteria or HOARD 13 PG&E has worked with a particular vendor in the past and believes that such vendor is the RKE 1,1ENIOVEWI ANx 14 best choice for the particular goods or services needed.

,,. " 15 5. The temporary staff and consultant described below will assist PG&E with 16 the process of obtaining New Contracts for goods and services that the New Entities will 17 need to operate (the "Procurement Work"). While PG&E has in-house expertise in this area, 18 .PG&E requires substantial outside assistance as a result of the volume of New Contracts 19 required and the limited time period for completion of the work. The contractors described 20 below will perform their portion of the Procurement Work at the direction of and under the 21 supervision of PG&E.

22 6. Buyers. PG&E intends to utilize approximately 20 individuals as buyers 23 ("Buyers"). These individuals will be hired on a temporary basis through Corestaff 24 Services, Inc. ("Corestaff"), a staffing agency. Under the direction of a PG&E supervisor, 25 the Buyers will be responsible for coordinating and conducting negotiations for the New 26 Contracts. This will include developing technical and commercial requirements, identifying 27 and qualifying vendors, establishing bid evaluation criteria, soliciting proposals from 28 vendors, negotiating contract terms and conditions, and contract documentation.

DECLARATION OF RONALD BATTLES 1 7. The total estimated expenditure for the Buyers' work described above is 2 approximately $3.5 million for the period beginning May 2002 and continuing to the 3 Effective Date (as defined in the Plan), or such earlier date on which the Procurement Work 4 has been completed. PG&E would pay the Buyers, through Corestaff, on a weekly or bi 5 monthly basis, based on the number of hours worked by each Buyer.

6 8. Clerks. PG&E also intends to utilize approximately 10 individuals as clerks 7 ("Clerks"). These individuals will also be hired on a temporary basis through Corestaff.

8 The Clerks will support the Buyers as well as PG&E staff performing the Procurement Work 9 and will perform general office services, such as typing, filing, copying and answering 10 telephones.

11 *9 The total estimated expenditure for the Clerk's work described above is 12 approximately $400,000, for the period beginning May 2002 and continuing to the Effective HOWARD 13 Date (as defined in the Plan) or such earlier date on which the Procurement Work has been RKE NlyffJVSKI BC.Lkf 14 completed. PG&E would pay the Clerks, through Corestaff, on a weekly or bi-monthly M(A~I

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15 basis, based on the number of hours worked by each Clerk.

16 10. Consultant. PG&E also intends to utilize Stan Miyamoto ("Consultant") to 17 assist with project planning, scheduling and cost management support with respect to the 18 Procurement Work. Consultant is experienced in providing project management support and 19 has previously performed similar services for PG&E.

20 11. The total estimated expenditure for Consultant's work described above is 21 approximately $80,000, for the period beginning May 2002 and continuing to the Effective 22 Date (as defined in the Plan) or such earlier date on which the Procurement Work has been 23 completed. PG&E would pay Consultant on a monthly basis as work is completed, based on 24 monthly billings by Consultant.

25 12. The Procurement Work is essential to the implementation of the Plan.

26 PG&E estimates that it could take up to nine months to complete the Procurement Work 27 necessary to enable the New Entities to operate their respective businesses. The timing will 28 vary, for example, depending on whether PG&E's existing vendors will require substantially DECLARATION OF RONALD BATTLES 1 different terms for New Contracts, or whether many. of the New Contracts can replicate 2 existing contract terms; for certainNew Contracts, it may be necessary to develop new 3 vendor relationships, which could extend the time required for completion of the New 4 Contracts. Therefore, given the volume of work and the time that may be required for 5 completion, PG&E believes that-the work must begin now.

6 13. PG&E's standard contractual provisions in place with Corestaff and 7 Consultant do rot guarantee future work or any minimum amount of revenue. PG&E also 8 maintains the right to terminate the work at any time without cause, in which case PG&E is 9 liable only for work performed to the date of termination plus costs reasonably incurred by 10 the contractor in terminating any work in progress. Also, any New Contracts that are 11 negotiated prior to the Effective Date would not obligate PG&E to incur any costs or other 12 liabilities unless and until the Effective Date occurs.

HCNVAD 13 I declare under penalty of perjury of the laws of the United States that the RIE N 14 foregoing is true and correct, and that this declaration was executed at San Francisco,

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• 15 California on Aprilit, 2002.

16 17 RONALD BATTLES 1i WD 042902/1-1419905/990925/vI 19 20 21 22 23 24 25 26 27 28 DECLARATION OF RONALD BATTLES