Contract Extension 012-T-03 Rental of Graders for Winter Maintenance

Report to: General Committee Date Report Authored: August 9, 2010

SUBJECT: Contract Extension 012-T-03 Rental of Graders for Winter Maintenance

PREPARED BY: Morgan Jones Ext. 2285

Alex Moore Ext. 4711

RECOMMENDATION:

1) THAT the staff report entitled “Contract Extension 012-T-03 Rental of Graders for Winter Maintenance” be received;

2) AND that the tender process be waived in accordance with Purchasing Bylaw 2004-341, Part 11, Section 7(1) c which states “when the extension of an existing contract would prove more cost-effective or beneficial;

3) AND that Contract 012-T-03 Rental of Graders for Winter Maintenance be extended for one (1) additional winter season (2010/11) and an option to extend for one additional winter season (2011/12) with previously approved itemized prices and be awarded as summarized in ATTACHMENT A.

4) AND that the total annual award cost of $1,276,429 ($1,144,263-Graders, $132,166-Windrow clearing) including HST be funded from the annual operating budget from Operating Account 700 504 5301Winter Maintenance Graders;

5) AND that Staff be authorized to provide standby costs of $45,670 including HST to meet service levels for clearing of windrows from seniors driveways in accordance with the Town’s approved list;

6) AND that the tender process be waived in accordance with Purchasing Bylaw 2004-341, Part 11, Section 7(1) c which states “when the extension of an existing contract would prove more cost-effective or beneficial;

7) AND that Staff be authorized and directed to do all things necessary to give effect to this resolution.

1. Purpose 2. Background 3. Discussion 4. Financial

PURPOSE:

The purpose of this report is to obtain Council approval for the extension of our existing winter maintenance contract, Tender 012-T-03, Rental of Graders for Winter Maintenance for the 2010-2011 and 2011-2012 winter seasons.

BACKGROUND:

The previous contract extension for the rental of graders for winter maintenance expired April, 2010.

Currently 39 Graders are used for winter maintenance to assist in the removal of snow on the Town’s local road network. This contract is one of four major contracts to obtain the services of winter maintenance equipment throughout the Town of Markham. The other three contracts are: Rental of Tandem Axle Trucks, Sidewalk Winter Maintenance and Rental of Loaders.

OPTIONS/ DISCUSSION:

In 2003, the Town received bids from only five (5) contractors that were awarded contracts at the hourly rates provided in their respective tender submissions. Tender 012-T-03 called for a three (3) year contract term with the option to renew for two (2) additional years at the 2003 tendered rates. In 2008, Staff determined it was in the best interests of the Town to renegotiate a two year extension with a 6% increase for the 1^st year over the 2003 prices and a further 3% for the 2^nd extension year, in light of price increases recognized on the sidewalk/tandem plows (70-80% higher than previous contract), as well as the limited number of contractors bidding on the hired grader contract in 2003. This option to extend the existing contract aligns with Part 11 Section 7(1) c of Purchasing Bylaw 2004-341 which states “the Town may negotiate a contract for the supply of goods and services without a competitive process when the extension of an existing contract would prove more cost-effective or beneficial.”

The availability of graders is limited within the field. In the 2008 contract extension, one (1) of the five (5) contractors chose not to renew. These five (5) routes were offered to the other contractors but only three (3) were accepted. The remaining two (2) were completed by payment of extra hours to the remaining contractors.

In addition, the grader contractors are responsible for the removal of snow windrows from seniors and physically challenged with prices identified within this report. During the 2008 Council Winter Workshop, one of the areas identified for improvement was the service delivery of Windrow Clearing. Through negotiations with Staff, the contractors have agreed to hold their 2008 prices per driveway but have requested to be paid standby on Windrow Trucks. This paid standby aligns with all other winter maintenance equipment currently under contract to the Town. This standby cost is to meet service level delivery for managing the windrow clearing program. Costs associated with this service improvement are identified in ATTACHMENT “B”.

Hourly Rates (Exclusive of HST)

Contractor 2008/09 2010/11/12

Curtis Enterprizes Inc. $145/hour $145/hour

Jag Construction $145/hour $145/hour Vidome Construction Limited $168/hour $168/hour

Pit Haulage Ltd. $150/hour $150/hour

Standby Rate (136 days)

2008/09 2010/11/12

All Contractors $120/day $120/day

In addition, the grader contractors are responsible for the removal of snow windrows from seniors and physically challenged with prices identified below.

Windrow Clearing (Estimated 2000 driveways)

2008/09 2010/11/12

All Contractors $8.50/windrow $8.50/windrow

Standby Rate (130 days)

2008/09 2010/11/12

6 Vehicles $0/day $55/day

FINANCIAL CONSIDERATIONS AND TEMPLATE:

# of Units 2011

Estimated Cost 2010/2011

Incl. HST

# of Units 2010

Operating Budget 2010

Increase

Graders / Operating

$479,974

$471,672

$8,302*

* Due to HST impact commenced July 1^st, 2010

Graders-Standby

$664,289

$636,480

$27,809*

* One (1) additional grader on standby related to growth ($16,607) and the HST impact of $11,202 for the remaining graders

Windrow Operating

$86,496

$76,500

$9,996*

* The impact of additional 200 driveways ($8,650) and HST impact ($1,346) for the remaining 1800 driveways

Windrow Standby

$45,670

$45,670*

* Standby rate added to for service level demands for managing the windrow clearing program

Total

$1,276,429

$1,184,652

$91,777

2010 Operating Budget Impact:

Equipment	2010 Available Budget	2010 Costs – 2 Storms	Balance Remaining
Total Graders		$416,675
Windrow Cleaning		$50,045
TOTAL	$664,756	$466,720	$198,036

Remaining balance to offset any winter operations over expenditures.

In October 2008, Council approved the extension of contract 012-T-03 for one (1) winter season (2008/09) at the negotiated rates with an option to extend for a further one (1) additional winter season (2009/10) with a 3% rate increase. Since this contract extension, fuel prices have increased by 11% and the consumer price index which is an indicator of consumer prices (Inclusive of labour) has increased by 3.08%.

Staff were successful during the extension year 2009/10 to negotiate a 0% rate increase in lieu of 3% as approved and have further been successfully in negotiating the same 2008/09 itemized rates with an standby for windrows for a further two (2) winter seasons (2010/11& 2011/12). As stated within this report, the Town has seen a considerable increase in other winter maintenance contracts (sidewalk and plow) when the tender was released to the marketplace (70-80% higher than previous 2003-2008 contract). Also, as identified within the report, the availability of graders is limited and during the requested extension period in 2008/09 the highest hourly rate amongst all contractors under contract 012-T-03 chose not to renew with the Town as they had received work from another municipality at a higher rate. The rate of this contractor at that time (2008/09) was 20% higher than the Town’s 2^nd highest hourly rate contractor.

ATTACHMENTS:

Attachment “A” – Summary of Contractor Tender Award

Attachment “B” – Summary of Additional Equipment Costs

RECOMMENDED BY: