TO: Mayor and Members of City Council
THRU: Douglas J. Hewett, City Manager ICMA-CM
FROM: Kristoff Bauer, Deputy City Manager
DATE: November 26, 2018
RE:
Title
Fleet Maintenance Vendor Contract Award and Adoption of Budget Ordinance Amendment 2019-8 to Re-establish the City’s Fleet Maintenance Internal Service Fund and Appropriate Funds for Projected Fiscal Year 2019 Expenditures
end
COUNCIL DISTRICT(S):
Council District(s)
All
b
Relationship To Strategic Plan:
Goal 5: Sustainable Organizational Capacity
Executive Summary:
On May 10, 2017, the City received a letter from PWC stating their intent to terminate the existing fleet maintenance agreement effective June 30, 2018. This deadline was subsequently extended to June 30, 2019. The City’s efforts to find a replacement service provider have culminated in two “last, best, and final” proposals from well qualified vendors. Council action is needed to authorize the execution of a service contract with the recommended vendor (Vector) and to adopt Budget Ordinance Amendment 2019-8 to re-establish the City’s Fleet Maintenance Internal Service Fund and appropriate $300,000 to support start-up costs in Fiscal Year 2019.
Background:
The City of Fayetteville and PWC are currently operating under the original 2005 Fleet Services Agreement which is outdated and does not reflect how both parties currently operate and is not consistent with the requirements of the revised charter.
At the May 10, 2017, PWC Commission meeting, the Commissioners requested that City Council make a decision in regard to its intent to continue to participate in fleet maintenance services through PWC in response to a proposal developed by PWC staff to invest in significant capital improvements to the existing maintenance facility. Without a firm commitment from the City, PWC was unable to obligate resources for that expansion. The Commissioners voted unanimously, pursuant to Section 4 of the May 31, 2005, Fleet Services Agreement, to notify the City of their intent to terminate the agreement effective June 30, 2018. A letter from former PWC Chairwoman Shaw to former Mayor Nat Robertson was sent on May 10, 2017.
In July 2017, the Fleet Maintenance Committee was established, with Council Member (CM) Arp serving as Chair, and including CM Crisp, CM Mohn, and PWC Commissioners Fowler and Rogers, along with staff members from the City Manager’s Office, PWC, Budget, Finance and Purchasing. The Committee discussed future options for fleet maintenance and guided the development of a Request for Information and subsequent Request for Proposals.
The eight proposals initially received were narrowed down to two highly qualified firms through a thorough vetting process that included reference checks, interviews, and site visits. These two firms were provided the opportunity to submit “last, best, and final” proposals based on specific contract terms. Both vendors were provided the opportunity to complete pricing terms of the service contract and then execute the completed agreement. These responses and executed agreements are attached.
Issues/Analysis:
The City now has the opportunity to decide which of the two alternative vendor contracts to execute. Other than pricing and the name of the vendor, these contracts are the same. The price difference is discussed in the attached memorandum and summarized in the table below:
Vendor Vector First Vehicle Difference
Total Fixed Target Cost (FY20) $2,399,322.09 $3,446,960.58 $1,047,638.49
Non-Target Labor Rate $ 44.85 $ 55.00 $ 10.15
(Outside Normal Daytime Business Hours)
Non-Target Parts Markup 5% 8% 3%
Subcontractor Markup 1.5% 5% 3.5%
Based on the pricing information, staff’s recommendation is to select Vector as the fleet vendor. The contract requires service to be provided starting on July 1, 2019. This transition will require significant work on the part of both Vector and the City in order to prepare the service location, install equipment, acquire initial inventory, and secure and train personnel. Council’s authorization to award will provide seven months to accomplish this work.
For the current fiscal year, staff estimates a funding need of $300,000 for the Fleet Maintenance Internal Service Fund. The budget needs to include one-time start up expenditures of approximately $170,000 for up-fit of the facility, furniture and equipment purchases, and recruitment of the City’s fleet manager. These expenditures include software and equipment costs for the City’s fuel site as we transition from shared administration with the PWC. The $130,000 balance of the funding supports recurring expenditures including: lease costs for the Pepsi Lane facility beginning in January 2019; maintenance and utility costs for the facility; salary and benefit costs for the fleet manager for approximately four months; and other operating expenditures.
Budget Impact:
The source of funding for the Fleet Maintenance Internal Service Fund will be cost allocations to the other operating funds. For the Fiscal Year 2019 start-up expenditures, preliminary plans are for the cost allocations to be completed at year-end based upon each department’s share of total PWC fleet maintenance expenditures for the current fiscal year. Based upon a preliminary review of current fleet maintenance budget appropriations, it is expected that the current appropriations will be sufficient to accommodate these start up expenditures as well as the PWC fleet maintenance charges.
Options:
• Approve Budget Ordinance Amendment 2019-8 and authorize the City Manager to execute the service contract with Vector.
• Approve Budget Ordinance Amendment 2019-8 and authorize the City Manager to execute the contract with First Vehicle.
• Direct staff to respond to specific questions and bring the item back for consideration during the December 10, 2018 Council meeting.
Recommended Action:
Staff recommends that Council move to adopt Budget Ordinance Amendment 2019-8 and authorize the City Manager to execute a service contract with Vector for fleet management services.
Attachments:
Best & Final Analysis and Attachments
Budget Ordinance Amendment 2019-8