To All Commissioners
Re: Contract Award – Leasing of Transit Radial Tires
Recommendation
That the Commission APPROVE the optional five year contract extension with Bridgestone Canada, effective April 1, 2018, for the supply of transit radial tires, noting year one rates have been reduced by 9.3% with subsequent increases of 5% in year two and three and 4 % in year four and five.
Background
The current term with the Bridgestone Canada contract expired on September 30, 2017, and was for a period of five years. At the same time, discussions were underway with a number of transit properties in Ontario on the possibilities of completing a joint tender for leased tires or alternatively, “piggybacking” on to a larger contract already in place if permitted and beneficial. The dialogue revealed that one large contract in place was not mutually beneficial to join and the group decided not to enter into joint discussions for tender at this time. During this period, consistent with contract provisions, administration extended the contract for two additional three month terms to investigate these opportunities.
The contract with Bridgestone also provides a renewal option term for an additional five years if mutually agreeable by both parties. Bridgestone was very interested in extending the contract and provided a very competitive quote. The 9.3% reduction in year one is a result of Bridgestone offering to roll back pricing to year three of the contract term just ending. They have then provided modest increases of 5% after year one and year two, and 4% after year three and year four. The following table illustrates the pricing submitted by Bridgestone and corresponding annual expenditure estimate.
Summary of Pricing per Kilometer
| Bus Size | Tire Size | Current Rate | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| 40′ | 305/70R225 | 0.028278 | 0.025650 | 0.026928 | 0.028278 | 0.029409 | 0.030585 |
| 60′ | 305/70R225 | 0.047130 | 0.042750 | 0.044880 | 0.047130 | 0.049015 | 0.050976 |
| 30′ | 275/70R225 | 0.060906 | 0.055248 | 0.058008 | 0.060906 | 0.063342 | 0.065876 |
| % Change | -9.3% | 5.0% | 5.0% | 4.0% | 4.0% | ||
| Overall % change | 8.2% | ||||||
| Annual Cost (at current KM’s) | $ 337,100 | $ 353,900 | $ 371,600 | $ 386,500 | $ 401,900 | ||
Given Bridgestone has held the contract for the past 15 years and has provided reliable products and service with fair and reasonable pricing, it is recommended the contract be extended for a further five year term.
Recommended by:
Mike Gregor – Director of Finance
Concurred in by:
Kelly S. Paleczny – General Manager