Staff Report #6
January 26, 2026
To All Commissioners
Re: 2027 Bus Replacement and Rapid Transit East Leg Bus Order
Recommendation
That the Commission:
- APPROVE the purchase of the 2027 replacement bus requirements (17 – 40’ buses) at a total cost of $16,275,307, exclusive of applicable taxes;
- APPROVE the purchase of 9 – 60’ buses required for the launch of the East Leg of the Rapid Transit program at a total cost of $13,137,849, exclusive of applicable taxes, noting the purchase order for these buses will be processed subsequent to Municipal Council approval of the expenditure from the Rapid Transit Program budget; and
- DIRECT Administration to issue the requisite purchase orders for the 26 buses.
Background
In April 2024, the Commission accepted the bid submission from New Flyer Industries Canada ULC (New Flyer) for the supply of 40’ and 60’ buses for the period of 2024 through 2027. Delivery timeframes continue to be extended to between 12 and 18 months from date of order, which necessitates earlier order confirmations to ensure that replacement buses are received within the year they are required. In addition to extended delivery times, several factors have impacted the supplier’s ability to determine firm pricing for this bus order, each of which is discussed in detail below.
2027 EPA Standards for Internal Combustion Engines
The US Environmental Protection Agency (EPA) creates standards that are followed by bus manufacturers in North America given their customer base covers both countries. Each time the EPA standards for diesel engines are updated, engine manufacturers must adapt their technologies to ensure compliance. Engines for the two bus manufacturers supplying Canada are provided by Cummins Inc, who have confirmed they will have a 2027 EPA-compliant engine (X10 Transit) available to North American bus manufacturers sometime in 2026, for install in buses going forward. This engine will be capable of operating on diesel, hydrogen or natural gas. While this is welcome news, bus manufacturers are not yet able to obtain final pricing for these engines, and as such, have indicated that an adjustment to the quoted price may be required once the cost of the engine is confirmed.
US Tariffs
The policy direction under the Trump presidency has resulted in significant incremental challenges to the North American Bus Manufacturing sector, the costs of which will be ultimately incurred by transit systems looking to maintain and/or expand their fleets. The ongoing and fluctuating tariffs on many of the raw materials required for the manufacturing process make it impossible for manufacturers to determine tariff impacts until such time as the bus is completed as the bus travels back and forth across the border as part of the manufacturing process and tariffs are applied at the time this occurs. As a result, the manufacturer has recommended a contingency of between 3% and 15% anticipated to be applied to the base bus price at time of delivery, the contingency on the bus replacement order will range from $527,500 to $2.6 million.
2027 Bus Replacement Order
In light of the extended delivery times being experienced in the sector, Administration reached out to New Flyer for pricing and delivery estimates for the 2027 replacement and expansion bus requirements. The prices quoted (exclusive of applicable taxes) are set out in the table below.
| Bus Model | Price |
| 40’ Diesel Bus | $ 957,371 |
| 60’ Diesel Bus | $ 1,459,761 |
New Flyer’s contracted prices are set based on the bus price established in December 2023 when the contract for 2024 through 2027 buses was established. The current prices provided include a PPI adjustment of 8.05% and a 3.28% exchange rate adjustment from the contract base that results in a 3.0% increase over the 2026 bus price. It is however noted in the quotation that New Flyer has committed to recalculate the foreign exchange at the time of line entry of the buses, and reduce the bus prices should the exchange be more favourable at that time.
The following table sets out the impact of the quoted pricing on the 2027 Bus Replacement Program budget.
2027 Bus Replacement Program
| Description | Units | 2027 Budget Amount | Units | Amended Cost | Variance |
| Bus Replacement (40’) | 15 | $ 14,643,000 | 17 | $ 16,561,400 | $ 1,918,400 |
| Bus Replacement (60’) | 2 | 2,978,800 | – | – | (2,978,800) |
| Ancillary Equipment | 773,500 | 773,500 | – | ||
| 17 | $ 18,395,300 | 17 | $ 17,334,900 | $ (1,060,400) | |
| Funding | |||||
| City of London | $ 14,043,000 | $ 14,043,000 | $ – | ||
| Provincial Gas Tax | 1,852,300 | 791,900 | (1,060,400) | ||
| Federal Gas Tax – C/L | 2,500,000 | 2,500,000 | – | ||
| Total | $ 18,395,300 | $ 17,334,900 | $ (1,060,400) |
As set out in the table above, the original 2027 Bus Replacement Program called for the purchase of 15 – 40’ buses and two 60’ buses. In light of the anticipated impacts on price resulting from the application of tariffs and the increased price associated with the 2027 EPA compliant engine, Administration is recommending that no 60’ replacement buses be purchased in 2027, resulting in the requirement for 17 – 40’ buses. This shift provides approximately $1 million in relief in the program budget, which will be utilized to offset the ultimate contingency costs.
The delivery time provided in the bid document indicates third quarter 2027 (approximately 18-month delivery) assuming a purchase order is issued by January 30, 2027. This will result in challenges in ensuring bus availability for the launch of the 2027 fall service changes; however, Administration will work to plan and coordinate service changes based on a more updated arrival time once it is known.
Rapid Transit East Leg Bus Requirements
The current projected timeframe for the launch of the East Leg of the Rapid Transit program is Fall of 2027. Civic Administration has requested that the 9 – 60’ articulated buses required for this service be appended to the London Transit 2027 bus replacement order. Council confirmation to proceed is required prior to confirmation of the purchase order which is anticipated for early March. Given the Commission’s meeting schedule is under review, approval for the issuance of this purchase order is included in this report noting it will only occur subsequent to Council approval.
Rapid Transit Program Bus Requirements
| Description | Units | Amended Cost |
| Bus Replacement (60’) | 9 | $ 13,368,600 |
| Ancillary Equipment | 981,000 | |
| 9 | $ 14,349,600 |
It should be noted that the pricing above is subject to the same contingencies as the bus replacement order, and pricing will be subject to shifts of between 3% and 15% relating to tariffs, which will not be known until bus delivery. There is also the potential for a pricing increase relating to the 2027 engine, which will be known once the buses are being built.
Given the issuance of this purchase order will not be completed until such time as Council approval is received, the delivery date for these buses cannot be determined. Based on the 18 month timeframe provided by New Flyer for the 2027 replacement buses, if a purchase order is issued in March of 2026, delivery could be expected to occur beginning in October 2027. Subsequent to confirmation of a delivery date for these buses, Administration will hold discussions with Civic Administration regarding implementation dates for the Rapid Transit East Leg that consider bus availability as well as the status of construction along the corridor.
Recommended by:
Craig Morneau, Director of Fleet and Facilities
Mike Gregor, Director of Finance
Katie Burns, Director of Planning
Concurred in by:
Kelly S. Paleczny, General Manager