Staff Report #2 – Contract Award – 2020-2022 Replacement and Expansion Buses

Staff Report #2

November 27, 2019

To All Commissioners

Re: Contract Award – 2020-2022 Replacement and Expansion Buses

Recommendation

That the Commission:

1. ACCEPT the bid submission from New Flyer Industries Canada, ULC for the supply of both 40’ and 60’ replacement and expansion buses for the period of 2020 through 2022, at a unit cost of $564,857.40 and $879,148.40 exclusive of applicable taxes respectively;
2. DIRECT the administration finalize the appropriate contract with New Flyer Industries Canada, ULC; and
3. APPROVE the early purchase of the 2020 replacement bus requirements (16 – 40’ buses) from New Flyer Industries Canada, ULC at a total cost of $9,424,918, exclusive of applicable taxes.

Background

The Request for Tender (RFT) for the supply and delivery of diesel powered 40’ and 60’ articulated low floor bus requirements for the period 2020 to 2022 closed on November 5, 2019. One compliant bid was received, which was deemed compliant with the RFT terms and conditions. A second bidder provided notification that they were unable to provide a bid within the tender’s stipulated timelines. The details of the compliant bid received are set out in the table below, noting the pricing provided is inclusive of all options and exclusive of applicable taxes.

When the 2020 capital budget was prepared in August of 2019, the 2019 bus costs were used given that was the most recent pricing available. The bid received from New Flyer for the 2020 bus order for a 40’ diesel bus is $564,857.40 exclusive of applicable taxes. This price represents a 1.4% decrease over the $572,700 unit price paid for the 2019 bus order.

Replacement Buses

The tables below set out the variance from budget to projected actual for the 2020 Bus Replacement Program based on the actual 2020 unit pricing. As indicated in the table, the variance in unit price is being reflected with a slight decrease in Provincial Gas Tax funding, and as such, no modifications in City of London funding is required.

2020 Bus Replacement Program

Over the past number of years, the Commission has approved ordering buses in November for the following year, notwithstanding the capital budget program has not been approved by Municipal Council at that time. As set out in the report recommendations, the same process is being recommended this year for the replacement bus program only. Ensuring buses arrive within the year they are required has been critical in managing the transition process as well as the costs associated with keeping buses on the road longer than anticipated. The RFT required respondents to indicate the timeframe in which buses would be delivered if an order was placed by December 1, 2019. The response from New Flyer indicated that 40’ buses would be delivered by October 23, 2020.

Given the bus replacement program is a long-standing program that has been included in the City of London capital budget with allocated funding for many years, it is not anticipated this program will be the subject of debate during budget deliberations. Should the confirmation of the bus order be pushed to be subsequent to the final approval of the budget programs by Municipal Council, there is little chance that buses would be delivered in 2020.

Expansion Buses

The Bus Expansion program, covering the period 2020-2028, was one of the projects submitted and approved for funding under the Investing in Canada Infrastructure Program – Transit Stream. Given the uncertainty with respect to the type of bus (40’ vs 60’) that would be required in each year of the program, the budget for expansion buses was arrived at by using a weighted average price between a 40’ and 60’ bus. Given the expansion buses being recommended for purchase in 2020 are all 40’ buses, the budget variance will be quite significant; however, this is anticipated to balance out over the eight-year period as more 60’ articulated buses are purchased.

The table below sets out the variance from budget to projected actual for the 2020 Bus Replacement Program based on the actual 2020 unit pricing.

2020 Bus Expansion Program

Notwithstanding the need for the four expansion buses in order to implement the planned service improvements scheduled to take effect September 1, 2020, the confirmation of the order for the four expansion buses is not being recommended at this time given the uncertainty with respect to the 2020 operating budget. As set out in Staff Report #3 dated November 27, 2019, all civic departments, boards and commissions have been requested to provide details with respect to the impacts associated with possible cuts to the base budget submissions. Should the Commission’s base operating budget for 2020 not be approved as submitted, there will be no need for expansion buses as the service will be facing reductions versus growth. Should the 2020 operating budget be approved as submitted (both base and growth), New Flyer will be provided with a confirmation for an additional four buses, and the first four replacement buses received will be treated as expansion buses in an effort to ensure that the service improvements can be implemented in September 2020. This approach may have a negative impact on the 2020 operating budget as four buses will need to be kept in service longer than planned.

The revised costing for both the Bus Replacement and Bus Expansion programs will be included in the recosted capital budget program, scheduled to be presented to the Commission at the March 2020 meeting, subsequent to Municipal Council finalizing the budgets.

Recommended by:

Mike Gregor, Director of Finance

Craig Morneau, Director of Fleet & Facilities

Concurred in by:

Kelly S. Paleczny, General Manager