Staff Report #2
November 28, 2018
To All Commissioners
Re: Contract Award – 2019 Replacement & Expansion Buses
Recommendation
That the Commission:
- APPROVE the early purchase of the 2019 new bus requirements (8 replacement and 1 expansion) from New Flyer Industries, at a total cost of $5,119,155, exclusive of applicable taxes; and
- DIRECT the administration finalize the appropriate purchase order with New Flyer Industries.
Background
In both 2017 and 2018, the Public Transit Infrastructure Funding program was utilized to fast-track bus replacement programs, moving forward half of the replacement buses each year. The approach resulted in the ability to offset the bus replacement costs with 50% funding from the Federal funding program.
The Public Transit Infrastructure Fund Program has resulted in significant pressure on North American bus manufacturers given many transit systems have increased their bus orders in effort to take advantage of this funding. In an effort to ensure delivery of the 2019 bus order next year, the report recommendation calls for Commission approval of the 2019 bus order, notwithstanding Municipal Council has not approved the 2019 capital budget (approval currently scheduled for January 2019).
When the 2019 capital budget was prepared in August of 2018, the 2018 bus costs were used given that was the most recent pricing available. The quote received from New Flyer for the 2019 bus order for a 40’ diesel bus is $568,795 exclusive of applicable taxes. This price represents a 4.2% increase over the $545,770 unit price paid for the 2018 bus order and was arrived at by applying the price escalation formula included in the contract.
The tables below set out the variance from budget to projected actual based on the actual 2019 unit pricing. As indicated in both the replacement and expansion bus tables below, the variance in unit price is being absorbed with Provincial Gas Tax funding, and as such, no request for modification in City of London funding is required.
2019 Bus Replacement Program
| Description | Units | 2019 Budget Amount | Amended Cost | Variance |
| Bus Replacement | 8 | $ 4,560,800 | $ 4,748,000 | $ 187,200 |
| Funding | ||||
| Provincial Gas Tax | $ 836,000 | $ 1,023,200 | $ 187,200 | |
| City of London | 2,224,800 | 2,224,800 | ||
| Federal Gas Tax – C/L | 1,500,000 | 1,500,000 | ||
| Total | $ 4,560,800 | $ 4,748,000 | $ 187,200 |
2019 Bus Expansion Program
| Description | Units | 2019 Budget Amount | Amended Cost | Variance |
| Bus Expansion | 1 | $ 600,200 | $ 623,500 | $ 23,300 |
| Funding | ||||
| Provincial Gas Tax | $ 300,100 | $ 323,400 | $ 23,300 | |
| City of London | 300,100 | 300,100 | ||
| Total | $ 600,200 | $ 623,500 | $ 23,300 |
The revised costing as set out above will be included in the recosted capital budget program, scheduled to be presented to the Commission at the March 2019 meeting.
New Flyer has indicated that should they receive confirmation of this order by the end of November, that all buses will be delivered in the last quarter of 2019.
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager