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CITY OF COLTON ITEM #13
<br />AGENDA REPORT
<br />FOR COUNCIL MEETING OF APRIL 7, 2009
<br />TO: Honorable Mayor and City Council
<br />FROM: Jeannette Olko, Electric Utility General Manager
<br />SUBJECT: Recommend Approval of Change Order To Terex Utilities, Inc., in the Additional
<br />Annual Amount of $25,762.87, for the Five -Year lease Purchase of Three (3)
<br />Digger Derrick Line Trucks, and to Authorize the City Manager to Execute the
<br />Lease Agreement with Wells Fargo equipment Finance, Inc. in the New Annual
<br />Amount of $210,330.81.
<br />DATE: April 1, 2009
<br />BACKGROUND:
<br />On March 12, 2008, the Electric Utility Department issued a Notice Inviting Bids for a five-year lease/purchase
<br />of three (3) new 60ft digger derrick line trucks. The Notice Inviting Bids and bid documents were posted and
<br />distributed through BidNet, the City's online bid system. BidNet directly notified eighteen (18) vendors
<br />registered nationally for this type of vehicle. In addition, the bid documents were available for viewing and/or
<br />download to all vendors registered on the network.
<br />A public bid opening was held on April 22, 2008, at 11:30am, at the City of Colton Electric Department
<br />Administrative offices on. Electric department staff next applied for an exemption from Rule 1196 from the
<br />SCAQMD. Between May and December, 2008, staff participated in several telephone conference calls with
<br />staff at the SCAQMD regarding the issue of diesel versus CNG or LNG trucks. The SCAQMD notified staff on
<br />December 17, 2008, that the City may purchase these vehicles, as bid, because our total fleet of heavy-duty
<br />vehicles is currently under 15 and the acquisition of these vehicles will not increase our fleet to 15 or more
<br />vehicles.
<br />On January 20, 2009, City Council awarded the bid for the five-year lease purchase of three (3) digger derrick
<br />trucks to Terex Utilities, Inc. based on the unit cost of $259,652.50 each, and authorized the City Manager to
<br />execute the lease agreement with Wells Fargo Equipment Finance, Inc. in the annual amount of $184,576.94.
<br />Purchase Order Number 09008240 was issued to Terex Utility, Inc. on January 22, 2009.
<br />DISCUSSION/ANALYSIS:
<br />After award of the bid to Terex, on February 4, 2009, the City of Colton Electric Utility was notified by Terex
<br />Utilities, Inc., that Sterling, the manufacturer of the cab and chassis portion of the units originally proposed in
<br />Terex's bid, had discontinued operation because of the downturn in the economy. However, Terex informed us
<br />that they can still honor their bid and build the unit, per our specifications that meets all requirements of the
<br />contract documents, using an International cab and chassis as a substitute for the Sterling which is no longer
<br />available. Unfortunately, this substitution cannot be made at the same cost as the Sterling cab and chassis. The
<br />substitution will result in an increased annual cost of $25,762.87. With the additional cost, the cost to issue a
<br />change order to Terex would still be less than bid of the next low bidder, coming in $22,871.81 less than the
<br />second low bidder's original bid.
<br />Staff has consulted with the City Attorney's office on this issue to ensure that allowing such a change order
<br />would not violate the City's Purchasing Ordinances. Since the City has not made any changes to its specification
<br />for the units, and Terex's proposed substitute will meet all requirements of the original specifications, and given
<br />that the cause of the increase is due to forces beyond Terex's or the City's control (the cab and chassis
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