ADMINISTRATIVE REPORT

Date: February 9, 2000
Author/Local: J.Lloyd/7257
RTS No. 01288

CC File No. 1805

Council: March 7, 2000

TO:	Vancouver City Council
FROM:	General Manager of Engineering Services and Manager of Materials Management
SUBJECT:	Contract Extension - Contract No. 58-98-01 - Supply and Delivery of PVC Sewer Pipe and Fittings

RECOMMENDATION

THAT Council approve the extension of the contract for the supply and delivery of PVC sewer pipe and fittings to Mueller Flow Control, for a 12-month period, at an annual estimated cost of $588,318 plus the 7% Goods and Services Tax (less any municipal rebate received) and the Provincial Sales Tax.

COUNCIL POLICY

The policy of Council is to award contracts for the purchase of equipment, supplies and services that will give the highest value based on quality, service and price.

Contracts with a value over $300,000 are referred to Council.

DISCUSSION

On February 17, 1998, Council awarded a 12-month contract to Grinnell Supply Sales, now known as Mueller Flow Control, for the supply and delivery of PVC sewer pipe and fittings, at an annual estimated cost of $469,749.

The 7% Goods and Services Tax (less any municipal rebate received) and the Provincial Sales Tax are in addition to all prices in this report.

The contract provides for two 12-month extensions by mutual agreement between the City and the contractor. This is the second 12-month extension period. Price adjustments are allowed during the contract due to the commodity nature of PVC resin. Council approved the first 12-month extension on February 2, 1999 with a 3% increase on the pipe portion of the contract.

Mueller has agreed to extend the contract for an additional 12-month period. PVC resin prices have been unstable over the past 12-month period due to heavy demand and less production capacity. Over the past year, several price increases have resulted in a 22% increase in the estimated annual contract value. Other organizations and manufacturers were canvassed and report similar price increases. Prices are forecast to be stable for the near future but predictions also exist of further price increases and even decreases during the next year.

After discussions with City staff, Mueller has arranged for price reductions on some pipe items for a fixed time period reducing costs approximately $24,186. In addition, City staff have been satisfied with product quality and service from Mueller who were able to maintain adequate supplies for the City during pipe shortages in the market.

Despite the price increases PVC material still remains the most economical product to purchase and install for certain types of sewer line applications. All PVC pipe manufacturers will be subject to similar price adjustments so no value would be gained by retendering this product.

Considering that Mueller Flow Control has been a satisfactory supplier, it is recommended that this contract be extended for an additional 12-month period.

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(c) 1998 City of Vancouver