ADMINISTRATIVE REPORT

Date: March 1, 2000
Author/Local: J.Lloyd/7257
RTS No. 01323

CC File No. 1805

Council: March 14, 2000

TO:	Vancouver City Council
FROM:	General Manager of Engineering Services and Manager of Materials Management
SUBJECT:	Contract Extension - Contract No. PS99037 Supply and Delivery of Municipal Castings

RECOMMENDATION

THAT Council approve a 24-month contract extension for Westview Sales Ltd. to supply and deliver municipal castings at the cost of $447,890 over two years, plus the 7% Goods and Services Tax (less the anticipated receipt of the municipal rebate) 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 for award.

DISCUSSION

On August 6, 1999, the General Manager of Engineering Services awarded the above mentioned tender for the supply and delivery of municipal castings to Westview Sales Ltd., the low bid, for an initial 12-month period at a cost of $180,658.

The 7% Goods and Services Tax (less the anticipated receipt of the municipal rebate) and the Provincial Sales Tax are in addition to the prices shown in this report.

Funds for these purchases are available in various Engineering Services operating and capital budgets.

This contract covers the supply and delivery of three major items of sewer and waterworks castings. Two 12-month extension periods are available in addition to the initial 12-month period awarded last year. A price adjustment clause exists in the contract.

Traditionally, the City required the castings be supplied in two shipments which increased inventory value and used a large amount of storage space. Since the tender was awarded, space has become a concern at the City's Central Stores due to yard modifications plus an initiative is underway to reduce inventory values. Overall requirements have increased since the original tender.

Westview agreed to a proposal from City staff for a staggered delivery schedule and will maintain local stock if unpredictable construction activity depletes City inventories. In return, Westview would be granted both 12-month extensions at the same time with a 3% price increase for the first 12-month period, followed by another 3% price increase in the second 12-month period.

These increases are considered reasonable as Westview will now have inventory carrying costs and more frequent shipping expenses. When the future quantities and price increases are taken into consideration, Westview's contract will be $70,425 or 16% less than the second low bidder's original tender prices.

Council should note that quality control concerns with offshore castings have been identified as an issue by the local foundry industry. The City did not have any recent experience with offshore castings until last year when Westview supplied their castings which were manufactured in China.

As set out in the tender documents, Westview's castings were tested by an independent inspection firm to confirm that metallurgy met specifications. The castings were also tested for compatibility by City staff with existing castings without problems. Only 2 castings were rejected from Westview on over 3,000 castings supplied during the initial 12-month contract period. Future castings will be subject to the same quality control processes.

Accordingly, we recommend that a 24-month contract extension be approved for Westview Sales Ltd. for the supply and delivery of municipal castings at a total cost of $447,890 over two years as it is unlikely that a new tender would generate better prices and quality control has been exceptional over the past year.

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(c) 1998 City of Vancouver