Vancouver City Council |
ADMINISTRATIVE REPORT
Date: April 28, 2003
Author/Local: TBatty/7315
RTS No. 03358
CC File No. 1805
Meeting Date: May 13, 2003
TO:
Vancouver City Council
FROM:
General Manager of Engineering Services and Manager of Materials Management
SUBJECT:
Renewal Option - Contract PS00004
Supply and Delivery of Mineral AggregatesRECOMMENDATION
THAT Council approve the exercise of the renewal options and that the City enter into contracts with Lafarge Construction Materials Ltd., and Mainland Sand & Gravel Ltd. for the supply and delivery of mineral aggregates for an additional 24-month period from June 1, 2003 to May 31, 2005, at an estimated 24-month cost of $6,660,170 plus the GST (less any anticipated receipt of municipal rebate) and PST (where applicable).
1.
Lafarge Construction Materials Ltd
for items #1, #10, #11, #15, #17 and #21$4,422,944
2.
Mainland Sand & Gravel Ltd.
For items #3, #4, #5, #7, #9, #13, and #14$2,237,226
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.
BACKGROUND
On March 28, 2000, Council awarded 12-month contracts for the supply and delivery of mineral aggregates to Lafarge Construction Materials Ltd. and Mainland Sand & Gravel Ltd. The contracts provide for four 12-month renewal options, by mutual consent between the City and the contractors.
The renewal options also provide for a price adjustment at the end of each 12-month period, subject to documented proof of manufacturers raw material cost changes or any other factors related to this product which can be verified with an independent published source.
City Council approved the first 12-month extension on April 24, 2001 and the second 12-month extension on April 23, 2002. This report deals with the final third and fourth 12-month renewal options.
DISCUSSION
Both Lafarge Construction and Mainland Sand & Gravel have agreed to extend for an additional 24-month period at 3.1% price increase based on fuel and labour costs. This represents an approximate annual increase rate of 1.55%. The first extension in 2001 included an increase of 5.5% for material and transport costs. The second extension in 2002 had no cost increase. The proposed 3.1% increase over 24 months is reasonable and it is recommended that it be approved.
As a result, the total cost of mineral aggregates is estimated to be $6,660,170 as follows:
Supply and Delivery of Mineral Aggregates
Estimated 24-month Cost
1.
Lafarge Construction Materials Ltd
for items 1, 10, 11, 15, 17 and 21$4,422,944 ($2,211,472 for 12-month)
2.
Mainland Sand & Gravel Ltd.
For items 3, 4, 5, 7, 9, 13, and 14$2,237,226 ($1,118,613 for 12-month cost)
All other terms and conditions remain the same as the original contract.
FINANCIAL IMPLICATIONS
The 3.1% increase represents a $200,000 increase over two years. Mineral aggregate material is primarily used for new construction and therefore impacts Capital budgets with very little impact on Operating Budgets. The mineral aggregate component of projects is generally in the range of 15% to 20% of the total cost and therefore this increase will affect the overall projects cost by less than 1%.
Funds for all purchases are provided by the revenues of the Asphalt and Aggregate Plant operations.
CONCLUSION
As both Lafarge Construction Materials Ltd., and Mainland Sand & Gravel Ltd. have been satisfactory suppliers, it is recommended that the City exercise the renewal options and enter into new contracts with each supplier effective May 31, 2003 through to June 1, 2005 at an estimated 24-month cost of $6,660,170 plus GST and PST, where applicable.
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