Vancouver City Council |
ADMINISTRATIVE REPORT
Date: July 11, 2003
Author: LBerglund/7254
RTS No. 03534
CC File No. 1805
Meeting Date: July 29, 2003
TO:
Vancouver City Council
FROM:
General Manager, Engineering Services
General Manager/Fire Chief, Vancouver Fire and Rescue Services
Manager, Materials Management
SUBJECT: Approval (Subject to Contract) of Proposal for the Supply of Automotive, Truck and Heavy Equipment Parts and Related Shop Supplies - RFP No. PS02025
RECOMMENDATION
A. THAT, subject to the conditions set out in Recommendations B, C, and D, an agreement be entered into with UAP Inc. DBA Napa Auto Parts to supply the after-market automotive Parts and related shop supplies; and with Co-Van International Trucks Inc. to supply the truck and heavy equipment after-market parts and components, for a period of three years at an estimated amount of $1.6 million and $600,000 respectively, excluding GST.
B. THAT all legal documentation is to be in a form which is satisfactory to the Director of Legal Services, Manager of Materials Management, General Manager of Engineering Services, and the General Manager/Fire Chief of Fire and Rescue Services.
C. THAT upon approval of the legal documentation by the Director of Legal Services, Manager of Materials Management, General Manager of Engineering Services, and the General Manager/Fire Chief of the Vancouver Fire and Rescue Services, that the General Manager of Engineering Services, and the General Manager/Fire Chief of the Vancouver Fire and Rescue Services be authorized to execute and deliver the necessary legal documents on behalf of City Council.
D. THAT no legal rights or obligations shall arise hereby and none shall arise or be granted hereafter unless and until all contemplated legal documentation has been executed and delivered by all parties.
POLICY
The policy of Council is to award contracts for the purchase of equipment, supplies and services that will give the best value based on quality, service and price.
Contracts with a value over $300,000 are referred to Council for approval.
PURPOSE
The purpose of this report is to recommend that Council authorize staff to enter into a three-year contract with UAP Inc. DBA Napa Auto Parts as the primary supplier of automotive after-market parts and related shop supplies; and Co-Van International Trucks Inc. as the primary supplier of after-market truck and heavy equipment parts to the City. This recommendation is based on responses to a public process through Request for Proposals PS02025.
DISCUSSION
The City spends an estimated $740,000 per year on after-market automotive, truck and heavy equipment parts, and related shop supplies at its three key maintenance facilities with several suppliers. Over the past several years, Equipment Services and Materials Management have gained efficiencies for the City by reducing the number of suppliers and thereby increasing the volume discounts available to the City for parts and supplies. Improvements also included reducing administrative costs associated with transactions related to ordering, payment processing and supplier performance management, and by further consolidating purchasing contracts as recommended in this report, additional savings can be achieved.
On July 29, 2002, the City issued a Request for Proposal (RFP PS02025) for any or all of the three components for the supply of after-market automotive parts, truck and heavy equipment parts, and related shop supplies. The competition was advertised on the City's web site; the "BC Bid" web site; and invitations were also sent to key vendors known within the industry. From the twenty-five prospective proponents attending the informational bid pre-submission meeting, twelve proposals were received for the various components within the RFP.
The City's objectives for the RFP's supply and service requirement includes:
- timely deliveries at lowest cost to the City;
- consistent and best pricing for parts, components, supplies and accessories;
- reduction of inventory investment within the respective shops;
- lower transaction costs by adopting a more efficient ordering process and payment system;
- a strong co-operative and proactive relationship with the vendors.Under the sponsorship of the Manager of Equipment Services, and the Division Chief Mechanic of the Fire and Rescue Services, the RFP process was facilitated by the Materials Management Division of Corporate Services with the evaluation team comprised of the following:
- Peter Procyshyn, Superintendent and Planner/Scheduler, Equipment Services;
- Wayne Burns, Superintendent, Cambie Garage, Equipment Services;
- Dave Strebe, Storekeeper, Manitoba Yards, Equipment Services;
- Steve Salsman, Storekeeper/Equipment Fleet Maintenance, Fire and Rescue Services;
- Shari Wallace, SAP Business Support Manager, Corporate Services.Evaluation criteria were as follows:
- Proponent Qualifications:
Factors considered included the firm's history, scope of service abilities, experience of its key personnel, and product offering.
- General Requirements:
Factors considered included the capabilities of meeting the product and service needs of the City's maintenance facilities including 90 minute delivery requirements; the ability to supply the specified products; the safe disposal of obsolete or spent material; business process technology including efficient ordering and summary billing provisions; product usage reporting capabilities; and a workable transition and implementation plan.
- Risk:
Factors considered were identification of risks associated with implementing a contract of this nature, and a proposed solution to mitigate those risks.
- Value Added Services:
Factors considered included types of services that could be provided by the vendor such as identifying the City's parts needs, stocking special parts unique to the City's fleet, training, and core exchange/recycling programs.
- Quality of Proposal:
Factors considered included the organization, compliance and the comprehensiveness of the proposal.
- Financial Offering:
Pricing was determined by consideration of the Proponent's offering on a predetermined sample basket of products organized into commodity groups within the RFP. Using a value equalization analysis on common products quoted, the Proponent's offering was included within the overall evaluation after the subjective factors were scored.
The following steps were taken in completing the evaluation process:
- Proposals were evaluated by team members individually;
- A composite score was assigned to each proposal based on team member scores;
- Pricing was then combined with the team composite score to provide an overall rating;
- Consideration by the evaluation team on best supply strategy based on product offerings by Proponents within respective product categories resulted in consolidating shop supplies with the automotive parts category, and separating truck and heavy equipment parts;
- Clarification was obtained to confirm service and business process abilities;
- Based on the composite scores and clarification received, the automotive category was short-listed to two Proponents;
- Tours of each of the short listed Proponents' distribution centres were conducted, wherein operations and product information was obtained to enable the Evaluation Team to obtain further clarification of the service and product offering within the proposals, and to further examine each Proponent's business process technology through viewing demonstrations of their respective ordering process/billing system;
- Final review of the information and the selection of vendor(s).The proposal request was structured in three parts; the supply of automotive parts, the supply of truck and heavy equipment parts, and the supply of related shop supplies and accessories. The RFP stated that the City, at its option, could separately negotiate a contract for each part or any combination thereof, which would allow vendors to respond even though they could not supply all three of the categories.
Of the twelve proposals received, only three Proponents offered sufficient number of products within their proposal that provided an overall solution incorporating all three categories, however, each category was evaluated separately to provide an equal opportunity for compliant Proposals to be considered within the respective category(s) to which they were responding. After reviewing the scores and service requirement issues within each of the respective categories, the Evaluation Team decided that the City would receive the most benefit in allocating the requirements of the RFP to two vendors. Consolidating the automotive parts with the shop supplies and allocating those categories to one of the short-listed Proponents within the automotive parts group, and allocating the truck and heavy equipment parts to the leading Proponent in that category, would best meet the service objectives of the RFP.
The recommendation that the City authorize a contract with Napa Auto Parts for the supply of automotive parts and related shop supplies is based on the following strengths of their Proposal:
- Comprehensive selection of products under their "Napa" brand that exceeds original equipment manufacturer (OEM) specifications and establishing 2nd tier alliances with suppliers of parts and supplies specific to the City;
- An efficient internal distribution system supporting their stores' ability to respond to the 90 minute service requirement for the City's non-inventoried parts requirements, and in-house order fill-rate tracking system that monitors service;
- A strong parts warranty replacement program that includes the value of the part and labour incurred with its replacement credited to the City;
- An operational on-line internet ordering system that enables the City's technicians or parts people to place orders individually or in packages specific to the repairs for the types of vehicles operated by the City, thus improving the ordering process and reducing the possibility of "missed parts";
- Local IT staff supporting their ordering system and commitment to work with the City in developing a customized summary invoicing system, as well as possessing Master Card level 3 billing capabilities, thereby reducing business process costs;
- Significant value added services such as an expediting service, a battery recycling program, complete catalogues and manuals, testing new products, conducting equipment surveys and maintaining inventories tailored to the City's fleet, customized parts usage reports, fill rate reports, and technical training courses to staff;
The recommendation that the City approve a contract with Co-Van International Trucks for the supply of truck and heavy equipment parts is based on the following strengths of their Proposal:
- Operates its parts department until midnight and provides three regular deliveries along with expedited service as required and has an associate store in close proximity to the heavy equipment shop located at the City's Delta maintenance facility thereby supporting all of the City's truck and heavy equipment shops;
- Its warranty conditions that provides 12 month and unlimited mileage on all parts and workmanship supplied by Co-Van, and extends longer warranty periods for parts as covered by the manufacturer;
- Its ability to provide the range of after-market parts specific to the City's truck fleet through a working relationship with over 50 local vendors;
- Ability to manage its customer's inventory through their "Diamond Connection" online computerized inventory system which also provides for ordering non-inventory parts requirements to specific work orders or special parts;
- Possesses summary billing capability and will invest in Master Card's level 3 billing system if requested, enabling business process cost reduction;
- Value added services such as determining usage history for parts not previously purchased from Co-Van and stocking those parts for the City; provide parts supply reports, technical training, providing an electronic catalogue, and offering an obsolete parts recovery program.
FINANCIAL IMPLICATIONS
With funding to be provided from the respective departments' operating budgets, the financial offer for consideration as offered by the respective recommended solutions and calculated from the representative sample of competitive items are summarized below:
Representative Sample
Product CategoryRecommended
ProponentFinancial Offering
Present cost
Variance
Saving
Automotive Parts and Shop Supplies
Napa Auto Parts
$ 145,300.
$ 157,520.
$ 12,220.
7.8 %
Trucks and Heavy Equipment
Co-Van Trucks
$ 152,570.
$ 170,960.
$ 18,390.
10.8%
Total
$ 297,870.
$ 328,480.
$ 30,610.
9.3%
The above table, reflecting current price and cost information, indicates the savings for the representative sample competitive package for after-market automotive parts and related supplies is approximately 7.8%, and for the truck and heavy equipment parts is 10.8%, or for a combined average of 9.3% or $30,620 annually. When applying those rates of savings to the combined overall estimated annual spend of $740,000, the direct savings translates to approximately $68,800 annually.
CONCLUSION
In consideration of the advantages to entering into long term contracts for the supply of automotive, truck, heavy equipment parts and related shop supplies, the recommendation to contract with Napa Auto Parts for the automotive parts and related shop supplies; and with Co-Van International Trucks Inc. for the truck and heavy equipment parts; is deemed as the best value for the City over the term of the two prospective contracts. Based on the Proposals submitted, these Proponents demonstrated that their solutions would be able to meet the product, service and, business process improvement objectives of the City.
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