|
CITY OF VANCOUVER ADMINISTRATIVE REPORT |
Date: |
May 18, 2004 | |
Author: |
Ted Batty | |
Phone No.: |
7315 | |
RTS No.: |
04256 | |
CC File No.: |
1805 | |
Meeting Date: |
June 8, 2004 |
TO: |
Vancouver City Council |
FROM: |
General Manager of Engineering Services and Manager of Materials Management |
SUBJECT: |
Renewal Option - Contract PS01019, Supply of Ready-Mixed Concrete |
RECOMMENDATION
A. THAT, subject to the conditions set out in Recommendations C, D and E, Council approve the exercise of the renewal options and that agreements be entered into with Lafarge Construction Materials Ltd. and Ocean Construction Supplies Ltd. for ready-mixed concrete picked up by City vehicles from suppliers depots and Kask Bros Ready Mix Ltd. for ready-mixed concrete delivered to City job sites for an additional 12-month period from June 13, 2004 to June 12, 2005, at an estimated annual cost of $2,038,444 plus the GST (less any municipal rebate received) and PST (where applicable) subject to a contract satisfactory to the Director of Legal Services and the Manager of Materials Management.
B. THAT, if Council approves Recommendation A, and subject to the conditions set out in Recommendations C, D and E, Lafarge Construction Materials Ltd., Ocean Construction Supplies Ltd. and Kask Bros Ready Mix Ltd. be awarded a contract for a 12-month term, with a subsequent renewal option for one-12 month period.
C. THAT all legal documentation is to be in a form which is satisfactory to the Director of Legal Services, the General Manager of Engineering Services and the Manager of Materials Management.
D. THAT upon approval of the legal documentation by the Director of Legal Services, the General Manager of Engineering Services and the Manager of Materials Management, that the Director of Legal Services and the General Manager of Engineering Services be authorized to execute and deliver the necessary agreement on behalf of City Council.
E. 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.
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.
BACKGROUND
On May 15, 2001 Council awarded 12-month contracts to Lafarge Construction Material Ltd. and Ocean Construction Supplies Ltd. for ready-mix concrete picked up by City vehicles from supplier's depots. A contract was also awarded to Kask Bros Ready Mix Ltd. for the delivery of ready-mixed concrete to City job sites as and when required.
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 manufacturer's raw material cost or any other factors related to this product which can be verified with an independent published source.
DISCUSSION
This is the third 12 month renewal. Lafarge Construction Materials Ltd. and Kask Bros. Ready Mix Ltd. have both requested an average price increase of $8.00 (approx 7.5%) per cubic metre to extend for a third 12-month period based on increased raw material, fuel and labour costs. Both Kask and Lafarge have requested an increase in the environmental levy from $2.00 to $3.00 per cubic meter based on more stringent environmental regulations.
Ocean Construction Supplies has requested an average price increase of $3.00 (approx 3.11%) per cubic metre based on increased raw material, fuel, labour, utilities and insurance costs. Ocean has also requested an increase in the environmental levy from $2.25 per cubic metre to $2.50 per cubic metre due to increased plant maintenance required to meet more stringent environmental regulations. Documentation provided by all three companies has been reviewed and recommended for approval.
It is estimated that the 2004 contract extensions will result in costs of $564,144 for ready-mixed concrete to be picked up by City vehicles from Lafarge Construction Materials Ltd. and Ocean Construction Supplies Ltd., and $1,474,300 for ready-mixed concrete delivered to job sites by Kask Bros Ready Mix Ltd. The total value of the ready mixed concrete is estimated to be $2,038,444.
ENVIRONMENTAL
Fly ash is a by-product of the burning of coal to produce electricity. The use of fly ash as a partial replacement for Portland cement in ready mix concrete has environmental advantages in reducing CO2 emissions and reducing waste disposal requirements. The ready mix suppliers for the City of Vancouver have been conscious of the benefits of fly ash and have incorporated fly ash in their mixes for many years. The percentage of fly ash used is now approximately 20 percent of the total cement used in the concrete. This is the maximum amount recommended for the intended use.
The increasing demands on the environment and issues surrounding the use of ready mixed concrete have led Kask Bros. Ltd. and Lafarge Construction Materials Ltd. to install self-contained wash out systems on their transit mixer vehicles in order to eliminate the need to wash out on site. Both wash water and aggregates are recycled at Kask and Lafarge's waste-water treatment facility. The target for both companies is to re-use and recycle 100% of the product produced when delivery trucks are cleaned.
FINANCIAL IMPLICATIONS
The overall estimated cost for the supply and delivery of ready-mixed concrete has shown an increase from $1,940,519 in 2003 to $2,038,444 in 2004. A slight change to the estimated quantities and price increases will result in a 5% price increase overall. Generally, ready-mixed concrete is used for Waterworks, Sewers and Streets capital and maintenance work. Ready mixed concrete is ordered on an as needed basis for each particular job site. On some occasions operating budget and capital budget funding is used for the same delivery as new capital work and maintenance work is taking place in the same location. The concrete for each is charged to specific work orders. Therefore, these purchases are funded from a variety of sources, i.e. 2004 Streets and Sewers Operating Budget, 2004 Streets, Waterworks and Sewers Basic Capital, 2004 Water Utility Fees and 2004 Sewer Utility Fees.
CONCLUSION
As Lafarge Construction Materials Ltd., Ocean Construction Supplies Ltd. and Kask Bros. Ready-Mix Ltd. have been satisfactory suppliers, it is recommended that the City exercise the renewal options and enter into new contracts with each supplier effective June 13, 2004 through to June 12, 2005 at an estimated 12-month cost of $2,038,444.
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