CITY OF VANCOUVER

ADMINISTRATIVE REPORT

 

Date:

June 4, 2004

 

Author:

Michael Irvine

 

Phone No.:

873-7375

 

RTS No.:

04320

 

CC File No.:

1805

 

Meeting Date:

June 22, 2004

TO:

Vancouver City Council

FROM:

General Manager of Engineering Service and Manager of Materials Management

SUBJECT:

Renewal Option of Contract PS03019, Mineral Aggregates for Canada British Columbia Infrastructure Program

RECOMMENDATION

A. THAT subject to the conditions set out in Recommendations C, D and E, Council approve the exercise of the renewal option and that an agreement be entered into with Mainland Sand and Gravel Ltd. for mineral aggregates picked up by City trucks from the supplier's depot for an additional 18-month period at an estimated $1,152,750 (to be partially funded by the Canada-British Columbia Infrastructure Program, as discussed in this report) plus GST (less any municipal rebate received) and PST (where applicable) subject to a contract satisfactory to the Director of Legal Services, the General Manager of Engineering 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, Mainland Sand and Gravel Ltd. be awarded a contract for an 18-month term.

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, the Manager of Materials Management 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.

BACKGROUND

On March 11, 2003 Council authorized the City Manager to, on behalf of the City, enter into the Canada-British Columbia Infrastructure Program contract agreements. As part of this Program the three sewer construction projects in China Creek are eligible to receive reimbursement of 2/3 of the total project costs from the Federal and Provincial governments. The remaining 1/3 of the funding is to be provided by the City of Vancouver.

The infrastructure program stipulates that any City related construction expenditures, such as employees of the City, City equipment and value added by the City to any materials are not eligible for reimbursement. In order to meet this requirement, the tender document was structured to request the cost of materials at the supplier=s depot only. It also specified that the City will evaluate the award based on the cost of the material at supplier=s depot plus transportation costs.

On May 27, 2003 Council awarded a 12-month contract to Mainland Sand and Gravel Ltd. for mineral aggregates picked up by City vehicles from the supplier's depot. The contract provides for one (1) additional 12-month period and a possible further six (6) months extension. The renewal options also provide for a price adjustment at the end of each twelve (12) month period, subject to documented proof of manufacturer's raw material cost changes or any other factors that may relate to this product which can be verified with an independent published source.

DISCUSSION

The tender called for pricing for a twelve (12) month period with an option to extend for an additional twelve (12) months and a possible further six (6) months by mutual agreement between the City of Vancouver and the Contractor.

This is the first renewal. Engineering has stated that this project will require both the first twelve (12) month and the optional six (6) month renewal periods.

In order to extend for the full 18-month time period Mainland Sand and Gravel has requested a 3% price increase for the first 12-month period with a negotiation window open for the additional 6 months due to unforeseen costs because of unsettled market conditions.

FUNDING

Funding is available in the 2003 - 5 Capital Plan, main sewers reconstruction (Canada - British Columbia Infrastructure Program). Funds are required at this time for the material costs of $1,152,750.

CONCLUSION

As Mainland Sand and Gravel Ltd. has been a satisfactory supplier, it is recommended that the City exercise the renewal option and enter into a new contract offering best overall value to the City for 18 months to December 4, 2005 at an estimated cost of $1,152,750 plus the Goods and Services Tax (less any municipal rebate received) and the PST.

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