A8
                             ADMINISTRATIVE REPORT

                                            Date: October 3, 1996
                                            File No. Crep059.wpd  

    TO:       Vancouver City Council

    FROM:     General Manager of Engineering Services
              Manager of Purchasing Services

    SUBJECT:  Extension of Contract No. 57-96-01 - Supply & Delivery
              of 4", 6", 8" & 12" Ductile Iron Water Pipe


    RECOMMENDATION

         THAT Council approve the extension of the contract to Canada Pipe
         Company Ltd. for the supply and delivery of 4", 6", 8" & 12"
         ductile iron water pipe, for an additional 12-month period,
         including a $0.70 per foot price increase, if required,  on 4"
         Tyton joint pipe and the removal of any obligation to provide
         Tyton to mechanical joint pipe, at an annual estimated cost of
         $512,023 plus the 7% Goods and Services Tax (less any municipal
         rebate received) 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 January 11, 1996, Council awarded a 12-month contract to Canada Pipe
    Company Ltd. for the supply and delivery of 4", 6", 8" & 12" ductile
    iron water pipe, at an annual estimated cost of $509,923 plus the 7%
    Goods and Services Tax (less any municipal rebate received) and the
    Provincial Sales Tax.

    The contract provides for two 12-month extensions by mutual agreement
    between the City and the contractor. This is the first 12-month
    extension. Prices are to be firm for the duration of the contract.

    Canada Pipe has agreed to extend for an additional 12-month period with
    the provision of a $0.70 per foot price increase on 4" Tyton joint (TJ)
    pipe and the removal of the obligation to provide TJ to mechanical
    joint (MJ) pipe from the contract. 

    Canada Pipe has offered an option to the price increase. They will
    attempt to produce pipe at the tendered price from their Hamilton,
    Ontario plant instead of their usual Alabama location. The Hamilton
    plant has had previous quality control problems producing pipe to City
    standards. However, this offer may allow the City the opportunity to
    check if these problems have been resolved for future tender
    requirements.

    A price increase will be required for 4" pipe if the above option does
    not work out. The increase is required to offset rising scrap metal
    prices and higher transportation costs from Alabama. This increase,
    approximately 0.5% of the total estimated contract price, amounts to an
    additional $2,100 per year and is considered reasonable. The prices for
    6", 8", and 12" pipe, manufactured in Utah, will remain the same.

    The City requested prices on the original tender for TJ/MJ pipe without
    estimated quantities in the event that this type of pipe was required.
    Canada Pipe is concerned that the City may order a small quantity of
    this pipe forcing them to produce uneconomical quantities at a
    financial loss.  No TJ/MJ pipe was required in 1996 or is foreseen to
    be required in 1997. Therefore, compliance with Canada Pipe s request
    will not have an effect on the City s operations. All other terms and
    conditions of the contract would remain the same. 

    Considering that Canada Pipe Company Ltd. has been a satisfactory
    supplier, it is recommended that the contract be extended for an
    additional 12-month period with a price increase of $0.70 per foot, if
    required, on 4" TJ pipe and the removal of any obligation to provide
    TJ/MJ pipe.


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