A7
ADMINISTRATIVE REPORT
Date: January 24, 1997
File No.: CREP069.wpd
CC File 1801-1
TO: Vancouver City Council
FROM: Manager of Purchasing Services
SUBJECT: Co-operative Purchasing of Gasoline and Diesel Fuels
RECOMMENDATION
A. THAT, as a member of the negotiating team for the 1997
Co-operative Fuels RFP, the Manager of Purchasing Services be
authorized to
(1) accept on behalf of the City of Vancouver the proposal
(excluding those with futures-based formulae ) that will
provide the City with the lowest overall cost, and
(2) execute the contract subject to the approval of the
contract documents by the Director of Legal Services.
and further,
B. THAT the Manager of Purchasing Services report back to Council
following the award of the contract.
COMMENTS OF GENERAL MANAGER
The General Manager of Corporate Services RECOMMENDS approval of A and
B.
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.
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On March 4, 1980, City Council authorized co-operative purchasing when
benefits to the City are indicated .
Contracts with a value over $300,000 are referred to Council for
approval.
BACKGROUND
The City has a contract with Shell Canada Products Ltd. to supply and
deliver gasoline and diesel fuels. This contract which expires on
February 28, 1997 has provision for two 12-month extensions by mutual
agreement between the City and the contractor. To facilitate the City's
participation and the 1997 Co-operative Fuels RFP, the current contract
has been extended until May 31, 1997.
DISCUSSION
The City of Vancouver annually purchases 6 million litres of diesel and
gasoline fuel for a total annual cost, including delivery and taxes, of
almost $3 million. The City has been invited to join the North Shore
Co-operative Purchasing Group (i.e. cities of Burnaby, North Vancouver
and West Vancouver, and the District of North Vancouver) and several
other British Columbia municipalities in a multi-municipality Request
for Proposal (RFP) for gasoline and diesel fuel for 1997 with a proposed
one-year extension.
If Vancouver were to join, the combined volume of this co-operative
purchasing group is about 18 million litres (three times the City of
Vancouver volume) and should give sufficient leverage for all
participants to obtain better prices than the City of Vancouver could
obtain above.
The co-operative purchasing group has agreed to include all of the City
of Vancouver s standard conditions in the RFP. Consequently, the
Manager of Purchasing Services agreed that the City would participate.
All purchasing agents involved (other than the City of Vancouver s) in
this RFP have been delegated by their Councils to negotiate with the
shortlisted Vendors, make the award and execute the contract documents.
To facilitate negotiations and maximize the Co-operative group's
leverage, it is desirable that the City of Vancouver s Manager of
Purchasing Services be given similar authority. Negotiations will be
focused on the pricing formulae and delivery points.
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It is proposed that, for the 1997 Co-operative Fuels RFP, Council
authorize the Manager of Purchasing Services to accept the proposal
(excluding those with futures-based formulae) that will provide the City
with the lowest overall cost; and further, that the Manager of
Purchasing Services be authorized to execute the contract subject to the
approval of the contract documents by the Director of Legal Services.
If Council wishes to reserve final approval to itself, the City of
Vancouver will still be able to participate in the 1997 Co-operative
Fuels RFP. However, the negotiating team would lose significant
leverage as the negotiating team could not assure the shortlisted
Vendors, during negotiations, that the award would include the City s 6
million litres. That would probably result in less than optimal prices.
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