CITY OF TALLAHASSEE
CITY COMMISSION AGENDA ITEM
ACTION REQUESTED ON: February 11, 2009
SUBJECT/TITLE: Approval to Purchase Eight Commercial and Eight Residential Garbage Trucks
TARGET ISSUE: N/A

STATEMENT OF ISSUE
On November 25, 2008, the City Commission approved the ranking submitted by the selection committee and authorized the City Manager or designee to negotiate and execute a contract for Solid Waste vehicles, equipment and associated services. RDK Municipal Truck Center, Inc. was the top-ranked firm. An agreement has been reached and contract documents are being executed. This agenda item requests Commission approval to procure eight commercial front-end loader and eight residential garbage side loader trucks for Solid Waste Services in accordance with the terms of the contract. The trucks will be purchased under the agreement with RDK Municipal Truck Center, Inc. using an innovative approach that will provide the City customers with new equipment and reduce the operating costs significantly.

Some of the special conditions for this transaction include the following:

• All the vehicles will be repurchased and replaced with brand new vehicles by the seller after 13 months at 80% of the original purchase price (20% cost to the City),
• Full thirteen (13) month manufacturer warranty for cab, chassis and body,
• Vendor will be responsible for all warranty repairs with in-house technician and will be responsible for all paperwork and coordination with manufacturer,
• Vendor will provide replacement vehicle within 24 hours if vehicle is down due to any/warranty issue,
• Upgrades of cab, chassis and body,
• Vendor will provide operator training for Solid Waste employees,
• Vendor will provide shop technician training for Fleet Management employees.

RECOMMENDED ACTION
Option #1: Approve the procurement of eight front-end loader and eight residential garbage side-loader trucks from RDK Municipal Truck Center, Inc. in the amount of $3,488,992.

FISCAL IMPACT
$3,488,992. There are sufficient funds in the Fleet Capital Vehicle Replacement Project to cover this purchase. Future expenditures will be budgeted as operating costs in the Solid Waste Fund annually.

Reginald Ofuani, Director, Solid Waste

Terry Lowe, Superintendent, Fleet Management

Anita Favors Thompson, City Manager

For information, please contact: Reginald Ofuani, Solid Waste Services, (850) 891-5255 or Terry Lowe, Fleet Management, (850) 891-5225

SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES
On November 25, 2008, the City Commission approved the ranking submitted by the selection committee and authorized the City Manager or designee to negotiate and execute a contract for Solid Waste vehicles, equipment and associated services. RDK Municipal Truck Center, Inc. was the top-ranked firm. An agreement has been reached and contract documents are being executed. This agenda item requests Commission approval to procure eight commercial front-end loader and eight residential garbage side loader trucks for Solid Waste Services in accordance with the terms of the contract. The trucks will be purchased under the agreement with RDK Municipal Truck Center, Inc. using an innovative approach that will provide the City customers with new equipment and reduce the operating costs significantly.

Some of the special conditions for this transaction include the following:

• All the vehicles will be repurchased and replaced with brand new vehicles by the seller after 13 months at 80% of the original purchase price (20% cost to the City),
• Full thirteen (13) month manufacturer warranty for cab, chassis and body,
• Vendor will be responsible for all warranty repairs with in-house technician and will be responsible for all paperwork and coordination with manufacturer,
• Vendor will provide replacement vehicle within 24 hours if vehicle is down due to any/warranty issue,
• Upgrades of cab, chassis and body,
• Vendor will provide operator training for Solid Waste employees,
• Vendor will provide shop technician training for Fleet Management employees,
• Consignment parts will be provided to the City to help reduce excessive inventory cost and allow for additional spare parts thus reducing downtime.
• Manufacturer’s participation in the reengineering of City’s truck refurbishments and specifications.
• Reimburse the City when other municipalities use our contract for their truck purchases.

As a part of the annual budget process, funds were appropriated for replacement of sixteen (16) trucks in accordance with the administrative replacement guidelines. The criteria for these guidelines consider age of the trucks, mileage or hours of maintenance, utilization and general condition of equipment.

These sixteen (16) trucks will replace twenty-five (25) trucks (eleven (11) side loaders and fourteen (14) front-end loaders) presently being used to serve our residential and commercial customers. The increased reliability of new trucks and the guarantee of a replacement truck after 24 hours of downtime provide us the opportunity of reducing the Solid Waste Fleet by 9 vehicles. The average age of the 25 vehicles being replaced is 7 years. Vehicle maintenance for Solid Waste trucks has historically been very progressive beginning in the second year of ownership because of the frequency and nature of operation. Downtime becomes an issue after the first year. As an example, we purchased 8 front-end loaders and 8 side-loaders in 2003. The maintenance and repair totals for all front and side loaders for the first year were $140,000, the second year costs were $360,000 and by 2007 they were $600,000. The infusion of 3 new side-loaders in 2008 brought the costs down to $490,000. The 2008 vehicles are not being replaced in this transaction. Additionally, the resale value begins a faster pace of decline in the second year reaching approximately 25% or less of the original cost by the end of the third year. Given the guidelines above and the current usage, cost of maintenance continues to rise significantly. The most cost effective recommendation is for the replacement of these trucks. Between the reduced operating costs and the elimination of capital contribution, this transaction reduces total costs over $500,000 per year with a brand new Fleet.

The cost of the most recent purchase of a residential garbage side loader truck was $242,602 and the most recent cost to purchase a front-end loader was $242,280. The newly negotiated truck contract prices will be $207,832 each for the front-end loaders and $228,292 each for the residential garbage side loaders. All trucks will be replaced by the manufacturer after 13 months of full warranty at 20% of the original purchase price. Costs include many environmental upgrades that make these vehicles some of the most environmentally friendly vehicles in their class.

The existing vehicles have an estimated value of between $500,000 and $600,000 that will be credited to the FY2009 replacement project upon sale. That would reduce the actual cost to under $3,000,000. This item has been reviewed and approved by the Offices of Budget and Policy and Procurement and they concur that it meets budget and purchasing guidelines.

CHARITABLE CONTRIBUTIONS
RFP No. 0117-08-BM-RC was issued on May 18, 2008.
Bids/Proposals received from four (4) vendors.
None of the firms claimed charitable contributions.
Award not based on Charitable Contribution Preference.

OPTIONS

1. Approve the procurement of eight front-end loader and eight residential garbage side-loader trucks from RDK Municipal Truck Center, Inc. in the amount of $3,488,992.

2. Do not approve the purchase and provide additional direction to staff.

ATTACHMENTS/REFERENCES
None.