Item 6-R

Council Meeting: August 11, 1998 Santa Monica, California

TO: Mayor and City Council

FROM: City Staff

SUBJECT: Recommendation to Provide Bus Parts, and Adopt a Resolution Authorizing City Manager to Negotiate and Execute Purchase Orders for the Purchase of Bus Parts.

Introduction

This report concerns the purchase of bus parts and requests that City Council authorize the City Manager to negotiate and execute purchase orders for the purchase of bus parts on the open market.

Background

The Transportation Department operates 135 buses over 12 routes, traveling over 3.8 million miles and serving more than 18,000,000 riders annually. In order to maintain these buses in daily service, the Department stocks over 3,500 different bus parts in inventory. During the year, approximately $500,000 is spent to replenish the bus parts inventory.

On December 17, 1996, Council authorized the City Manager to negotiate and execute purchase orders for the purchase of bus parts for FY 1996-97. Staff requires the ability to purchase parts on the open market in order to ensure both the availability of the part when needed and to take advantage of volume pricing and/or price breaks offered by one or more vendors during the year due to changing market conditions.

The market flexibility for purchasing bus parts is extremely limited. Unlike truck and automotive parts which are available from a large number of vendors (either locally, regionally or nationally) bus parts are available from a limited number of vendors. Some parts are only available from one vendor, the original equipment manufacturer (OEM) or their authorized distributor (Universal Coach Parts). Non-OEM parts are available, at this time, from six vendors nationwide (Universal Coach Parts, Mohawk Manufacturing, Muncie Reclamation, Nova Centre, Gillig and Neopart Corporation), though availability of the parts vary among the six vendors.

When parts are available from more than one vendor, purchase decisions depend not only on cost, but also on part availability and estimated delivery time. Parts needed for routine repairs can be easily maintained in inventory and purchases planned so that they can be made from the lowest cost vendor. However, due to the large number of parts on any particular bus model, it is often not practicable to stock all parts in inventory, or stock in sufficient quantities to maintain the buses in service when a unique problem occurs. At these times, when emergency part purchases are required, part availability and delivery time are considered crucial to the purchasing decisions.

Under the open market program, after City Council authorization, annual purchase orders will be issued to known bus parts vendors. When parts need to be restocked, staff will solicit quotes from each vendor who can supply parts and award to the lowest responsive and responsible bidder who has the parts available. Records will be kept to ensure that all vendors listing the part have been contacted. The ability to continually purchase parts on the open market will ensure that inventories are kept moderate and that safe quality bus service is maintained and available to the public at the lowest possible cost.

The items covered by these agreements will include replacement bus parts for Motor Coach Industries (MCI), NOVA and General Motors Corporation (GMC) transit coaches which comprise the Big Blue Bus fleet.

Budget/Financial Impact

Fiscal Year 1998-99 appropriation authority for this purchase is in the Maintenance Division, Transportation Department, account number 41-600-651-10601-4422-25422. As items are drawn from inventory, they will be expensed against this account. The estimated annual expenditure is $500,000.00 for FY 1998-99.

Recommendation

It is recommended that a resolution be adopted authorizing the City Manager to negotiate and execute purchase orders for the purchase of bus parts on the open market.