SR-11-13-2012-3H,®
City of
Santa Monica
City Council Report
City Council Meeting: November 13, 2012
Agenda Item: 3— FJ
To: Mayor and City Council
From: Edward F. King, Director of Transit Services
Subject: Tire Lease and Related On -site Tire Services
Recommended Action
Staff recommends that the City Council:
1. Award Bid No. 4022 to Michelin, a South Carolina -based company, to provide
new transit tires and service on a lease program for a one -year period with four
one -year renewal options in the amount of $3,042,462 (including a 10%
contingency).
2. Award a one -time purchase order in an amount not to exceed $390,000 to
Goodyear (the incumbent), an Ohio -based company, to buy out the lease on the
existing inventory of tires being used on the fleet.
3. Appropriate the budget increases as outlined in the Financial Impacts and
Budget Actions section of this report.
Executive Summary
Tire leasing has been a standard practice in the transit industry since the 1940's and a
common practice at the Big Blue Bus (BBB) for the last 40 years. Leasing is more
economical than purchasing since tire cost is based on a flat rate per mile- driven plus
the costs of inspection, repair, replacement, and inventory control. Currently, tires on
the buses are leased from Goodyear and this lease expires in December 2012. Per the
current lease agreement, the existing tire inventory (both on buses and in stock) must
be purchased from Goodyear as part of transitioning from one vendor to another. The
estimated value of the tires in stock and on buses is $390,000. Staff recommends that
Council approve both the award of a new tire lease to Michelin and award of a one -time
buyout of tires to Goodyear. If both awards are fully exercised, the total amount would
not exceed $3,432,462
1
Background
At the February 14 2012 meeting Council rejected Bid No. 3060 for tire leasing services
was rejected by Council due to disparate bid submissions. Council authorized staff to
reissue a request for bids in order to obtain the best bidder for this project.
Discussion
The Big Blue Bus currently leases bus tires from Goodyear. The existing lease expires
December 2012. The lease provides tire inventory, including spare stock on a
replacement basis, and two full -time on -site service attendants who perform
inspections, tire repair, and replacement. Tires are individually branded prior to delivery
for inventory control purposes. Tire rates are fixed and BBB only pays for the miles the
tire actually travels. The amount of the award is based on estimated miles traveled per
year (5.8 million) plus a 10% contingency for unforeseen charges such as tire damage
due to accidents or curb damage, increased miles traveled and new bus purchases.
BBB has a high volume of daily tire removal, repair, and replacement. Staff determined
that contracting for the service component plus leasing tires, as opposed to owning
tires, is the most economical option for the City. As illustrated in Attachment A, awarding
the bid to Michelin would cost $3,042,461, while doing the work in house will cost
$4,526,492, resulting in a savings of approximately $1.5M over the five -year term.
As part of the current lease agreement with Goodyear, the City is obligated to buy -out
the tires at the end of the lease agreement. The award of a purchase order to Goodyear
would enable BBB to buy -out leased tires that are currently installed on the fleet and
transition into a lease with Michelin. The service attendant would perform tire
inspections, and start rotating Goodyear tires from the fleet as they reach the end of
their useful life replacing them with Michelin tires. This is a standard business practice in
the transit industry.
Vendor Selection
In August 2012, the City published Notices Inviting Bids to provide tire leases and
service as required by the Big Blue Bus in accordance with City specifications. The bid
2
was posted on the City's on -line bidding site, and notices were advertised in the Santa
Monica Daily Press in accordance with City Charter and Municipal Code provisions.
There were 140 vendors notified and 11 vendors downloaded the bid. Two bids were
received and publicly opened on September 26, 2012 per Attachment B. Staff evaluated
bids based upon overall pricing, roadside service hourly rates, and the capacity of the
bidder to provide the service promptly. Staff found that leasing from Michelin would save
an estimated $139,178 over the five -year period (including the $390,000 Goodyear
lease buy -out). Based on the expected cost savings over the term of the contract
Michelin was selected as the best bidder. Due to the timing of the procurement, costs
presented in the bid (Attachment B) were based on a calendar year. They have been
converted to coincide with the fiscal year as shown in Attachment A. We are requesting
Council to appropriate the fiscal year amounts.
Financial Impacts & Budget Actions
The purchase order to be awarded to Michelin for the five -year term is $3,042,462,
which includes the current fiscal year allocation of $276,991 for January through June
2013. The FY12 -13 purchase order to be awarded to Goodyear year to purchase the
tires currently on the fleet is $390,000. Funds in the amount of $666,991 are available in
the FY2012 -13 budget at account number C410106.589000. Budget authority for the
subsequent years will be requested in each budget cycle for Council approval. Future
funding is contingent upon council approval. All funds used for this purchase come from
funding sources specifically dedicated for transit uses.
Prepared by: Getty Modica, Transit Maintenance Officer
Approved:
Edward F. King '
Director of Transit
Attachments: A - Cdntra
B - Pricing
Forwarded to Council:
Ro ould
City Manager
Vs. In House Comparison
3
Attachment A
Contract vs. In -House Services Cost Comparison
(Bid #4022)
Michelin Tire Labor Cost
Pen9J YEaG 2,,_. Pal3tirineT ,,,,,;,_; =, ,,,,,,,, '1,._ --
_„
_,_,_.. W. _
1 $14130000
52 $45.03
$141,300.00
2 $146,700.00
52 545.03
$148,700.00
3 $152,700.00
52 $45.03
$152,700.00
4 $158,700.00
Year 1(6 mos.)
$158,700.00
5 $165,300.00
Year 2
$165300.00
Total
Year
$764,700.00
The above Personnel cast of $]64,]001$ induced in the $3,042,462 total
Year4
$255,861.00
Overhead- Includes hiring, training, payroll, personnel administration, health benefits,
Year
uniforms tools safety equipment, and vacationdsiol,holiday leaves.
'Pa rate includes 40 % Pon ebenefits.
Total
$1126,055.00
Total
$3042461.62
Bid requires vendor to provide trained technicians
($1,484030.46
Total:
$0.00
Total:
x Ra>(Eb�e r :
r II
eked_Vaar �� - ';_TIIb Lease tPei143,30 ,r,0. -1aX E?nt
dgency'' sr
t l EF S S
1 $38031900 $143300.00
$50361.90
.90
$553,980.90
2 $378,355.20 8148,700.00
$52,705.52
$579,760]2
3 $397,192.80 5154,700.00
$55,18928
5607,082.08
4 $417,232.80 160,700.00
$57,793.28
5635,]26.08
5 $438,074.40 $167,300A0
$60,537.44
8885,91184
10% coinUrgenc, includes fire lease roadside assistance and
Total:
$3042461.¢2
$2,000.00 $36,514.30
$890,649.53
275f7OR22.5 XZU2 @$492.65( Spares 200 tires x 492.E $98,530.00
atntprtmo and Materials;,.'
Bid requires Vendor to provide equipment
' #of Tres charged par ear- 5SM miles travelled divided by 40K miles x 6 wheel pos itons Total:
Total
$0.00
Michelin Tire Year l -S Price: $3042461.62
In -House Labor Cost +One -Time Purchase of Equipment
P-em f ,_,.__:,.:iv% HOWk
Weeks Pay Rate'
Value
—M
1 FTEService Attendant (Mechanicl) 40
52 $45.03
$93,660.00
1 FTE Service Attendant (Mechanic 1) 40
52 545.03
$93,660.00
.6FTE Service Attendant (Mechanic l) 20
52 $45.03
$48831.20
$867,474.60
Year 1(6 mos.)
$117,075.00
Requires 2.5 FTE to provide same level of coverage
Year 2
$241,174.00
($28826033)
Year
$248,409.00
3635,726.08
Year4
$255,861.00
45%
Year
$263.536.00
'Pa rate includes 40 % Pon ebenefits.
Total
$1126,055.00
Total
$3042461.62
$4526492.08
($1,484030.46
Training time and costs included in estimate of indirect labor hours.
Total:
$0.00
4
t l EF S S
U' S 9
i 1 i { )64 L_ A 11 i1 r 411 RQd YsSd0* 151 11 l is 4 4 tom, r � u ( "
F e1 l
P- 6t,Y.earw„„i,,,_,o,
Gres foe194buses @$
$1$2,300.00 $]7441.00
$626,30.60
2(Alinge 10%allwtire3) $596,53000
tires every 30K miles) +10% allow fire once in(
$2,000.00 $27,483.80
$626,300.80
3(Change
$614,817.00
tires every 30K miles) +10% allow tire once inc $614,]21.51
$2,000.00 $30,211.90
$646,933.41
4(Change
(Change time every 30K miles)+ 10% allow tire price int 5633,159.54
$2,000.00 $33,123.00
$688,282.54
5 (Change tires every 30K miles) +10 %allow fire pace ins 3652,13523
$2,000.00 $36,514.30
$890,649.53
275f7OR22.5 XZU2 @$492.65( Spares 200 tires x 492.E $98,530.00
305I70R22.5 XZU2 @$663.13
' #of Tres charged par ear- 5SM miles travelled divided by 40K miles x 6 wheel pos itons Total:
$3341437.08
�Cost �
s -�
Oty.
Value
Tire Balancing Machine
1 $20,000.00
$20,000.00',
Tire Changer
1 $10,000.00
$10,000.00'.
Portable Compressor
2 $3,000.00
58,000.00
Floor Jacks
2 $2,500.00
$5,000.00
One inch impact wrenches
3 $3,500.00
$10,500.00
Safety Cage
1 $2,500.00
$2,500.00
Misc. Hand Tools
$5,000.00
Total:
358000.00
In -House Cost (Estimated) for Year 1S: $4526492.06
• In -house cast ror Yee,1 included one -time purchase of equipment end mstenals
Years 2 through 5labor cost only plus 3% inflation /actor.
This spreadsheet shows numbers by calendar year bat that Council action is being requested by Rscal year
Bus Tire Lease 11 1312 Attachment A.As
Michelin
In- House'
difference
%Difference
Ye011
$55$,980.90
15885,346.00
(5331365.10)
E0%
Year2
$579 ,760 .72
$867,474.60
($287]1388)
-501k
Year
3607,082.09
$895,34241
($28826033)
47%
Year4
3635,726.08
$924,143.54
($288,417.46)
45%
Year
$665,911.84
$954,16553
($288,23.69)
43%
Total
$3042461.62
$4526492.08
($1,484030.46
• In -house cast ror Yee,1 included one -time purchase of equipment end mstenals
Years 2 through 5labor cost only plus 3% inflation /actor.
This spreadsheet shows numbers by calendar year bat that Council action is being requested by Rscal year
Bus Tire Lease 11 1312 Attachment A.As
BID 4022 ATTACHMENT B
610 DESCRIPTION: PROVIDE BUS TIRES 8 SERVICE
BID CLOSING DATE: 91261'12
Goodyear
- Michelin
YEAR
Alecn, OH
Gra holile, SC
Annual Cmd(Eadmatod Average
mIBUS Typo
EsfMatetl Average
rim Rate Per Mile
Annual Cast(Edimatotl AVOage Annual
rim us o
Estirmmd AVU2ga Annual
Tiro Red, Par Mile
Ann MilersNINW ealsx Tlro
Annual Miles
Mil x. ofWhaelSx TU¢R to 11¢
Mlles
Ratemile
$ 0.01100
$ 66,000.00
B215OOR22.5 New Flyer Loatl
$ 0.00899
$ 53,940.00
BZISOOR225 Naw FlycrLwtl RangoH
1,000,000
Range H
1000,000
$ 0.00900
$ 2,520.00315180R225
MCI Load Range
$ 000099
S 2,517.20
315MOR225 MCI Load RengO J
35,000
35,000
$ 0.01200
$ ]2,000.00
B30570R225 NABI Load
S 0.00899
S 53,940.00
B30W0R@.5 NABI Load Range H
1,000,000
Ran eH
1000,000
S 0.01200
$ 90,000.00
BNOSTOR225 New Flyer Lead
$ 0.00899
$ 67,425,00
B3051]OR225 NOw Flyer Lead Range H
1,250,000
Range H
1250,000
$ 0.01200
$ 3,600.0083o5O0R22.5
IS Dorado Load
$ 0.00599
$ 2.697.00
W05pOR22.5 E1 Dorado Load RangoH
50,000
Ran, H
5,000
$ 0.01200
$ 150,000.0083051]0822.5
NABI Attic Load
$ 0.00890
$ 112375.00
B305f]OR22.S NABI Role Lead RangoH
1,250,000
Range H
1250,000
$ 0.01200
$ 90,00000
8305!]OR225 NABI Lead
S OCDB99
$ 6],425.00
830500822.5 NABI Lead RangoH
1,250,000
Range H
1250,000
YEAR I TOTAL FOR ALL TIRE TYPES
YEAR I TOTAL FORA. TIRE 1.
Brand MTms: Good, -,
BrandcfTns: Michelin
5474.130
Is 360,31930
YEAR
Goodyear
Nicholls
Alcor, OH
Green0le, SO
Estimated Average
The Rata Per Mile
Annual Cost(EStlmated Aucor,c Annual
Tir¢IBU3Type
Estimated Average Annual
Tre Rate Per Mile
Annual Cost IEStlmaled Average
TIreIBUS Typo
Annual Miles
Mlles x of Wheels x rim ReneWilo
Miles
Annual Miles. *fMccc.Trt
$ 0.01100
$ 6,000.00
Br51]OR225 New Flyer Lood
$ 0.00944
S 56,640.00
O2]SROR22.S New Flyer Lead RangoH
1,000,000
Rand, H
1000,000
$ 0.00900
$ 2.=..00315180R215
MCI Load Range
$ 0.00944
$ 21643.20
515/0 0 8 22 5 MCI Load Range
35,000
35,000
$ 0.01200
$ 72,00000
BSOSpO1122.5 NABI Lead
$ 0.00944
S 56,64000
8305MR225 NABI Load Range H
1,000,000
Ran e H
1.000,000
9 0.01200
$ 90,000.00
B30SNOR22.5 N. Flyer Load
S 0.00944
$ 70.800.00
83051)ORYlS Naw Flyer Lead RangoH
1,250,000
Range A
111110D
$ 0.01200
$ 300.00
8305!/082250 Dorado Lead
$ 0.00944
$ 2,8320D
83051IOR225 M Comas Load Range H
50,000
Wng.H
50,000
$ 001200
$ 150, 000.00
NABI ANC Lead
$ 0.00944
$ 118,000.00
0305008223 NABI ANC Load RangoH
1.250.000
�SQOR225
1, 350,000
$ 0.01200
S 90,000.00
B306TOR225 NABI Load
$ 0.003,4
$ 800.00
]0,
B3o5ROR2R.5 NABI Lead Range
1.2301000
Rang¢ H
1250,000
Bran ofTrcs: Goodyear
YEAR 2 TOTAL FOR ALL TIRE TYPES
YEAR TOTAL FOR ALL TIRE TYPES
Brandaf Tlms: Michelin
$: 4]4,130:00
$ 3]8,35510
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YEARS
GOOtlyear
Michelin
AAmn, OR
GreanvJl¢, 6C
Annual COag.1i...tl Ame.,
T.mIBm Typa
Estimated AwN,d
Tire Rate Per Mile
Annual Cost (Estimated Awrage Annual
'Nablus Type
Estideard Aworm, Annual
Tire Rare Per Mile
Annual Mile x got Wheels %Tire
gnnaal Miles
Miles xtl olWM1ealax Tire RalelMile
Milos
arranges
8 0.013350
$ 80,100.0011110R22.S
New Flyer LOatl
5 0.01093
$ 65,580.00
021Sb00.22.5 New Flyer loatl$angeH
1,000,000
Ran eH
1,000,000
5 0.010924
$ 3,058.723151B0R22.5
MCI Load Range
6 0.01083
3 3,060.40
315180832.5 MCI Load Range J
35,000
35,000
6 0.014564
$ - 67,384.00
B30WORY1 5 NABI Load
$ 0.0109$
S 65.580.00
63051) 08825 NABI Load Range
1,000,000
Range
1' 000,000
6 0.014564
3 109,230.00
830500828.5 New Flyer Load
$ 0A1093
$ 81,975.00
B30570R=5 New Flyer Lead Range H
1,=,cc0
Romeo H
1.250,000
$ 0.014564
3 4,369.20
BNaufmNSS.5 EI OO2tlo Lead
$ 0.0f 093
$ 3,279Ao
B3051 OM.5 El DOratlo Load Range H
$0,000
Ran o H
50,000
$ 0.01456,1
$ 182050.00
BZOW01122.5 NABI Atllc Load
$ 0.01093
$ 136,625.00
5305MM.5 NABI ANC Lead Range H
1,250,000
Fares H
1250,000
$ 0.014564
$ 109,230.00
330517OR22.5 NABI Load
S 0.01093
$ 61,975.00
8305171)R22S NABI LOnd RangoM
1,250,000
Bane H
1,250,000
YEAR 5 TOTAL FOR ALL TIRE TYPES
YEAR 5 TOTAL FOR ALL TIRE TYPES
Bran e(Tims' Goodyear
Bantl al Tires: Michelin
3 nSA��.si.
5 a3B;ai-0.ao.
5 YEAR ESTIMATED GRAND TOTAL $ 2,563,961.36 $ 1,991,174.40