SR 01-26-2021 3A
City Council Report
City Council Meeting: January 26, 2021
Agenda Item: 3.A
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To: Mayor and City Council
From: Susan Cline, Acting Assistant City Manager, Public Works, Fleet Services
Subject: Approval of First Modification to Master Equity Lease Agreement with
Enterprise Fleet Management, Inc.
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a first modification to Master Equity Lease agreement #4631 in the amount of
$857,500 with Enterprise Fleet Management, Inc. to provide vehicle leasing services for
the Public Works, Police, and Fire Departments. This will result in a seven-year
amended agreement with a new total amount not to exceed $1,038,120, including a
10% contingency, with future year funding contingent on Council budget approval.
Summary
In November 2019, the City piloted a leasing program with Enterprise Fleet
Management to replace six of the City’s centralized pool vehicles with light-duty electric
vehicles (EV) as an alternative to purchasing new vehicles. The program has proven to
be a cost-efficient alternative to purchasing and reduces the up-front costs necessary to
replace vehicles. Staff is requesting to expand the pilot program to lease 12 light-duty
trucks, vans, and sport utility vehicles (SUV) for the Fire, Public Works, and Police
Departments, on 60-month leases. The Police Department is also requesting 24-month
leases for eight vehicles to be used in their specialized anti-crime operations. Staff
recommends a modification to agreement #4631 to lease a total of 20 additional
vehicles, increasing the contract budget from $180,620 to $1,038,120, and extending
the term of the agreement through 2026 to cover the 60-month term of the new leases.
Vehicle Replacement Program – 70 Fund
Dept. Existing Lease Modified Lease Lease Term
Citywide Pool Vehicles 6 (Nissan Leaf EV) 6 (Nissan Leaf EV) 60 Month
Fire Dept 0 6 (3 F-150, 3 Explorers) 60 Month
Public Works 0 3 (Ford E-350 Transit) 60 Month
Police Dept 0 3 (2 F-350, 1 F-250) 60 Month
Police Anti-Crime Operations – PD Operating Budget
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Police Dept 0 8 (various makes & models) 24 Month
Total 26
Discussion
The Fleet Management Division is responsible for ensuring the City’s diverse fleet of
over 960 vehicles are available, dependable, meet the highest environmental standards
for a sustainable fleet, and are safe to operate from acquisition through disposal. The
Division routinely replaces vehicles that have reached the end of their cost-effective
useful lives through the Vehicle Replacement Fund. In response to the City’s revenue
shortfalls caused by COVID-19, contributions to the Vehicle Replacement Fund were
reduced by $8.8 Million. To ensure the Vehicle Replacement Fund maintains an
adequate fund balance, the Fleet Management Division has temporarily suspended
vehicle replacements unless necessary for public safety or essential operations of City
services. The Division is also working with City departments to evaluate vehicle needs
and reduce the number of vehicles in the City fleet without adversely impacting City
services.
The 12 vehicles proposed for replacement from the Vehicle Replacement Program have
significantly exceeded their asset lives and have an average age of 14 years. Due to
their age and use, these vehicles incur significant maintenance and repair costs in order
to remain safe and operational. More than $151,000 was spent over the past four years
to repair these 12 vehicles, in addition to preventive maintenance. Furthermore, two of
these vehicles are now inoperable and the costs to repair them would exceed their
current value. Staff recommends replacing these vehicles through an existing Master
Lease Agreement with Enterprise Fleet Management as an alternative to purchasing
new vehicles.
In the past, the City has solicited bids for large orders of vehicles and received reduced
pricing due to economies of scale, typically purchasing between 50 to 60 vehicles per
year. Given the relatively small order size and the various makes, models, and vehicle
specifications required by each department, staff does not anticipate achieving
significant cost savings through a competitive bid process to purchase vehicles.
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On April 26, 2018, Sourcewell (formerly known as National Joint Powers Alliance or
NJPA), a government agency that establishes nationally leveraged and competitively
solicited purchasing contracts for education, government, and non-profits, issued a
Request for Proposals (RFP) for Fleet Management Services. Under the terms of the
RFP and the resulting Sourcewell Agreement with Enterprise Fleet Management, Inc.
(Agreement #060618-EFM), similar nationally leveraged volume purchasing discounts
are also available to other government agencies. On November 13, 2019, the City
exercised the procurement option of utilizing the Sourcewell contract and entered into a
Master Lease Agreement with Enterprise Fleet Management for the leasing of six
Nissan Leaf EV vehicles for a 60-month term. This modification would extend the
nationally bid pricing from the Sourcewell contract to the additional 20 vehicles. This
brings the extension within an exception to the requirement for a competitive process
under Santa Monica Municipal Code Section 2.24.250(c), which authorizes an
exception if competitive procedures were followed by another governmental agency,
including a joint powers agency; those procedures are equivalent to the procedures set
out in SMMC Chapter 2.24; and the City is obtaining the goods or services at the same
or better price as provided to that other agency.
The leasing program would enable the City to replace these vehicles immediately while
distributing the cost over five years. This program would provide the City time to recoup
the funding shortfall caused by COVID-19 in the Vehicle Replacement Fund; allow staff
time to reevaluate the needs for each vehicle under the program and make reductions
to the overall City’s Fleet; reduce maintenance costs by maintaining a younger vehicle
fleet; and provide the ability to easily replace vehicles with alternative fuel vehicles as
manufacturers produce affordable alternatives. The pricing offered through the
Enterprise Fleet Management contract (including the option to purchase vehicles upon
lease maturity) is competitive, and in some vehicle types, lower than the purchase price
the City received in previous bids. Enterprise could also deliver vehicles within one to
two months, while a City competitive bid process and award would take an estimated
six months to have vehicles delivered.
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Vehicle Replacement Program – Leasing Costs for all 12 Vehicles
Make Model Quantity Dept. Lease –
60 Month
Term
End of
Lease
Buyout
Option
Total Estimated
Purchase
Price *
Expected Cost
Savings
Ford F-150 3 Fire $122,972 $22,569 $145,541 $146,195 $654
Ford Explorer 3 Fire $129,639 $19,683 $149,322 $136,360 ($12,962)
Ford F-350 2 Police $117,665 $11,671 $129,336 $128,235 ($1,101)
Ford F-250 1 Police $39,725 $6,849 $46,574 $45,995 ($579)
Ford E-350 3 PWD $107,284 $21,673 $128,957 $147,528 $18,571
Total: $599,730 $604,313 $4,583
*Based on previously purchased vehicle costs and current estimates
Furthermore, the Police Department has a total of 213 vehicles in the City’s Vehicle
Replacement Program and also regularly utilizes the services of car rental companies
for undercover operations, funded by the Police Department’s operating budget. These
vehicles are serviced and maintained outside of the Fleet Fund and are coordinated by
the rental companies. The rental vehicles are used daily as the primary mode of
transportation by these units and are a necessary element in the Department’s regular
operations. On January 12, 2016, the City awarded bid #4210 to Enterprise-Rent-A-Car
for vehicle rental services and the agreement ended on January 11, 2021. In order to
reduce costs, the Police Department is requesting to lease eight vehicles in lieu of
renting. The leasing option for these eight vehicles is projected to save the City
approximately $35,000 over the 24-month term. The Department is recommending a
24-month lease in order to routinely change vehicles to prevent them from being
recognized in undercover operations.
Past Council Actions
Meeting Date Description
01/12/16 (Attachment
A)
Original bid and award of agreement with Enterprise Rent-A-
Car for vehicle rental services.
11/27/18 (Attachment
B)
Extension of Vehicle Rental Services by Enterprise Rent-A-
Car.
Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from the Fleet Fund and General
Fund to increase the amount of the agreement with Enterprise Fleet Management, Inc.
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for vehicle leasing services. Future year funding is contingent on Council budget
approval.
Agreement Modification Request
Agreement #
Current Authorized
Amount
FY 2020-21
Modified Request
Amount
Account # Total Revised
Contract Amount
4631 $180,620 $651,500 C7000010.689000 $832,120
$0 $51,500 01180004.525020 $206,000
Total: $1,038,120
Prepared By: Jose Arroyo, Senior Administrative Analyst
Approved
Forwarded to Council
Attachments:
A. January 12, 2016 Staff Report (Weblink)
B. November 27, 2018 Staff Report (Web Link)
C. Enterprise Fleet Management Oaks Initiative
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3.A.cPacket Pg. 20Attachment: Enterprise Fleet Management Oaks Initiative (4308 : 1st Modification to Enterprise Vehicle Lease Contract)