HomeMy WebLinkAboutOPS 02-21
Report to
Council
Report Number: OPS 02-21 Date: November 22, 2021
From: Brian Duffield Director, Operations
Subject: 2022 Pre-Budget Approval to Award RFP-4-2019 Automotive Parts Supply & Inventory Management System -File: A-1440
Recommendation:
1.That Proposal No. RFP-4-2019, for Automotive Parts Supply & Inventory Management
System submitted by UAP Inc., NAPA Auto Parts (NAPA), in the amount of$1,610,250.00 (HST included) be accepted for the initial two year contract period of theinitial five year term with an option to extend for two additional one year extensions;
2.That the total gross project cost of $1,600,250.00 (HST included), including the proposal
amount, and other associated costs, and the net project cost of $1,450,080.00 (net of
HST rebate) for the initial two year contract, to be funded over a two-year period, beapproved;
3.That Council grant pre-2022 Current Budget amount of $580,032.00 for year one of theinitial two year contract;
4.That Council authorize the Director, Finance & Treasurer to fund the net project cost of
$1,450,080.00 as follows:
a.That the year one in amount of $580,032.00, to be funded from property taxes;
b.That the year two in the amount of $870,048.00 will be provided for in the 2023Current Budget; and,
5.That the appropriate City of Pickering officials be authorized to take the necessary
actions to give effect hereto.
Executive Summary: In anticipation of the move to the new Operations Centre, Public
Works’ staff were asked to consider existing procedures and best practices and recommend changes that could significantly improve operational efficiencies and leverage the design and space of the new facility. The fleet parts inventory supply and management was targeted as an area for efficiencies to better service the increasing fleet repair and maintenance work load. Staff were requested to visit other municipalities using a similar service, and visited the City of
Oshawa’s Operations Centre who, through a competitive RFP process, selected a third party in-house vendor to manage and supply all of the parts necessary for daily repairs and preventative maintenance of all City of Oshawa vehicles and equipment.
OPS 02-21 November 22, 2021
Subject: 2022 Pre Budget Approval to Award RFP-4-2019
Automotive Parts Supply & Inventory Management System Page 2
Service efficiencies that are expected to be realized with an integrated parts supply and inventory management system include:
• A link from NAPA’s Total Automotive Management System (TAMS) into SAP Financials (via SAP Fleet Software) will provide integration and two-way transmission of information which will result in reduced administrative task and reliance on paper reports.
• Assist Public Works in continuing to meet Winter Levels of Service as identified in Reports CS 31-19 and CS 14-21 by ensuring over the counter parts for repairs to emergency winter vehicles and equipment are available.
• Improvement in efficiency resulting in a reduction of 150 weekly invoices from multiple vendors to 1 monthly invoice from one vendor.
NAPA will own and fund all inventory parts, and the City will only be charged for parts when they cross the counter. Parts will be charged to the City will include payments based on invoice cost plus 10% which is below industry standard. However, UAP Inc. will be paid an hourly rate
of $32.84 per hour for the first year and $33.65 per hour for the second year to provide parts counter personnel whenever the fleet garage is open, including planned and unplanned events. The City will no longer have to fund the inventory of parts.
After careful consideration of the merits of this service and supply model, the City issued RFP-4-2019 for an Automotive Parts Supply & Inventory Management System which closed on
January 21, 2020. After completing the evaluation of the submission, completing a clarification and negotiation process, and satisfactory reference checks being confirmed, staff recommend proceeding to award RFP-4-2019 to UAP Inc.
Financial Implications:
1. Proposal Amount
2022 2023 TOTAL
Supply Of Parts From UAP 490,000.00 750,000.00 1,240,000.00 Parts Counter Personnel 70,000.00 105,000.00 175,000.00
SAP Fleet Module Integration 10,000.00 -10,000.00
HST (13%) 74,100.00 111,150.00 185,250.00
Gross Project Cost 644,100.00 966,150.00 1,610,250.00
OPS 02-21 November 22, 2021
Subject: 2022 Pre Budget Approval to Award RFP-4-2019
Automotive Parts Supply & Inventory Management System Page 3
2. Estimated Project Costing Summary
Supply Of Parts From UAP 490,000.00 750,000.00 1,240,000.00
Parts Counter Personnel 70,000.00 105,000.00 175,000.00 SAP Fleet Module Integration 10,000.00 -10,000.00
Total Project Cost (excluding taxes) 570,000.00 855,000.00 1,425,000.00
HST (13%) 74,100.00 111,150.00 185,250.00
Gross Project Costs 644,100.00 966,150.00 1,610,250.00 HST Rebate (11.24%) (64,068.00) (96,102.00) (160,170.00)
Net Project Cost (including 1.76%) 580,032.00 870,048.00 1,450,080.00
Notes:
• Supply of Parts From UAP to be budgeted through ten departments (this has been done historically).
• Parts Counter Personnel and SAP Fleet Module Integration to be budgeted through
Fleet Services department.
• The $490,000.00 in 2022 is for a nine month period with the project starting in Q2 of 2022.
Discussion: Currently, Public Works Fleet Operations consumes parts for the
preventative maintenance and emergency repairs in the order of $650,000 per year. These
costs are embedded in the repairs and maintenance budgets assigned to each department for the operating costs of vehicles and equipment in their control.
The parts used by Fleet mechanics are routinely sourced by various fleet staff including the Foreperson, Lead Hand, and our Mechanics. This time, amounting to approximately 60 hours
per week, will now be used productively for those identified staff to perform their core duties of
repairs and maintenance. The Central Stores location, adjacent to the Fleet Services bay, maintains a stock of the typical consumable parts for routine repair and maintenance. Fleet Services maintains such a wide range of vehicles and equipment, that it is not practical to maintain a comprehensive stock of all possible parts for all vehicles and equipment in the
City’s ownership.
The ad hoc method of ordering and maintaining a stock of on-hand parts, without an active digital inventory management system, has led to an inefficient parts system with unused parts and surplus parts as our fleet changes and vehicles are disposed of. Our current inventory of
parts has approximately 10 percent of obsolescent parts and 15 percent of surplus or
duplicated parts.
In addition, current procurement processes can range anywhere from one day to two weeks, (four business days on average), for delivery of parts leading to a significant amount of downtime for vehicles and equipment, particularly for unplanned maintenance and repairs.
UAP Inc. will provide and maintain a parts storage area within the Operations Centre specific
to our fleet and readily available over the counter to supply our mechanics daily with parts
OPS 02-21 November 22, 2021
Subject: 2022 Pre Budget Approval to Award RFP-4-2019
Automotive Parts Supply & Inventory Management System Page 4
needs exclusive City of Pickering. This area along with utilities will be provided to UAP Inc. at no charge. UAP Inc. will be expected to have an on-site inventory of 80 percent of regular
maintenance and repair parts within three months of implementation, which is planned in Q2, 2022, and reach the industry standard of 85 percent within the following three months as they develop an understanding of the full consumable parts requirements of the City. In order to address the approximate 50 winter events per season, other emergencies and planned events after hours, UAP Inc. will provide counter services upon request at an additional cost.
It is important to understand that the City will no longer have to purchase and maintain a large and diverse inventory of parts. UAP Inc., at their cost, are responsible to maintain the inventory and only invoice the City when the parts cross the counter and are in the hands of the mechanics, similar to any store front operation. Carrying costs for surplus and duplicated parts will be eliminated as UAP Inc. will be responsible for the stock levels and inventory. City staff
are currently undertaking an inventory count to identify and dispose of obsolete stock. When UAP Inc. arrives in Q2, 2022, one of their first tasks will be to cross reference our vehicle and equipment list against our current inventory of parts and absorb into their ownership and provide it over the counter when needed at no charge.
UAP Inc.’s proposal also includes use of their Integrated Business Solutions, in particular the
TAMS which other municipalities also use. Currently, Fleet Services receives anywhere from 120 to 150 individual invoices weekly from suppliers for review and approval. UAP Inc. will submit a single invoice monthly for all parts crossing the counter in that month, dramatically cutting down the time spent by Operations staff to verify and process multiple invoices from dozens of vendors. In addition, it is anticipated that there would be subsequent time saved in
the Finance department processing invoices from multiple vendors. This system along with our fuel management system and the future SAP fleet management software system module will provide the necessary data and metrics to make informed business decisions such as procurement and disposable of vehicles and equipment.
City staff will have the ability to receive reports weekly, monthly, quarterly and on an as-
required basis on key metrics which includes invoicing, costing and inventory control. The system will also be able to identify warranties, defects and core charges which are not being currently tracked efficiently; therefore, will offer substantial overall savings to the parts management process. Lastly, this system will allow the City to independently audit the contract to ensure compliance.
The Operations Department recommends the acceptance of RFP-4-2019 submitted by UAP Inc., NAPA Auto Parts in the submitted price of $1,425,000.00 (HST excluded) for the initial two year contract period. The total gross project cost is estimated to be $1,610,250.00 (HST included) and the total net project cost is estimated at $1,450,080.00 (net of HST rebate). Once approved, Operations can prepare for the implementation in Q1, 2022 with the start
launch date in Q2, 2022.
OPS 02-21 November 22, 2021
Subject: 2022 Pre Budget Approval to Award RFP-4-2019
Automotive Parts Supply & Inventory Management System Page 5
Attachments:
1.S&S Summary Memo, dated March 30, 2021
Prepared By: Approved/Endorsed By:
Original Signed By: Original Signed By:
Rob Burlie, P. Eng.
Manager, Public Works
Ray Rodrigues, CPPB
Manager, Supply & Services
Original Signed By: Original Signed By:
Brian Duffield Director, Operations Stan Karwowski, MBA, CPA, CMA Director, Finance & Treasurer
BD:rb
Recommended for the consideration
of Pickering City Council
Marisa Carpino, M.A. Chief Administrative Officer
Original Signed By:
From: Ray Rodrigues
Manager, Supply & Services
Copy: Administrative Assistant, Community Services
Manager, Public Works
Supervisor, Municipal Garage
Attachment 1 to Report OPS 02-21
Memo
To: Brian Duffield
Director, Community Services
March 30, 2021
Subject: Proposal No. RFP-4-2019
Automotive Parts Supply & Inventory Management System
Closing Date: January 21, 2020
- File: F-5300-001
Further to memo dated February 3, 2020, one proposal proceeded to Stage II evaluation.
The Evaluation Committee, consisting of City Staff from Community Services, conducted
independent evaluations of the proposals.
In accordance with Item 2.6 Stage V – Ranking and Contract Negotiations, all scores from Stage II
and Stage III have been added together, and was asked to enter into contract negotiations. Upon
satisfying all the clarifications, changes and revisions to the satisfaction of the evaluation
committee, it is recommended that UAP Inc., NAPA Auto Parts be awarded in the amount of an
estimated $1,125,126 plus HST for the initial two year contract period.
A budget of $650,000 was provided to Supply & Services for this procurement for the first year
of the contract and additional funding is to be obtained as a part of the budgeting process for
each additional year of the contract.
In accordance with Part B. Material Disclosures, Item 1, as a pre-condition of award, the
selected proponent, UAP Inc, NAPA Auto Parts will be required to provide the following
documents for review:
(a) A copy of the City’s Health and Safety Policy form currently dated and signed;
(b) A copy of the current Clearance Certificate issued by Workplace Safety & Insurance
Board; and
(c) The City’s certificate of insurance or approved alternative form shall be completed by
the Proponent’s agent, broker or insurer.
Please advise if we are to proceed with this task.
As such, in accordance with Purchasing Policy Item 06.11, where the compliant quotation or
tender meeting specifications and offering best value to the City is acceptable or where the
highest scoring proposal is recommended and the estimated total purchase price is:
(c) Over $250,000, the Manager may approve the award, subject to the approval of the Director,
Treasurer, CAO and Council.
Please include the following items in your Report to Council:
1. if Items (a) and (b) noted above are acceptable to the Co-ordinator, Health & Safety or
designate, if required;
2. if Item (c) is acceptable to the Manager, Budgets & Internal Audit;
3. any past work experience with the highest ranking proponent UAP Inc. NAPA Auto Parts
including work location;
4. the appropriate account number(s) to which this work is to be charged;
5. the budget amount(s) assigned thereto;
6. Treasurer’s confirmation of funding;
7. related departmental approvals; and
8. related comments specific to the project.
Upon receiving Council’s approval, an approved requisition will be required to proceed.
Do not disclose any information to enquiries during this time. The Proponents will be
advised of the outcome in due course.
If you require further information, please feel free to contact me or a member of Supply &
Services.
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RFP-4-2019 Page 2 of 2