Meeting Date: January 12, 2005

Subject: Procurement Authorization - Purchase Order Amendment #3 - C35pwo2893 - Inspection Services For New Buses In 2005

Recommendation

It is recommended that the Commission authorize amendment #3 to Purchase Order C35PW02893 issued to First Transit on January 8, 2003 by the amount of $125,000 in US funds ($156,250 CDN) to accommodate the requirement for on-going inspection during the manufacture of 250 of TTC’s  buses to be delivered in 2005.

Funding

Sufficient funding for on-site inspection expenditure has been included in Project 4.11 under – Purchase 470 Replacement 40 foot Low Floor Orion VII Diesel Buses (2003 - 2005) as set out on pages 979 to 981 – category State of Good Repair/Safety of the 2005 – 2009 TTC Capital Program approved by the Commission on November 17, 2004.

Background

The Capital Program for Bus Procurement describes the purchase of 470 Orion VII 40-foot diesel buses during the period from 2003 to 2005.  The remaining 250 buses of this order will be manufactured and delivered to TTC in 2005.  To ensure that the manufacture is carried out to specification, and that the quality of the finished product meets staff’s expectation, Resident Quality Control Inspectors are placed in the manufacturer’s plants to oversee production.  The bodies are manufactured at the Orion Plant in Mississauga with installation of interior fittings, drive train, and suspension completed in Oriskany, New York. Final inspection of completed buses occurs at both the Oriskany and Mississauga plants in preparation for delivery to TTC.  Since Orion made a decision to change the point of final inspection, in part, from Oriskany to Mississauga, it was necessary to add an additional inspector to our original inspection plan.  Orion agreed to accept our costs for the extra inspector as a result of the change in the production plan.

First Transit were identified as a result of a tendered requirement in 2003 and retained for the duration of production of the 470 low floor diesel buses.  To date, staff have found the services provided by First Transit to be thorough and competitively priced in the industry.
Contract details are as follows:                       

Original Upset Limit Contract Price / $100,000.00 US

Previous Amendments / $101,365.60 US

This Amendment / $125,000.00 US

Revised Upset Limit Contract Price / $326,365.60 US

Discussion

In the Fall of 2003, a specification was released for tender which described the Commission’s need for bus manufacturing inspection services for the period of 2003 to 2005 while 470 low-floor diesel buses were being produced for delivery to TTC by Orion Bus Industries in Mississauga.  First Transit were successful in winning the bid in competition with other reputable suppliers of similar services to the industry.  A Purchase Order in the amount of $100,000 in US funds ($125,000 CDN) was awarded to them to provide inspection services for 220 vehicles.  The amount of the Purchase Order was an estimate of what the service was expected to cost,  assuming production would follow the contracted delivery schedule.

Delays in production at the Oriskany plant caused the inspectors to be retained longer than originally planned, thus increasing our actual costs which resulted in the issuance of two (2) previous amendments in the amounts of $66,365.60 US and $35,000.00 US which were approved by management and will be re-imbursed by Orion.  In addition, the location for final finishing of buses was also changed by Orion causing TTC to assign an extra inspector to the work.  Orion have confirmed that they would cover the extra costs and have paid all invoices submitted to date.  Unfortunately, as a result of the need to increase the inspection services described, the value of payments to First Transit increased accordingly to cover the extra hours of work.

It is recommended, therefore, that the Commission approve the proposed Purchase Order Amendment so the inspection services provided by First Transit can continue through 2005 for the additional 250 vehicles. 

Justification

The authorization of the proposed Purchase Order Amendment will allow completion of the 470-bus order with Orion and ensure that the finished product meets staff’s expectation for quality in the production process.

January 12, 2005

5-92-91