Meeting Date: January 12, 2005

Subject: Purchase Of Alstom Signal Parts

Recommendation

It is recommended that the Commission authorize the award of a three-year inventory supply contract for the supply of various signal parts for the period from January 2005 to December 2007 to Alstom Canada Incorporated in the upset limit amount of $231,000 (CDN) including applicable taxes.

Funding

Sufficient funds are available in the 2005 TTC Operating Budget which was approved by the Commission at its November 17, 2004 Commission meeting and will be included in future Operating Budgets as required.  These inventory materials will be charged to the appropriate budget at the time of issuance from Stores.

Background

The subject signal parts are used for the maintenance of signal equipment within the Commission.  Several examples include motor control contacts, clutches and sealing nuts.

Discussion

On October 12, 2004, Alstom Canada Incorporated was invited to submit a proposal on the basis of single source as they are the Original Equipment Manufacturer and the only known source of supply for these parts.

The Proposal requested pricing on 39 part types.   Alstom Canada Incorporated submitted pricing for 32 part types at a total proposed value of $154,525.31 (USD) or $182,927.06 (CDN) based on the published exchange rate of 1.1838.  The remaining 7 part types have been identified as obsolete and no longer available.  These 7 part types will require further investigation by staff, which may be the subject of a future proposal.

Their proposal also contained qualification regarding part number revisions on 20 part types. Their qualification indicated no change to fit, form or function but were merely administrative thereby not rendering the parts as alternative.

Their original pricing for this new three-year inventory supply contract was approximately 22% lower in the first year than the current prices.  The pricing would be approximately 3% higher in year two based on year one pricing and approximately 3% higher in year three based on year two pricing.  Further, any extraordinary increases in cost would have to be negotiated.  Staff contacted Alstom Canada Incorporated and were able to negotiate price reductions.  As a result, these price reductions will remain 22% in the first year, however the pricing will remain the same for year two and year three and the clause to negotiate extraordinary increases was removed.

The total upset limit amount of $231,000 includes approximately 25% contingency for variances between forecasted and actual usage and new parts yet to be identified which may be added to this contract during the contract term.  As well an additional 5% has been added to cover freight, duties and brokerage over the course of this contract.

Justification

These signal parts are required in order to support the Commission’s signal maintenance needs.

December 17, 2004

9-118-63