HomeMy WebLinkAboutItem 05 - First Extension of the 2015 Transit operations & Maintenance Agreement with First Transit, Inc.
Department Name: Public Works
Cost Center: 5201
For Agenda of: March 3, 2020
Placement: Consent
Estimated Time: N/A
FROM: Shelly Stanwyck, Assistant City Manager, Community Services
Prepared By: Gamaliel Anguiano, Transit Manager
SUBJECT: EXERCISE THE FIRST EXTENSION OF THE 2015 TRANSIT OPERATIONS
& MAINTENANCE AGREEMENT WITH FIRST TRANSIT INC.
RECOMMENDATION
Authorize the City Manager to exercise the first of three possible extensions of the 201 6 Transit
Operations & Maintenance Agreement with First Transit Inc., at the agreed upon rate.
(Attachment A)
DISCUSSION
Background
The City of San Luis Obispo (City) operates a fixed-route public transit system within City limits
and the California Polytechnic State University (Cal Poly) campus. Vehicle operations and
maintenance have been outsourced and provided under a third-party vendor since the 1990s.
Throughout this time the City has continued to use various vendors/contractors to perform these
duties and often enters into multi-year contracts with potential one year extensions as allowed by
the Federal Transit Administration (FTA).
On June 16, 2015, the City Council approved the award of the Transit Operations and
Maintenance contract to First Transit Inc. who was deemed to be the “best in value” contractor
of the seven firms considered. The recommendation for the award came at the end of a
successful Request for Proposal (RFP) process where multiple contractors submitted proposals
for this work and the competitive process identified the firm that was deemed most appropriate
to conduct the services. This contract called for a base four-year contract term with the potential
for an additional three-year extension each in one-year increments.
Since entering into the contract with First Transit there have been two amendments. In the First
Amendment (Attachment B), Council approved an adjustment to the “Not-To-Exceed” amount
of the price for services due to the expansion of transit services stemming from the Short-Range
Transit Plan changes. In the second amendment (Attachment C), Council approved the pass-thru
procurement of an Automatic Vehicle Location (AVL) system, as the old AVL system was no
longer supported but necessary for managing the operations.
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On July 1, 2019, the City entered into its fourth and last year of the base contract with First
Transit Inc. The contract’s provisions for up to three possible one-year extensions has been
utilized to negotiate with First Transit Inc. for an extension for FY 20-21. Recommendations for
exercising an extension are based on a number of factors including contractor performance,
market indicators, and strategic operational benefits.
Reasons for Extension of Operations and Maintenance Agreement
The Agreement contains a number of key performance indicators (KPI) with associated
liquidated damages and incentives. These KPI are designed to gauge the contractor’s
performance. The City has a high standard for the level of service expected and First Transit Inc.
has satisfactorily met these standards with improvements in safety, reliability and on-time
performance. First Transit Inc. has also demonstrated to be responsive and willing to help the
City deliver changing transit services to the community and be adaptive to change.
Another consideration for making the recommendation to extend the contract, are market
indicators like competitive pricing that may be available if a new RFP process were undertaken.
This is usually somewhat offset by the additional costs for completing the RFP process and the
lost time due to this additional work. Current pricing for the SLO Transit services are in line
with industry indicators and the negotiated amounts are consistent with similar contracts. Given
that no “down swings” in the economy or the transit industry are occurring, staff does not believe
that the City could achieve significantly better pricing by going back out to bid at this time.
Further, negotiated prices with the contractor, herein presented, are in line with the Transit funds
projections and approved 2019-21 budget cycle.
Approving the extension is also considered to have operational strategic benefits. The City has at
least two transformative issues with potential unknowns that could have a drastic impact on any
long-term contract if enacted during this time. First, the City is currently in negotiations with
Cal Poly for a new long-term transit subsidy agreement. The final agreement is anticipated to be
accompanied with additional opportunities for expanded transit service hours or other services.
Service changes in excess of 15% in revenue hours are generally considered reopeners to transit
operations contracts as the level of work can significantly change profit and loss amounts for a
contractor. Doing a major rebid of services could cause complications in contract amounts when
a single year extension can avoid that issue at this time.
Lastly, the City is pursuing expansion of the Transit fleet, with electric transit vehicles, per State
mandates and City Major City Goals. A change to this new technology will have impacts to how
costs are experienced (both good and bad). Therefore, exercising an extension allows the City to
preserve status quo services under existing terms, as staff, quantifies the impacts of these
changes before releasing a new RFP for long-term contract.
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Policy Context
The City Council is the legislative authority and sets the policies under which the City’s
programs operate. The City Council has the power to adopt ordinances and resolutions, make
appointments to the City's advisory bodies, establish policies and approve programs, appropriate
funds, adopt budgets, and approve contracts.
Continuation of this contract is in line with Major City Goals. Particularly with regard to
Sustainable Transportation and Climate Action as mass public transit is widely regarded as more
environmentally superior form of transportation over single-occupant vehicles.
Public Engagement
This is an administrative item, so no outside public engagement was completed. Public comment
can be provided to the City Council through written correspondence prior to the meeting and
through public testimony at the meeting.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2020/21
Funding Identified: Yes/
Fiscal Analysis:
Funding Sources Adopted FY Cost
Annualized
On-going Cost
Total Project
Cost
Transit Fund $2,738,228 $2,820,950
State
Federal
Fees
Other:
Total $2,738,228 $2,820,950
During the FY 2019-21 budget setting process, the transit operation and maintenance costs for
FY 2019-20 were already known and memorialized as part of the base contract with First
Transit. A 3.5% increase in costs for FY 20-21 was assumed for the second year of the Financial
Plan (the contract cost for a potential extension year of the First Transit Contract). The currently
adopted budget includes $2,738,228 for FY 20-21 purchased transportation for the contract.
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First Transit has requested additional funds attributable to the increases in cost for maintaining
an older fleet (50% of the vehicles past their federally approved “useful-life”), the State
mandated increase to minimum wages, and increased costs for improved driver’s wages aimed
at achieving better employee retention. The difference is roughly $82,000 more than was
originally projected and adopted in the financial plan and equating to a total of $2,820,950.
There is no request for additional funding at this time. The difference can be absorbed in the
Transit Fund’s program, with no impacts to the State’s (20%) operational cost recovery mandate.
Accommodating this increase is largely possible due to the typical cost savings the Transit Fund
experiences annually in staffing, marketing, fuel and other program line items. Possible
adjustments to this amount will be addressed and brought forward for approval as part of the FY
20-21 Supplemental Budget in June 2020.
ALTERNATIVES
Deny the extension request and direct staff to go out to bid. This not recommended as any new
long-term contract will take a significant work effort at this time, may not result in any cost
savings and likely cannot be completed in a time for fiscal year end.
Attachments:
a - First Transit Agreement - Amendment #3 to Extend Contract
b - First Transit Agreement - Amendment #1 dated April 5, 2018
c - First Transit Agreement - Amendment #2 dated January 8, 2019
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AMENDMENT TO AGREEMENT NO. 3
THIS AMENDMENT TO AGREEMENT is made this _______ day of ________, 2020, by and
between the CITY OF SAN LUIS OBISPO a municipal corporation and charter city, hereinafter referred to
as “CITY” and FIRST TRANSIT INC., hereinafter referred to as “CONTRACTOR.”
WITNESSETH:
WHEREAS, on June 16, 2015, the City entered into an Agreement with Contractor for Transit
Operations & Maintenance (Agreement); and,
WHEREAS, on April 5, 2018, the City and Contractor entered into an Amendment to Agreement No.
1, amending the scope of services to reflect changes in Revenue Service Hours as a result of the
implementation of Short-Range Transit Plan; and
WHEREAS, on January 8, 2019, the City and Contractor entered into an Amendment to Agreement
No. 2, amending the scope of services to reflect the pass-thru purchase of an Automatic Vehicle Location
System; and
WHEREAS, the Agreement’s term is set to expire on June 20, 2020 and the City desires to exercise
a one-year contract extension option as indicated in the Agreement’s Section 2.c.; and
WHEREAS, the Agreement requires the City and Contractor to negotiate the price formulas for the
one-year contract extension;
WHEREAS, the Contractor has submitted a proposal for this purpose and said proposal is
acceptable to the City. Attached hereto as attachment A is a copy of the Contractor’s Proposal.
NOW, THEREFORE, in consideration of their mutual promises, obligations, and covenants
hereinafter contained, the parties hereto agree as follows:
1. TERM OF AGREEMENT
Subject to the terms and conditions of this Amendment to Agreement, the term of this Amendment to
Agreement shall be from July 1, 2020 through and including June 30, 2021.
2. MAXIMUM OBLIGATION
City agrees to pay Contractor in consideration for its services as described herein. The maximum cost to be
paid by City to Contractor shall not exceed $2,820,950 based on services in Agreement’s Exhibit A.
3. PRICE FORMULA
City agrees to pay Contractor for performance of the services set forth in this agreement as follows:
a. Payment of a fixed hourly rate per vehicle service hour of $35.69 in Year One; A vehicle service hour
is defined as on vehicle providing passenger service for one hour during the service hours specified
herein. A vehicle service hour shall be deemed to have commenced when a vehicle leaves CITY’s
Transit Center (located at 990 Palm Street) to provide the services required herein and shall not
include any out-of-service vehicle time used for vehicle operator breaks or lunches. A vehicle service
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.,,
hour shall terminate when a vehicle returns .to CITY Transit Center prior to any cleaning, servicing
or fueling of the vehicle. The hourly rate shall include vehicle operator wages, fringe benefits, indirect
labor and all consumable material costs that can be tracked by vehicle service hour such as vehicle
maintenance parts and supplies including oil.
b. Payment of a fixed monthly rate of $107,562 in Year One; to compensate CONTRACTOR for all
work to be performed under this agreement as defined in Exhibit A, except that which is included
qnder Paragraph 5(a) and Paragraph 7 of this agreement including, but not limited to: vehicle operator
non~service wages; management, controller and maintenance employee wages and said employees
fringe benefits and indirect labor costs; bus washing and cleaning supplies; uniforms; report
reproduction; office supplies; project telephones; all other related operational costs; and the contract
management fee.
c. Payment of a fixed monthly rate of $5,195 in Year One; for the cost incurred in providing all vehicle
and general liability insurance required under this agreement as such insurance is defined in this
agreement. This amount shall be in excess of the fixed monthly rate as defined herein. CITY reserves
the right, however, to alternatively secure all or part of the specified insurance coverage
4. EXTRA SERVICES
Special promotional and community services shall be considered extra services and will be provided only
with the authorization of City and the mutual consent of the Contractor. Such services shall be defined as
those non-permanent service hours operated outside of the services identified in Exhibit A. Extra services
shall be considered a change to this agreement as defined herein and shall be in excess of the maximum price
defined in Paragraph 4. The costs for extra services will be determined at a rate per vehicle service hours of
$35.69 in Year Four and billed separately from the services specified in the Agreement's Exhibit A.
5. All other terms and conditions of the Agreement, Amendment No. 1 and Amendment No. 2 remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed by and
through their respective officers thereunto duly authorized on the date written below their signatures.
ATTEST:
Teresa Purrington, City Clerk
APPROVED AS TO FORM:
J. Christine Dietrick
City Attorney
CITY OF SAN LUIS OBISPO
By: _________ _
Derrek Johnson, City Manager
CONTRACTOR:
First Transit Inc.
~,?/ . /.
By: ,9 .Z,..c,t.P~
Fadi Chakbazof
Its: Senior Vice Presi
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Attachment A Item 5
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AMENDMENT TO AGREEMENT NO. 2
THIS AMENDMENT TO AGREEMENT No. 2 is made and entered in on January 8, 2019, by and
between the CITY OF SAN LUIS OBISPO, a municipal corporation, herein after referred to as City, and FIRST
TRANSIT INC., a Delaware corporation, hereinafter referred to as Contractor.
WITNESSETH:
WHEREAS, on June 16, 2015, the City entered into an Agreement with Contractor for Transit Operations
& Maintenance services; and
WHEREAS, on April 5, 2018, the parties made and entered into Amendment to Agreement No.1; and
WHEREAS, the City desires to amend the scope of services to reflect the pass-thru purchase of an
Automatic Vehicle Location System; and
WHEREAS, the Contractor has submitted a proposal for this purpose that is acceptable to the City.
NOW THEREFORE, in consideration of their mutual promises, obligations, and covenants hereinafter
contained, the parties hereto agree as follows:
1. Contractor shall be responsible for providing an Automatic Vehicle Locator System (“AVL
System”). Contractor’s scope of services and related compensation is hereby amended to include the equipment,
software and services as set forth in Exhibit A attached hereto. Contractor agrees to maintain the AVL System in
good working order at all times. Upon termination of the 2015 Agreement for Transit Operations and Maintenance
services, the AVL System, and any service agreements or licenses or software, shall automatically become the sole
property of the City. Contractor shall execute and agreements and otherwise cooperate to transfer title to the AVLS
System and any supporting software, service agreement or licenses to City.
2. All other terms and conditions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year
first written above.
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CITY OF SAN LUIS OBISPO: CONTRACTOR:
By: __________________________________ By: ____________________________________
City Manager, Derek Johnson Senior Vice President, Fadi Chakbazof
City of San Luis Obispo First Transit Inc.
APPROVED AS TO FORM:
By: _____________________________________
City Attorney, Christine Dietrick
City of San Luis Obispo
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