HomeMy WebLinkAboutItem 6g - Authorize Amendment No. 5 to the Transit Operations and Maintenance Contract with First Transit Item 6g
Department: Public Works
Cost Center: 5201 (Transit)
For Agenda of: 5/3/2022
Placement: Consent
Estimated Time: N/A
FROM: Matt Horn, Public Works Director
Prepared By: Austin O’Dell, Interim Transit Manager
SUBJECT: AUTHORIZE AMENDMENT NUMBER 5 TO THE TRANSIT OPERATIONS
& MAINTENANCE CONTRACT WITH FIRST TRANSIT, INC
RECOMMENDATION
1. Authorize the Mayor to execute Amendment Number Five to the Transit Operations &
Maintenance Agreement with First Transit Inc. to exercise the third extension until
June 30, 2023 at the agreed upon and negotiated rate not to exceed $2,626,896 for
FY 2022-23; and
2. Authorize the Mayor to approve the sole source procurement to the Transit Operations
& Maintenance Agreement with First Transit Inc. to extend the term until June 30,
2024 at the agreed upon and negotiated rate to not exceed $3,078,597 for FY 2023 -
24; and
3. Authorize the Director of Public Works or his designee to amend and make changes
to Amendment No. 5 in accordance with the terms and conditions of the agreement
with First Transit for operations and maintenance for fixed route services.
DISCUSSION
Background
The City of San Luis Obispo 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 to and are provided by third-party vendors since the
1990s. Throughout this time, the City has continued to use various vendors/contractors
to perform these duties and often does multi-year contracts with multiple potential one-
year extensions as allowed by the Federal Transit Administration (FTA ).
On June 16, 2016, 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”
vendor of the seven considered. The recommendation for the award came at the end of
a successful Request for Proposal process where multiple vendors submitted proposals
for this work and a competitive process arrived at the vendor 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 extensions in one -year increments. City
Council has approved two of the extensions. These extensions were successful to control
operating costs, which benefits the City’s Transit Program.
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Item 6g
Preparation of a new operations and maintenance contract requires review of past
performance and planning to project the needs and scope for the term of the contract.
Generally, this process can take between nine and twelve months from development to
executing the agreement. Another added complexity is the departure of the permanent
Transit Manager. Currently this role is being covered by an Interim Transit Manager.
There is benefit and value for the Transit Manager to assess the needs of the transit
service and develop the scope of work for the term of the new transit services agreement.
The current amendment expires on June 30, 2022. Due to the preparation and solicitation
time required to secure a new transit services agreement and the time needed to hire a
new regular Transit Manager, staff is recommending exercising the third extension and
approving a sole source procurement to extend the contractual obligation with First
Transit for an additional year beyond the third extension. This will provide staff sufficient
time to recruit a regular Transit Manager and for the new Transit Manager to prepare and
issue a new request for proposals for transit operations and maintenance services.
Recruitment for the permenant Transit Manager will commence after the completion of
the Transit Program Analysis study. This study is near completion.
The City has a high standard for the expected level of service and the vendor has
satisfactorily met these standards with improvements in safety, reliability, and on -time
performance. The vendor has also demonstrated to be responsive and adapted to
change to improve transit services offered based upon community needs and current
pandemic conditions.
Current pricing for the SLO Transit services is in line with current industry standards and
the negotiated amounts are consistent with similar contracts. First Transit’s pricing also
reflects an increase in wages for operations staffing (i.e., drivers, dispatchers, road
supervisors, etc.). The City’s cost per revenue hour1 is nearly 45% lower than the
County’s regional transit service. This key performance is indicat ive of the City’s ability
to control operations cost by contracting its services.
The negotiated price with the vendor, in a not exceed amount of $2,626,896 for FY 2022-
23 is a different, and increased amount from the Transit Fund’s Fiscal Year 2022-23
forecast. The difference for FY 2022-23 is an increase to operational costs of $181,006,
and for the FY 2023-24 and increase of $581,149. The total difference is $762,154. The
differential is attributed to two factors. The first is under the terms of the amendment and
sole source procurement, higher wages for drivers, road supervisors, and operation staff
than initially forecasted will be paid to attract and retain qualified employees. The second
is the additional service hours projected for FY 2023-24.
1 Cost per revenue is calculated by the total operations cost divided by revenue hours. This is key
performance indicator that is used to monitor the service efficiency. This indicator is useful to compare
service efficiency with other agencies.
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Item 6g
The recent award from the American Rescue Plan Act (ARPA) will fund the higher costs
in these two years under the terms of the Amendment and the Sole Source Procurement.
There is sufficient revenue to cover these costs as ridersh ip returns to pre-pandemic
levels.
The current budget assumptions utilize state and federal funding to fund transit
operations. With the receipt of ARPA funds, ARPA will pay 100% of the net operating
cost. The net operating cost is defined as the total cost of operating less fare revenue.
Previous Council or Advisory Body Action
City Council has previously approved exercising other contract amendments to the First
Transit Agreement including exercising the first of three possible extensions.
On June 16, 2016, the City entered into a four-year Agreement with Vendor for
Transit Operations & Maintenance.
On April 5, 2018, the City and Contractor amended the agreement and the scope
of services to reflect changes in Revenue Service Hours as a resul t of the
implementation of Short-Range Transit Plan.
On January 8, 2019, the City and Vendor amended the agreement and the scope
of services to reflect the pass-thru purchase of an Automatic Vehicle Location
System.
On March 3, 2020 the City exercise the f irst of three possible extensions of the
2016 Transit Operations & Maintenance contract with First Transit Inc.
On May 12, 2021, the City exercised the second of three possible extensions of
the 2016 Transit Operations & Maintenance contract with First Transit Inc.
Policy Context
The City’s adopted Financial Management Manual states that contract’s greater than
$100,000 fall under the purview of City Council for approval (page 46).
Amendment No. 5 is the final extension to the agreement. Staff is also requesting
amending the term of the agreement in compliance to the sole source provision in the
City’s adopted purchasing policy. In accordance to the City’s Municipal Code
3.24.060(B), sole source procurement is justified to address a situation that creates an
immediated need for services that cannot be met through normal purchasing procedures
and lack of services would seriously threaten the availability of City services.
Extending the term of the agreement by one year is justified a s sole source because there
insuffiencient staffing and time to draft and solicit for proposals for transit operations and
maintenance services for the City’s public transportation system. By the time it takes to
recruit and onboard a new Transit Manager next year, the new Transit Manager will have
to analyze the appropriate service levels for service restoration from the pandemic period
and post pandemic service. This analysis is essential in the preparation of
the procurement document and solicitation for proposals.
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Item 6g
Recruitment for the permenant Transit Manager will commence after the completion of
the Transit Program Analysis study. This study is near completion and the anticipated
hire date is winter 2023. Failure to extend the agreement would not provide the new
Transit Manager time to prepare and solicit proposals and would ultimately threaten the
continued availability of public transportation in the City.
Public Engagement
This item is considered an administrative item and public engagement was not solicited.
However, the item will be considered during a public meeting of the City Council and
members of the public can comment prior or during the meeting.
CONCURRENCE
The City Attorney’s Office has reviewed and approved the contract amendment with First
Transit. The Finance Department Purchasing Program support the sole source
recommendation with First Transit.
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: 2022-23
Funding Identified: Yes
Fiscal Analysis:
Fiscal Impact Table for FY 2022-23
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund - - - $-
State-TDA/LTF $1,403,951 $1,313,448 ($90,503) $-
Federal-FTA 5307 $1,403,951 $1,313,448 ($90,503) $-
Other: ARPA $181,006 - $181,006 $-
Total $2,626,896 $2,626,896 $- $-
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Item 6g
Fiscal Impact Table for FY 2023-24
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund - - - $-
State-TDA/LTF $1,248,724 $1,426,373 ($290,574.50) $-
Federal-FTA 5307 $1,248,724 $1,426,373 ($290,574.50) $-
Other: ARPA $581,149 - $581,149 $-
Total $3,078,597 $3,078,597 $- $-
Figures above represent two years of contract costs. At the request of the City,
negotiations commenced in the Winter of 2021. The additional costs requested by First
Transit are largely attributable to the increased cost for wages and benefits for drivers,
dispatcher, and road supervisors. Additional ARPA funds will be available for the next
three years to support transit operating cost for this agreement extension.
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 and may not
result in any cost savings and likely cannot be completed in a time for fiscal year end.
ATTACHMENTS
A - Third and final extension of contract
B - Sole Source Justification
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AMENDMENT TO AGREEMENT NO. 5
THIS AMENDMENT TO AGREEMENT is made this _______ day of ______, 2022, by and
between the CITY OF SAN LUIS OBISPO a municipal corporation and charter city, hereinafter
referred toas “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, on March 3, 2020, the City and Contractor entered into an Amendment to Agreement No. 3,
to exercise the first of three possible extensions provisioned within the original contract at a negotiated price; and
WHEREAS, on May 12, 2021, the City and Contractor entered into an Amendment to Agreement No. 4,
to exercise the second of three possible extensions provisioned within the original contract at a negotiated price;
and
WHEREAS, the Agreement’s term is set to expire on June 30, 2022 and the City desires to exercise a
third one-year contract extension option as indicated in the Agreement’s Section 2.c.; and
WHEREAS, the City and Contractor desire to enter an Amendment to the Agreement No. 5 to exercise the
third and final extension of the original contract at a negotiated price that will expire on June 30, 2023; and
WHEREAS, in addition to exercising the third one-year extension option, the parties desire to amend the term
of the Agreement to June 30, 2024 pursuant to Paragraph 24 of the Agreement, which allows modifications of the
Agreement signed by both parties; and
WHEREAS, the parties desire to extend the term of the Agreement to June 30, 2024 to provide sufficient time
to recruit a permanent Transit Manager and solicit proposals before the expiration of the current agreement which will
otherwise cause serious disruption of essential services for the welfare of the community, which is justified as a sole
source purchase pursuant to Municipal Code Section 3.24.060.
WHEREAS, the Agreement requires the City and Contractor to negotiate the price formulas for the
one-year contract extension; and
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
Term. Subject to the terms and conditions of this agreement, the term of this agreement shall be
from July 1, 2022 through and including June 30, 2024.
2. MAXIMUM OBLIGATION Page 275 of 395
City agrees to pay Contractor in consideration for its services as described herein.
The maximum cost to be paid by City to Contractor for FY 2022-23 shall not exceed $2,626,896
and for FY 2023-24 the amended extension shall not exceed $3,078,597 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 $44.33 in Year One and $49.06 in Year
Two. 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 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 $106,323.26 in Year One and $118,041.41 in Year Two; to
compensate CONTRACTOR for all work to be performed under this agreement as defined in
Exhibit A, except that which is included under 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 $10,254.86 in Year One; and $12,443.72 in Year Two 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 in the respective year in accordance to
Paragraph 3a and billed separately from the services specified in the Agreement’s Exhibit A.
5. CHANGES
CITY, without invalidating this agreement may or additions to or deletions from the work to the
performed. Such changes shall be specified to CONTRACTOR in writing. If justified, the
“Maximum Obligation” will be adjusted accordingly. New provisions must be mutually agreeable
to both CITY and CONTRACTOR. A shift of vehicle service hours between services with the
maximum value or an increase or decrease of up to 30% change (up or down) within the curr3ent
span of service would not constitute a change as defined in this agreement, but any such shift or
change shall only occur at the direction of CITY.
6. All other terms and conditions of the Agreement, Amendment No. 1, Amendment No. 2,
Amendment No. 3, and Amendment No. 4 remain in full force and effect.
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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: CITY OF SAN LUIS OBISPO
By:
Teresa Purrington, City Clerk Mayor Erica Stewart
APPROVED AS TO FORM: CONTRACTOR: FIRST TRANSIT INC.
By:
J. Christine Dietrick, City Attorney Fadi Chakbazof, Senior Vice President Bradley Thomas, CEO
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City of San Luis Obispo Sole Source Justification Form
First Transit
The City of San Luis Obispo policy is to solicit quotations or bids for purchases of commodities or services for specified
dollar amounts and select vendors on a competitive basis (See City of San Luis Obispo Financial Management Manual,
Section 201, Exhibit 201-B).
Under San Luis Obispo Municipal Code Chapter 3.24.060, procurement obtained from a single source can be
purchased without engaging in bidding procedures. Staff must justify waiving the competitive bidding process in this
sole-source form. The justification should provide enough detail so that anyone in the public with no background on
the purchase can understand the justification.
1. What is the product or service? Why is this product or service offered as the only ‘sole source’ that
meets the City’s requirements?
First Transit is the City’s public transit operator. First Transit provides essential services to city
residents. This service procurement is consistent with the sole service provisions in Municipal Code
3.24.060, Subsection B, because there is insufficient time to procure services through normal
procedures that would cause a disruption of essential public transit service to the City. Currently, City
has hired an Interim Transit Manager until the completion of the Transit Program Analysis. This study
will be complete by June 2022. The City will recruit to hire a permanent in the Fiscal Year 2023, which
will not provide sufficient time for the permanent transit manager to complete a Request for Proposal
for transit operations at the end of the contract term. Thus, the staff is seeking a one-year extension
to ensure operations continue, and an RFP is planned for advertisement for June 2024.
2. Have other products/vendors been considered? If yes, which? And how did they fail to meet the
City’s requirements?
No
3. Is the purchase an upgrade or addition to an existing system or brand of products adopted as a
citywide standard? If so, will the purchase of this product avoid “switching” costs? (e.g., additional
training required; data conversion; implementation of a new system; etc.)?
No.
4. Is this a request for services by a contractor with unique and critical knowledge of established City
systems or programs? If so, will the use of the contractor’s services avoid other costs (e.g.,
significant staff time in compiling information, data transfers, etc.)?
Yes.
5. What is the quoted price for the product or service, and is it reasonable (based on other products
or services in the same field or based on historical pricing for the City for similar products or
services)?
See attached quote. It is in alignment with current pricing and industry expectations.
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__Austin O’Dell, Interim Transit Manager_
Requester
__________________________________ ________________
Approver [______] Date
3/29/2022
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