HomeMy WebLinkAboutItem 6g. Authorize an Amendment to Transdev's Agreement for Hiring Incentives and Term Extension Item 6g
Department: Public Works
Cost Center: 5201
For Agenda of: 9/19/2023
Placement: Consent
Estimated Time: N/A
FROM: Matt Horn, Public Works Director
Prepared By: Alex Fuchs, Mobility Services Business Manager
SUBJECT: AUTHORIZE THE CITY MANAGER TO EXECUTE AN AMENDMENT TO
TRANSDEV’S AGREEMENT FOR HIRING INCENTIVES AND TERM
EXTENSION
RECOMMENDATION
1. Approve the sole source procurement for transit operations and maintenance
services; and
2. Authorize the City Manager to negotiate and execute an amendment to the transit
operations and maintenance agreement with Transdev North America, formerly First
Transit, to include hiring incentives and to extend the term of the agreement.
POLICY CONTEXT
The City’s adopted Financial Management Manual section 257 – Contract Amendments
– states that cumulative amendments of $150,000 or more require City Council approval.
In 2016, Council approved award of the transit operations and maintenance contract
(Attachment A) to Transdev (formerly First Transit). The agreement has since been
modified five times by Council action to extend the term, approve one -time pass-thru
purchases, and to amend the annual not -to-exceed amount for services provided. The
current not-to-exceed amount for fiscal year 2023 -24 outlined in the last amendment
approved by Council, Amendment to Agreement No. 5 (Attachment B), is $3,078,597.
Providing funding for hiring incentives by Transdev after negotiation with appropriate labor
unions and extending the agreement for an additional two years would exceed the
$150,000 threshold and, therefore, require City Council approval.
Extending the transit and operations agreement with Transdev for two additional years
requires approval under the City’s sole source provision per Municipal Code section
3.24.060(B). Sole source procurement is justified in this situation to address an immediate
need for continued transit operations and maintenance services that cannot be met in a
timely manner through the City’s normal purchasing procedures. A lack of transit
operations and maintenance services would threaten the delivery and availability of
essential transportation services to the community.
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Item 6g
Two additional years will provide staff time to finalize the Short-Range Transit Plan
(SRTP) and integrate findings from the Transit Innovation Study, which is anticipated to
be completed by Spring 2025. The recommendations in the SRTP will inform the scope
of services for the solicitation of proposals for a new operations and maintenance
agreement.
DISCUSSION
SLO Transit fleet operations and maintenance have been provided by third -party vendors
since the 1990s. On June 16, 2016, City Council approved the award of the transit
operations and maintenance contract to First Transit, Inc. (now referred to as Transdev
North America). The contract included a base four-year term with options for three one-
year extensions. The term options were exhausted at the end of the fiscal year 2022-23
but, prior to that, Council approved an additional one-year extension as a sole source
procurement through the end of fiscal year 2023-24. The intent was to provide the City
time to recruit, hire, and onboard a new Transit Manager who would then be responsible
for preparing and releasing a request for proposals for transit operations and maintenance
services.
Need for Contract Extension
Prior to recruitment for the Transit Manager position, the Public Works Department
received approval to implement a reorganization that created a third division in the
department. The reorganization included the establishment of the Mobility Services
Division and a reclassification of the Transit Manager to the Mobility Services Business
Manager. This effort and subsequent delayed filling of the new Mobility Services Business
Manager position has pushed out the preparation and solicitation of proposals for transit
operations and maintenance services. With the SRTP now underway, staff recommends
postponing solicitation of proposals until the SRTP is completed, so the recommendations
within it can inform the scope of services.
The SRTP is anticipated to be completed by Spring 2025 and the proposed contract
extension would be through the end of June 2026. This would give staff sufficient time to
prepare a request for proposals, receive and evaluate proposals, provide a
recommendation to Council for a contract award to a vendor, and finally execute the
agreement with the vendor.
Need for Hiring Incentives
SLO Transit has operated a reduced service schedule for all fixed routes and suspended
most tripper services since the onset of the COVID-19 pandemic in March 2020.
Continued operation at a reduced level post-pandemic is due to a nation, statewide,
regional and local shortage in qualified bus drivers. This is not exclusive to SLO Transit
but is an industry-wide issue and extends to school operated systems as well. Operators,
including San Luis Obispo Regional Transit Authority (RTA), have implemented hiring
incentives to help attract and retain new drivers.
Transdev requires a minimum of 35 drivers to operate SLO Transit’s full-service schedule.
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Item 6g
As of September 2023, Transdev employs 21 drivers with seven more in training. The
training process is six weeks long and requires trainees to pass the DMV’s commercial
driver’s license for bus operators. Transdev pays trainees during the six-week process
and assists with preparation for the licensing requirements. Many trainees either do not
make it through the training process or leave soon after obtaining their license for other
better paying driver positions in the county.
In addition to losing potential drivers through the training process, between January 2022
and September 2023, Transdev reported that 24 drivers had resigned. Most seeking work
elsewhere that is either better paying, more consistent hours, or both. Hiring incentives
would not only attract new potential drivers but also help to retain drivers once they
graduate. Below is a conceptual hiring incentives structure developed by staff and
provided to Transdev for consideration.
Table 1: Hiring Incentives Conceptual Structure
Name Description Rate/Amount
Sign-on Incentive Drivers
Completion of training
After 90 days of service
Next 90 days
Total
Dispatch and Road Supervisors
Completion of training
After 90 days of initial training
Next 90 days
Total
$ 500
$ 500
$ 1,500
$ 2,500
$250
$250
$1,000
$1,500
One-time
Retention
Incentive
One-time bonus for new drivers in good standing after completing
365 days of employment. Employees returning to SLO Transit and
after receiving this bonus from prior employment are not eligible
for an additional one-time bonus.
$ 2,500
Temporary
Continued
Employment
Incentive (TCEI)
The TCEI is an additional hourly incentive rate for drivers,
dispatchers, and supervisors in good standing. Does not include
hours for training and mandatory meetings. $ 4.25/hour
Drivers, dispatch, and road supervisor positions employed by Transdev are unionized.
Any hiring incentives would require Transdev to meet and confer with union
representatives as well as execute a separate agreement with the union prior to
implementation. This means the hiring incentive structure could change from the proposal
outlined above. As such, staff recommends that Council delegate its authority to execute
amendments to the agreement with Transdev to the City Manager to allow an amendment
that will provide for the City’s contribution toward a hiring incentive in an amount not-to-
exceed $408,780 annually during the extended term upon demonstration by Transdev
that it has complied with applicable labor relations obligations. Additionally, the incentives
would be in effect until a new agreement for services is negotiated and executed via
Council authorization.
Previous Council Action
City Council has approved five previous amendments to the Transdev agreement.
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Item 6g
1. On April 5, 2018, the City and Contractor amended the agreement and scope of
services to reflect changes in Revenue Service Hours resulting from the
implementation of the Short-Range Transit Plan.
2. On January 8, 2019, the City and Contractor amended the agreement and scope
of services to include a pass-thru purchase of an Automatic Vehicle Location (AVL)
system.
3. On March 2, 2020, the City exercised the first of three possible option s extending
the term of the agreement one additional year.
4. On May 12, 2021, the City exercised the second of three possible options
extending the term of the agreement one additional year.
5. On May 5, 2022, the City exercised the third and final option options extending the
term of the agreement one additional year. The City and Contractor also agreed
upon and negotiated a not-to-exceed rate for one additional year extension beyond
the original term of the agreement for fiscal year 2023-24.
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 to or during the meeting.
CONCURRENCE
Transdev concurs with the need to implement a hiring incentives structure to attract and
retain qualified employees as well as extending the agreement for two additional years.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) 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: On-going
Funding Identified: Yes
Fiscal Analysis:
The fiscal impact for this action is the summation of the cost for the incentives as well as
the annual cost of the transit contract extension. While these are shown as new costs, if
the City went through the formal request for proposals process it is likely that a majority
of these costs would be similar to provide both the bus service the City desires and to
retain drivers for these services.
Contract Element FY 2023-24 FY 2024-25 FY 2025-26
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Item 6g
Incentives $ 233,1401 $ 408,7802 $ 408,780
Contract $ 3,078,5973 $ 3,170,9554 $ 3,266,0845
Total $ 3,311,737 $ 3,579,735 $ 3,674,864
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
Transit Fund $ $ $ $
State:
Federal: ARPA $ 4,100,000 $ 233,140 $ 3,866,860
Other:
Total $ 4,100,000 $ 233,140 $ 3,866,860 $
In 2022, the City received $12.3 million American Rescue Plan Act (ARPA ) funding for
transit operating assistance. The services provided through Transdev agreement are part
of the Transit Fund’s operating expenditures and are reimbursable by the ARPA funding
assistance. The Transit Fund has budgeted $4.1 million of ARPA funds each year for
three fiscal years beginning in 2022-23. However, unspent funds can be used in additional
fiscal years to cover operating assistance costs.
The current annual not-to-exceed amount for the transit operations and maintenance
contract is $3,078,597 as negotiated during the last agreement extension. Staff
anticipates an increase in the not-to-exceed amount based on the Consumer Price Index
(CPI) if the two-year extension is approved. Transdev is currently preparing a price
proposal for the two extension years for staff’s review.
ALTERNATIVES
Council could decide not to authorize the City Manager to execute an amendment
to the agreement. This action is not recommended because SLO Transit continues to
operate at reduced service levels post-pandemic as a direct result of the driver shortage.
Delaying the implementation of hiring incentives will further hinder SLO Transit’s ability to
return to a full-service schedule. Also, deciding not to extend the agreement term would
risk essential services provided to the community while staff completes the SRTP that will
inform the future scope of services.
ATTACHMENT
A – First Transit Operations and Maintenance Agreement
1 Assumes hiring incentives take effect January 1, 2024. Assumes 15 operators receive sign -on bonus.
2 Assumes 15 operators receive one-time retention bonus
3 No new contract costs would be incurred through this action for the current fiscal year to the contract.
4 This amount assumes a consumer price increase of 3% over the previous fiscal year. The final cost for
the contract will be based upon a not-to-exceed amount negotiated and agreed upon by both parties.
5 This amount assumes a consumer price increase of 3% over the previous fiscal year. The final cost for
the contract will be based upon a not-to-exceed amount negotiated and agreed upon by both parties.
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Item 6g
B – Amendment to Agreement No. 5
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AMENDMENT TO AGREEMENT NO. 5
THIS AMENDMENT TO AGREEMENT is made on ____________________________, 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, 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
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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 A. 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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