1.          PARA TRANSPO TENDER FOR SERVICE DELIVERY

 

SOUMISSION - SERVICE PARA TRANSPO

 

 

 

Committee recommendationS

 

That Council approve:

 

1.         The tender submission from the In-house Bid Team to provide Para Transpo van service from January 1, 2008 using 91 vans, at a projected cost of $91,921,000 over the five-year contract term; and,

 

2.         That the sedan service component of the Para Transpo program be provided through an increase in the scope of the two existing taxi contracts with West-Way (sedan taxis) and Coventry Connections (accessible taxis), as permitted within the applicable contractual frameworks.

 

 

 

RecommandationS du Comité

 

Que le Conseil d'approuve:

 

1.         La soumission reçue de l'équipe de soumission interne pour le volet « transport en fourgonnettes » du service Para Transpo, ce service devant être assuré au moyen de 91 fourgonnettes à compter du 1er janvier 2008, moyennant la somme projetée de 91 921 000 $ pour les cinq années du contrat;

 

2.         l'élargissement de la portée des contrats de taxi passés avec West-Way (voitures taxis) et Coventry Connections (taxis accessibles) pour le volet « transport en voiture » du service Para Transpo, comme le permettent les cadres contractuels applicables.

 

 

 

Documentation

 

1.      Deputy City Manager's report Planning, Transit and the Environment dated
03 April 2007 (ACS2007-PTE-TRA-0004).

 

2.   Extract of Draft Minutes, 18 April 2007.


Report to/Rapport au :

 

Transit Committee

Comité du transport en commun

 

and Council/et au Conseil

 

03 April 2007/le 03 avril 2007

 

Submitted by/Soumis par : Nancy Schepers Deputy City Manager/Directrice municipale adjointe

Planning, Transit and the Environment/Urbanisme, Transport en commun et Environnement

 

Contact Person/Personne ressource : A. Mercier, Director / Directeur, Transit Services/Services du transport en commun

(613) 842-3636 ext. 2271, alain.mercier@ottawa.ca

 

City-wide

Ref N°: ACS2007-PTE-TRA-0004

 

 

SUBJECT:

PARA TRANSPO TENDER FOR SERVICE DELIVERY

 

 

OBJET :

SOUMISSION - SERVICE PARA TRANSPO

 

 

REPORT RECOMMENDATIONS

 

That Transit Committee recommend that Council approve:

 

1.       The tender submission from the In-house Bid Team to provide Para Transpo van service from January 1, 2008 using 91 vans, at a projected cost of $91,921,000 over the five-year contract term; and,

 

2.       That the sedan service component of the Para Transpo program be provided through an increase in the scope of the two existing taxi contracts with West-Way (sedan taxis) and Coventry Connections (accessible taxis), as permitted within the applicable contractual frameworks.

 

RECOMMANDATIONS DU RAPPORT

 

Que le Comité du transport en commun recommande au Conseil d'approuver :

 

1.       La soumission reçue de l'équipe de soumission interne pour le volet « transport en fourgonnettes » du service Para Transpo, ce service devant être assuré au moyen de 91 fourgonnettes à compter du 1er janvier 2008, moyennant la somme projetée de 91 921 000 $ pour les cinq années du contrat;

 

2.       l'élargissement de la portée des contrats de taxi passés avec West-Way (voitures taxis) et Coventry Connections (taxis accessibles) pour le volet « transport en voiture » du service Para Transpo, comme le permettent les cadres contractuels applicables.

 

 

BACKGROUND

 

In July 2006, Council approved a managed competition for the Para Transpo contract that was due to expire on June 30, 2007, which endorsed the participation of an In-house Bid Team.  The current contract, which is with FirstBus Canada, was subsequently extended to the end of 2007, and so the contract being recommended herein is proposed to start on January 1, 2008.

 

Guidelines for the competition were agreed to as part of the approved report.  Louise Panneton, of P3 Advisors, was appointed as Fairness Commissioner and has been involved throughout the procurement process.  Richard Hewitt, the Deputy City Manager, Public Works and Services, was appointed the Project Sponsor at the time, although in the interim, responsibility for the Transit Services Branch has moved to the Planning, Transit and the Environment Department.

 

An In-house Bid Team was formed under the leadership of, initially Alain Carle (then Director of Transit) and subsequently of John L. Moser, Director, Planning and Infrastructure Approvals.  An evaluation team was formed under the leadership of Helen Gault, Manager, Transit Service Planning and Development.

 

The RFT was released through the Internet based Merx bid distribution network on October 5, 2006.  Fourteen firms ordered the tender document, with one response received, from the In-house Bid Team, on December 21, 2006, the tender due date.

 

The response was reviewed by the evaluation team, in accordance with the criteria approved in advance by Council and contained in the tender, and found to be compliant in relation to the qualifications phase of the tender.  The tender from the In-house Bid Team scored a total of 84.6 percent on the qualitative, non-financial criteria. The financial offer was then analyzed and the recommendations in this report are the result of this process.

 

Originally, authority to award the contract was delegated to the Deputy City Manager, Public Works and Services.  However, in view of the change in responsibility for Transit Services to the Deputy City Manager, Planning Transit and the Environment and the public interest expressed at the end of last year by councillors and some members of the public about the future of the Para Transpo service delivery, it was decided that it would be better to bring the matter back to Committee and Council to allow an open discussion and to permit Council to consider the staff recommendation.

 

 

DISCUSSION

 

Scope of Recommended Contract Award

 

Para Transpo service is currently provided by a combination of vans, sedans and taxi services.  The scope of the RFT was for van and/or sedan services, which are currently provided by FirstBus Canada.

 

FirstBus Canada operates 91 vans and 37 sedans.  The RFT allowed for service at various levels, to enable comparison to be made with taxi services and with the flexibility to increase service, as needed over the five-year contract period.

 

The RFT asked for information on the provision of service:

 

The RFT was structured to enable any combination of vans and/or sedans to be selected, allowing for the possibility that different bidders may provide better prices for the van contract, but not the sedan, or vice versa.  In addition, the flexibility to compare with the costs of providing the service through the existing taxi contracts was also provided.

 

At the end of last year, concern was voiced by a number of wheelchair and scooter users about the possibility that the van service would be reduced meaning that they would need to rely on accessible taxis.  Others incorrectly had the impression that Para Transpo service was being reduced overall, which is not the case.

 

The recommendation is not to reduce the van service but to continue to use 91 vans in the next contract.  However, it is recommended that the sedan service be eliminated and replaced with taxi service.  The combined approach of retaining the van service at its current level while eliminating the sedan service and using taxis is a prudent approach that minimizes risk in service delivery while improving cost efficiency.

 

The existing contracts with the two taxi companies provide service at meter rate plus an administrative fee.  On the basis of existing Para Transpo data, taxi costs were found to be approximately $50 per hour.  This was used to assist in the determination of the most cost-effective mix of service, and provide a common denominator for the cost comparison.

 

The sedan costs proposed by the In-house Bid Team were higher than $50 per hour by a significant margin.  On this basis, it is recommended that 140,000 annual trips that would have been provided by the sedans be provided through the existing taxi contracts with West-Way and Coventry Connections.  Both firms were successful in obtaining the existing contracts through a competitive process undertaken by Supply Management Division, and have confirmed their ability and willingness to expand on the current scope, at the rates now in effect.  Under the existing contracts, taxi drivers providing Para Transpo service must be fully trained to provide transportation service to persons with a disability.  This includes disability awareness and passenger relations training, which is currently provided by the Rehab Centre.  They are also required to possess a defensive driving certificate.  The contractors’ performance is monitored throughout the contract period to ensure that they provide the appropriate level of service.  Should service levels fall below acceptable standards, corrective action is taken.

 

The total annual cost of taxi service in 2008 resulting from this decision is expected to be approximately $5.5 million, as compared to $2.1 million being spent in 2007.

 

Comparative Cost Analysis

 

Van Service

 

Based on the proposal from the In-house Bid Team, the average hourly cost for the provision of van service would increase by 11.5 percent between the final stage of the existing contract with FirstBus Canada in December 2007, and the start-up of the new contract with the In-house Bid Team in January 2008 (Document 1). 

 

There are a number of likely reasons for the increase, and these are listed below.  It is also interesting to note that in 2002, when the contract changed from Laidlaw to FirstBus Canada, the increase in cost to the City was 35 percent, and the (unsuccessful) financial submission from Laidlaw (the incumbent) requested a 77 percent increase.

 

Reasons for the 11.5 percent increase in price include:

·        The pre-determined maximum of three percent annual wage increases to labour (drivers);

·        The fact that maintenance of the fleet, previously not undertaken by unionized staff, will now be the responsibility of the City’s Fleet Services Branch;

·        The recognition of improved working conditions and benefits for staff, notably the OMERS pension plan coverage;

·        The fact that fuel costs, based on the August 2006 “benchmark” stipulated in the RFT, were at the high end of the scale, at 93.9 cents and had to be factored into the tender costs;

·        The fact that the comparison (the 11.5 percent) is with an incumbent bidder that communicated that the current costs are insufficient to carry on the business in a profitable manner; a contention that gains credibility given the fact that FirstBus Canada refrained from submitting a tender for the upcoming five-year contract; and,

·        The tender submitted by the In-house Bid Team is inclusive of all known costs and contains a 2.5 percent contingency allowance, which allowed for integration within the SAP payroll system without affecting the hourly rate.

 

Sedan/Taxi Service

 

The cost of the additional taxi service for 2008 will be approximately $3.43 million, compared with $3.26 million budgeted for sedan service in 2007.  While this is 5.2 percent higher than the sedan service for the last six months of 2007, it compares with $5.08 million for the first year of sedan service proposed by the In-house Bid Team.

 

Costs Incurred in 2007

 

The In-house Bid Team’s proposal included a transition plan and identified the start-up costs that would be incurred.  These amount to $316,000 and cover the costs of bringing staff on board ahead of the January 1, 2008 contract start date, as well as training costs.

 

In addition, there will be significant costs associated with setting up the City’s SAP system for a new labour agreement.  These are estimated at $435,000 and must be accomplished prior to commencement of the contract. 

 

All costs associated with setting up the operation will be covered initially by the 2007 Transit Services base budget, and will be recovered from the Para Transpo budget once the contract is in place.

 

Purchase of the Para Transpo Vans

 

Bidders were asked to provide information about the vans that they proposed to use for the service so that the City could purchase the vans.  This was a condition of eligibility for Provincial subsidy.  The In-house Bid Team specified a Ford E450 van, and on the basis of this Council approval of $7.3 million was sought and received in the 2007 capital budget.

 

Due to a legal dispute between Ford and its engine supplier, Ford is no longer taking orders for these vans.  It was, therefore, necessary to find an alternative as quickly as possible, given the six to nine-month lead time expected for an order of this sort.

 

Supply Management conducted a procurement process to which there were ten responses and have awarded the contract to Overland Coach for GM C4500 chassis.  Although the lowest compliant bid, the cost of these vehicles is higher than the Ford vans would have been and an additional $1.2 million was needed to cover this.  It should be noted that, although these vans are more expensive than the Ford vans would have been, they are slightly larger, are of a sturdier construction and have a longer expected lifetime.

 

Under normal circumstances, the department would have submitted a report to Committee and Council seeking the additional $1.2 million in project authority to purchase the required vehicles.  Due to the short lead times to procure the required vehicles and to minimize any delivery delays, the "Emergency or Special Circumstances" provisions of the Delegation of Authority by-law (By-law 2005-503), were invoked.  Section 7 of these provisions allows the City Manager to take the following action:   "In cases of emergency or special circumstances where it is necessary to take an action outside the normal mandate of a department, the City Manager may take such action as necessary to rectify the situation."

 

Under the provisions of this by-law, the City Manager has authorized the additional authority requirements to allow for the procurement of the vehicles with funding from the Transit Capital Reserve Fund.

 

As required by the by-law, all action taken by the City Manager pursuant to Section 7 is to be reported to the Corporate Services and Economic Development Committee and subsequently to Council.  A separate memorandum has been forwarded to the Corporate Services and Economic Development Committee.

 

Until now Ford has been a major player in the Para Transpo van market and its current dispute could cause supply chain issues this year as other suppliers try to fill the gap.  Although, currently, we are expecting the vans to be delivered in time for the new contract, it is possible that these issues may cause a delay for some vans.  We will monitor the situation and develop contingency plans.  If delays look as if they will occur we should know by August by which time Overland will have taken delivery of the chassis for the installation of the van bodies.

 

Labour Relations Implications

 

Memorandum of Agreement between ATU Local 279, The City of Ottawa, Laidlaw Transit Ltd. and FirstBus Canada Ltd.

 

An agreement signed by the City, FirstBus Canada, Laidlaw Transit Ltd. and ATU Local 279 in 2003, as part of a negotiated settlement in a co-employer application filed by the Union has a number of labour relations implications for all Para Transpo contracts until 2024.  This is particularly so if there is a reduction in scope from the current FirstBus Canada contract. 

 

This agreement specifies that employees who were employed as Para Transpo drivers when the agreement was signed in 2003 (listed in Appendix E of the agreement), who may be declared surplus as a result of any reduction in service in the subsequent contract, have employment rights within the City, first within the City’s ATU 279 work area and then within the rest of the City.  If no opportunities are immediately available, the City will be responsible for maintaining pay and benefits until such employment is obtained.

 

The current In-house Bid Team proposes to employ all but 45 of the existing Para Transpo drivers listed in Appendix E.  It is anticipated that 32 of these employees could be placed as bus operators through positions that arise as a result of normal attrition within the first three months of 2008.  The remaining 13 employees listed in Appendix E would be assessed for placement into positions elsewhere within the City.  This agreement brings with it costs in the range of $700,000 per year for salary and benefits.  This cost may be less, depending on the City’s ability to absorb the excess Para Transpo drivers.

 

Implications for Additional Staff at the end of the Contract

 

While the In-house Bid has the advantage of including an undertaking from ATU 279 regarding wage and benefit increases over the five-year life of the agreement, thereby ensuring no labour cost surprises, there are other staff, both union and non-union that will also be required.  Some of these will likely be folded into the existing ATU 279 bargaining unit (mechanics), and the ATU 1760 (clerical), while the remainder will be non-unionized.

 

Since there are no agreements regarding Para Transpo with the ATU 279 and ATU 1760 bargaining units, the devolution of this service five years hence will result in the City either retaining these employees or severing them and incurring the costs associated with this.  Since this will entail a total of 17 full-time equivalent employees at most, it is likely that the City will be able to absorb these employees through normal attrition.

 

In addition to the increased staffing listed above, the In-house Bid will require an increase of three FTEs in Employee Services to handle the increased workload that comes with the transition of this new bargaining unit to the City and the ongoing management of this group.  While this cost is built into the bid there is no specific monies for severance should Para Transpo services be contracted out in five years.  As with the unionized employees above, it is probable that the City will be able to absorb these employees through normal attrition.

 

 

CONSULTATION/PUBLIC NOTIFICATION

 

The service delivery plan described in this report was presented to both the Seniors and Accessibility Advisory Committees on March 21, 2007.  Members of both Committees were comfortable with the proposed arrangements and the Seniors Advisory Committee approved a motion formally supporting the service delivery arrangements.

 

 

FINANCIAL IMPLICATIONS

 

To provide Para Transpo services from 2008 to 2010, the acquisition of 91 vans was necessary.  The 2007 capital budget approved by Council on February 26, 2007 included a capital project “Para Transpo vans acquisition” in the amount of $7.3 million.  The City is eligible for Provincial subsidy estimated at $2.47 million.  This funding was identified for the acquisition of the 91 vans to be used in the provision of the Para Transpo service.  As mentioned previously in the report an additional capital funding requirement of $1.2 million has arisen due to problems with the original vehicle specified for the contract.  These additional funds will be provided from the Transit reserve fund.  These vans have already been ordered to ensure their arrival in time for the service start in January 2008.

 

The 2007 operating budget for Transit Services includes a budget of $21.447 million, which covers the cost of the service currently provided by FirstBus Canada plus taxi service contracts.  The budget impact in 2008 will be based on the level of Para Transpo service approved by Council in the 2008 budget.  However, on the assumption that the same level of service is maintained for the five-year contract term, the budget impacts are summarized in Document 2.  From this, it can be seen that there would be an operating budget pressure of $1.15 million in 2008, falling to $0.7 million by 2012 as start-up costs are amortized.

 

As mentioned in this report, there are certain costs associated with this contract (e.g. SAP payroll system modifications: $435,000 and other “start-up” costs: $316,000), which will be incurred in 2007 to initiate the contract.  These “start-up” costs have been identified over the five-year life of the service contract, which will be in effect January 1, 2008.  The budget for these start-up costs will come from the 2007 base budget of Transit Services, and will be recovered/offset from the Para Transpo budget once the contract is in place.  The cost of the SAP payroll modifications was not part of the service contract, but will be recovered from the contract contingency as the contract progresses.

 

As well, any resultant costs from placing the existing Para Transpo drivers will come from the Transit Services base budget.

 

 

SUPPORTING DOCUMENTATION 

 

Document 1      Para Transpo In-house Van Service Bid Proposal

Document 2      Para Transpo Service Delivery Costs Based on 2007 Service Levels

 

 

DISPOSITION

 

Following approval of the Para Transpo contract, staff will set in motion the transition plan to ensure a smooth transfer from FirstBus Canada to the City of Ottawa on January 1, 2008.

 


PARA TRANSPO IN-HOUSE VAN SERVICE BID PROPOSAL                    DOCUMENT 1

 

 

 

 

Five-Year Contract

 

FirstBus Contract Annualized Jul – Dec 2007

2008

2009

2010

2011

2012

Total

Base hourly rate

68.37

 

 

 

 

 

 

Addit’l hourly rate

48.96

 

 

 

 

 

 

Average hourly rate

64.88

69.19

72.13

75.20

77.18

79.29

 

 

 

 

 

 

 

 

 

Base hours

202,218

202,218

202,218

202,218

202,218

202,218

1,011,090

Addit’l hours

44,234

44,234

44,234

44,234

44,234

44,234

221,170

Total hours

246,452

246,452

246,452

246,452

246,452

246,452

1,232,260

 

 

 

 

 

 

 

 

Total operating cost ($M)

16.564

17.052

17.776

18.533

19.020

19.540

91.921

 

 

 

 

 

 

 

 

Capital

Depreciation ($M) 1

n.a.

1.413

1.413

1.413

1.413

1.413

 

Total Service

Costs ($M) 2.

16.564

18.465

19.189

19.946

20.433

20.953

 

 

 

 

 

 

 

 

 

% increase

 

11.5

3.9

3.9

2.4

2.5

 

 

Note:    1.   For cost comparison purposes, annual depreciation values have been calculated based on an acquisition cost of $8.477 million and an assumed van life of six years.  During the five-year term of the contract, this would generate an annual depreciation cost of $1.413 million.

 

2.       2007 FirstBus contract costs include capital depreciation.  The 2007 Para Transpo budget also includes a provision of $0.6 million for fuel price fluctuations.

 


PARA TRANSPO SERVICE DELIVERY COSTS BASED ON 2007

SERVICE LEVELS ($MILLIONS)                                                                      DOCUMENT 2

 

 

 

Five-Year Contract 1.

 

2007

2008

2009

2010

2011

2012

Total

Van Service

16.043

17.052

17.776

18.533

19.020

19.540

91.921

Sedan Service

3.350

-

-

-

-

-

-

Taxi Service

2.054

5.545

5.712

5.883

6.060

6.241

29.441

Total

21.447

22.597

23.488

24.416

25.080

25.781

121.362

Pressure

 

1.150

0.891

0.928

0.664

0.701

 

% Increase

 

5.4

3.9

4.0

2.7

2.8

 

 

 

Note:      1.     It should be noted that the vans for the 2008–2012 Para Transpo contract are being purchased in 2007.  Therefore, only the operating costs of the vans will be included in the 2008-2012 operating budget and the contract with the In-House Bid Team.