CITY OF SAN MATEO
CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 9 Section Name: {{section.name}} Account Number: 82-4683 File ID: {{item.tracking_number}} TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Public Works Department
MEETING DATE: May 19, 2025
SUBJECT:
Fleet Maintenance Services – Agreement Approval
RECOMMENDATION:
Adopt a Resolution approving an alternative purchasing procedure to award a two-year agreement to Vector Fleet Management, LLC, for Fleet Maintenance Services in the amount of $2,261,226.42, with three one-year extensions subject to future Council approval; establish an annual contingency in the amount of $75,000 per agreement year; and authorize the Public Works Director to execute the agreement in substantially the form presented and issue amendments within the contingency amount.
BACKGROUND:
The City of San Mateo currently operates a fleet of over 300 vehicles and pieces of equipment, including sedans, trucks, street sweepers, tractors, police patrol vehicles, aerial lifts, motorcycles, turf mowers, and sewer trucks. The fleet incorporates various propulsion technologies, such as conventional internal combustion engines, hybrid electric, plug-in hybrid electric, battery electric, and compressed natural gas vehicles. The City has awarded an agreement for fleet maintenance services since 1991 with the current vehicle maintenance agreement due to expire on June 30, 2025.
In March 2025, staff issued a Request for Proposals (RFP) for a two-year term for Fleet Maintenance Services, with the option to extend the agreement in one-year increments for an additional three (3) years. If the service provider's initial two year term performance warrants staff to recommend pursuing any of the optional term extensions, staff will return to Council to request an amendment for the term extension and associated increase in fee. In the RFP, staff listed the estimated annual agreement amount to be $950,000. The RFP attracted inquiries from several qualified participants, who were also given the opportunity to attend an optional on-site facility walk-through. As a result, the following proposals for annual agreement amounts were received:
Company Proposed Annual Agreement Amount
Vector Fleet Management, LLC $930,613.21
Transdev Fleet Services, Inc. $1,327,623.00
Staff reviewed and assessed each submitted proposal based on the following criteria: Organization and Experience, Key Personnel, Approach and Understanding, and Cost Proposal, these factors were then assessed and weighted according to the RFP guidelines. The results of the scoring were:
CITY OF SAN MATEO
Vendor Organization &
Experience Key Personnel Approach &
Understanding Cost Proposal Total Rank
30 Pts
Obtainable
55 Pts
Obtainable
70 Pts
Obtainable
45 Pts
Obtainable
200 Pts
Obtainable
TransDev 25 47.5 60 22.5 155 2
Vector 26.5 50 65 42.5 184 1
Based on the results of the evaluation, in addition to checking references with other municipal agencies, staff identified Vector Fleet Management, LLC to be the recommended firm. The breakdown of Vector Fleet Management’s annual fleet maintenance cost proposal is shown below:
Total Base Cost $ 861,678.90
Performance Based Compensation (8% of Base Cost) $ 68,934.31 Total Annual Agreement Amount $ 930,613.21
The RFP requested proposers to submit a Performance Based Compensation (PBC) amount, listed above, as part of their annual agreement amount. The PBC is intended to be a portion of the Vendor’s acceptable profit margin and therefore an incentive to both meet and exceed performance standards. The criteria for evaluating the PBC will be based on the overall Vendor performance and a set of Key Performance Indicators (KPIs) established by the City. Examples of KPI types are performance standards, Vendor cost savings/control, innovation, customer focus, etc. The PBC will be reviewed quarterly between staff and the Vendor and up to 25 percent of annual PBC may be paid upon quarterly review. In the event of subpar performance, guidance will be provided by staff to assist the Vendor toward improvement upon identified areas.
In addition, the RFP required proposers to submit hourly rates for non-contract labor to address expenses associated with accidents and major vehicle repair that is beyond the scope of typical maintenance. Based on prior years, staff estimates include a not-to-exceed $200,000 provision per year for these non-contract labor expenses.
This award of the Fleet Maintenance Services represents the first major change in operator of the City‘s Fleet Maintenance shop since the City first awarded and agreement with the incumbent maintenance provider in 1993. This change will require the month of June 2025 as a transition period for the incumbent to wind down operations and the new vendor to set up operations and hire staff. The agreement requires both the incumbent and new operator have stipulations for a phase in/out period to allow staff and the operators to manage the transition.
The initial agreement period will be in place for two years with an option to extend the agreement for up to three (3) additional one-year periods, bringing the total potential agreement term to a maximum of five (5) years. For the proposed two-year term, the agreement amount with the base cost, performance-based compensation allowance, and non-contract labor provisions for accidents and major vehicle repairs results in a total amount of $2,261,226.42. The three additional one-year periods may only be granted through an amendment to the agreement, which will require Council approval.
To address any market fluctuations and any unknown additional expenses, staff also recommends establishing an annual contingency in the amount of $75,000 renewing each agreement year and to be utilized within the agreement term for which it is reserved. If the service provider's initial two year term performance warrants staff to recommend pursuing any of the optional term extensions, staff will return to Council to request an amendment for the term extension and associated increase in fee.
San Mateo Municipal Code Section 3.60.030 generally requires competitive bidding for agreements of $100,000 or more.
San Mateo Municipal Code Section 3.60.070(h)(3) authorizes the City Council to approve an alternative purchasing procedure when it finds doing so is in the best interest of the City. In this case, utilizing the RFP process is more beneficial to the City because the City is not required to accept the lowest bid, but rather may evaluate other factors in addition to price such as Organization and Experience, Key Personnel, and Approach and Understanding. In addition, an RFP allows the City to consider proposals where the purpose and/or performance is known but for which no unique specification exists.
CITY OF SAN MATEO
This process is in the best interest of the City as proposals are considered upon ability along with cost savings to the City.
Staff recommends awarding an agreement to Vector Fleet Management, LLC due to their requisite expertise, familiarity with this type of work, cost, and experience with similar fleet types.
BUDGET IMPACT:
Sufficient funding for this agreement and contingency have been requested through the annual budget development process in the Fleet and Building Maintenance Fund pending approval and adoption of the FY 2025-26 operating budget.
An annual contingency in the amount of $75,000 per agreement year is recommended to cover market fluctuations and additional expenses.
ENVIRONMENTAL DETERMINATION:
Approval of this agreement is not a project subject to CEQA, because it can be seen with certainty that there is no possibility that fleet maintenance services may have a significant effect on the environment. (CEQA Guidelines Section 15061(b)(3).)
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 – Proposed Resolution
Att 2 – Agreement
STAFF CONTACT
Daniel Heffelfinger, Fleet Services Supervisor
[email protected]
650-522-7366
Steve Wu, Facilities and Fleet Manager
[email protected]
650-522-7345
Deryk Daquigan, Deputy Director Public Works
[email protected]
650-522-7287