City Council
Report
City Council Meeting: November 24, 2020
Agenda Item: 3.F
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To: Mayor and City Council
From: Susan Cline, Director, Public Works, Fleet Services Subject: Award Contract to Genuine Parts Company for Integrated Business Solutions for the City's Fleet Management Division
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and execute an agreement with Genuine Parts Company, dba NAPA Auto Parts, for an Integrated Business Solution for the Public Works Department. This recommended award is made as an exception to the competitive bidding process, pursuant to Section
2.24.250(c) and is for a total amount not to exceed $3,300,000 including a 10% contingency over a two year period, with three one year renewal options in the total amount of $4,950,000 including a 10% contingency, for a total amount not to exceed $8,250,000 over 5 years, with future year funding contingent on Council Approval.
Summary
Fleet Management is responsible for ensuring the City’s diverse fleet of over 960 vehicles are available, dependable, and safe to operate. Currently, the Division operates its Parts Room with two full-time staff (one mechanic and one Fleet Maintenance Supervisor) and sources vehicle parts and equipment from hundreds of different vendors. In order to improve the efficiency and effectiveness of Fleet Management in servicing and repairing vehicles, staff recommends that Council authorize an agreement with Genuine Parts Company dba NAPA Auto Parts, to provide Integrated Business Solutions (IBS), which encompasses supplying equipment, supplies, services, and onsite inventory management. This would consolidate the numerous parts invoices into one monthly invoice, enable two full-time equivalent staff to resume servicing and repairing vehicles, and streamline the ordering and inventory management of Fleet Management’s Parts Room.
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Discussion
The Parts Room is responsible for ordering, monitoring, and stocking the inventory of parts, and dispensing equipment and supplies to the mechanic shop floor. Fleet Management spends approximately $1.3 million annually on parts, lubricants, and tires.
Due to the diversity in the City’s Fleet, the City has used myriad different vendors to supply its auto parts. On average, the Division sources parts from more than 100 different vendors each year, with most purchase orders (POs) under $10,000.
Significant staff time is spent in bidding, executing, and renewing these various POs, as well as processing more than 400 hundred different parts invoices every month.
The staffing of the Parts Room also requires a significant investment in staff time. It operates from 6:30 AM – 5:30 PM, Monday through Friday, with two full-time storekeepers responsible for issuing parts to mechanics. The two storekeepers are also responsible for ordering parts, monitoring inventory, and coordinating pickups and deliveries. Due to the City’s reduction in workforce, both Fleet storekeeper positions were eliminated. Currently, one fleet management supervisor and one mechanic are doing this in addition to their normal duties to ensure operation of the Parts Room.
In 2018, the City’s Internal Auditor, Moss Adams, conducted a Fleet Management Efficiency Study and presented their findings to the Audit Subcommittee on August 21, 2018. Moss Adams highlighted several areas of inefficiencies in the operations of the Parts Room. They found that a formal inventory monitoring system had not been established and that a parts audit had not been completed since 2013. Moss Adams also observed that a significant portion of mechanic and supervisor time went into sourcing, picking up, and delivering parts that was equivalent to more than $400,000 in staff time. Moss Adams recommended the City consider using a national parts vendor to provide on-site parts supply and implement an inventory monitoring program to improve efficiency and reduce costs.
Staff recommends that the City enter into a two-year agreement, with three one-year renewal options with NAPA to provide Integrated Business Solutions. NAPA’s services would include on-site parts supply for the City Fleet and an Inventory Monitoring 3 of 4
Program responsible for maintaining an 80% fill rate. This would reduce vehicle turnaround time and increase mechanic productivity by putting parts in their hands with minimal disruption. NAPA would also be responsible for purchasing and supplying inventory and would only charge the City for parts that are used. This would minimize upfront costs as the City would no longer need to keep parts in stock and reduces the risk of parts becoming obsolete as the City’s Fleet changes. The total amount spent in the agreement would fluctuate depending on the City’s needs, but NAPA’s operating costs would largely remain fixed at $170,000 per year through the contract term. Costs could incrementally change over the life of the contract due to adjustments in the costs for fringe benefits or overtime, with preapproval from the City.
Vendor Selection
Exception to Competitive Bidding
Staff recommends General Parts Company dba NAPA to furnish and provide an integrated business solution as an exception to competitive bidding per Muni Code
2.24.250 (c). On May 1, 2015, Sourcewell (formerly known as National Joint Powers Alliance (NJPA)), a government agency that establishes nationally leveraged and competitively solicited purchasing contracts for education, government, and non-profits issued a Request for Proposals (RFP) for fleet-related maintenance equipment, supplies, services, and inventory management solutions. Under the terms of the RFP and the resulting Sourcewell Agreement with Genuine Parts Company (Agreement #061015-GPC), similar nationally leveraged volume purchasing discounts are also available to other government agencies. The discounts offered in the Sourcewell contract on average, are 10-15% greater than the discounts offered in the City’s competitively bid POs.
NAPA currently provides Integrated Business Solutions for several municipalities and organizations in California, including the City of Sacramento, San Diego County, and Los Angeles World Airports. Fleet Management staff conducted outreach to these organizations and they recommended NAPA for its reliability, inventory management, and effectiveness in providing parts.
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c. Competitive procedures were followed by a governmental agency, federal, state, county, city, joint powers agency, special district, or cooperative purchasing agency and the goods or services are supplied to the City at the same or better price; Financial Impacts and Budget Actions
Staff seeks authority to approve funding from the Fleet Fund to award a contract with Genuine Parts Company for Integrated Business Solutions. Staff anticipates the contract would be executed by January 2021 and the budget request amounts for FY 2020-21 are based on a six-month period.
Agreement Request
FY 2020-21
Budget
Request Amount
FY 2020-21 Budget
Department Account #
Total Contract
Amount
$121,000 70500001.529010 $1,210,000
$561,000 70500001.529020 $5,610,000
$11,000 70500001.529021 $110,000
$22,000 70500001.521814 $220,000
$110,000 70500010.550010 $1,100,000
$825,000 Total $8,250,000
Future year funding is contingent on Council budget approval.
Prepared By: Jose Arroyo, Senior Administrative Analyst Approved Forwarded to Council
Attachments:
A. Genuine Parts Company Oaks Initiative Form