TO:Andrew P. Powers, City Manager
FROM:Clifford G. Finley, Public Works Director
DATE:May 9, 2023
SUBJECT: Cancellation of EV Bus Purchase Contract
RECOMMENDATION:
1. Ratify staff’s decision to cancel purchase order with Creative Bus Sales (Chino, CA) in the amount of $601,107.83 for the purchase of two electrically powered (EV), light-duty, cutaway transit buses due to vendor’s and dealer’s inability to deliver the buses per contract terms.
2. Find that this action is not a project as defined under the California Environmental Quality Act.
FINANCIAL IMPACT:
No Additional Funding Requested. Minimal staff time to prepare report is included in the Adopted FY 2022-23 Transportation Fund Budget. Potential loss of up to $297,087 in grant and voucher funding amounts awarded for the purchase.
BACKGROUND:
In January 2021, City Council approved the purchase of two electric light-duty cutaway transit buses to replace two existing Compressed Natural Gas (CNG) buses of a similar size eligible for retirement. The buses were purchased through a statewide contract coordinated by the Morongo Basin Transit Authority (MBTA) and administered by the California Association for Coordinated Transportation (Cal ACT), with Creative Bus Sales (CBS) as the awarded dealer. The buses were to be funded by Transportation Development Act (TDA) funds with additional grant funding ($177,087) that was under application at the time the purchase was approved.
The conversion of the buses to electric was to be completed by Phoenix Motors (Ontario, CA), an authorized electric vehicle upfitter in the contract. At the time the order was placed, delivery was expected by September 2021. Due to supply chain issues related to the COVID-19 pandemic, the delivery date was amended to December 2021.
Cancellation of EV Bus Purchase Contract
May 9, 2023
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6 In late December 2021, staff was notified that Phoenix Motors was having difficulties installing the battery packs due to specific elements of the City’s order, which include moving the wheelchair lift forward of the rear axle. Several attempts were made to modify the chassis to accommodate the battery pack as designed but those attempts proved unsuccessful. CBS formally notified the City in late February 2022, that the buses could not be delivered per contract. CBS offered to have the electric vehicle upfitting completed by an alternative vendor, but MBTA determined that it would be a contract violation. This finding was consistent with the City’s own determination.
On March 29, 2022, City Council ratified cancellation of that purchase contract and awarded a new bid for similar buses, also to CBS. This time the conversion was to be done by Lightning Motors (Loveland, CO). The buses used were the exact same chassis and bodies from the original order but were to have different internals and batteries sourced and installed by Lightning Motors. Due to the timing of the award, these vehicles were also available for California State Voucher Funding (H-VIP) worth $69,000 per bus, bringing the net cost of the two buses after grant and voucher awards to just over $300,000.
DISCUSSION/ANALYSIS:
The bid placed by the dealer included a stipulated 120-day delivery time window.
The dealer also represented that a specific brand of battery would be used in the conversion. The dealer and vendor failed to deliver the buses until late November 2022, nearly 60 days late. Further, the vehicles failed the post-delivery inspection by fleet staff who identified build quality issues and missing components.
While waiting for the dealer to effect repairs so the City could accept the buses, one vehicle suffered significant water intrusion during the January 2023 rains due to an incorrectly sealed window that damaged the interior of the bus and the electronic dash. The other bus failed while being driven between the fleet shop and the bus parking area and had to be towed back to the dealer. Lastly, in early March 2023, staff was notified the installed batteries, which were not the batteries promised by the dealer, were being recalled for safety reasons and the battery manufacturer was bankrupt and out of business. Staff has waited for nearly two months for CBS and Lightning to provide a solution for battery replacements.
On April 10, 2023, staff notified CBS in writing (Attachment #1) of intent to cancel the purchase for failing to fulfill the terms of the purchase contract and for significant manufacturing defects they have not remedied. Therefore, staff recommends ratification of the cancellation of the purchase contract for cause.
Staff will work with the awarding agency to preserve already awarded grant funding for a future purchase. However, the H-VIP voucher funding is specific to the buses Cancellation of EV Bus Purchase Contract
May 9, 2023
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6 ordered and the $138,000 will be lost. A new purchase may qualify for future H- VIP voucher funding and staff will pursue these funding opportunities as they become available.
At this time, the State cooperative contract used for the initial award does not include equivalent buses. Additionally, based on experiences to date, staff is reluctant to attempt another purchase that involves a third-party upfitter or uses CBS as the awarded dealer.
The buses purchased were intended to replace the two that have now exceeded their maximum in-service life per the adopted Transit Asset Management Plan. If a suitable electric-powered replacement is not identified in the near future, staff intends to recommend replacing the existing CNG-powered vehicles with equivalent CNG vehicles and delaying conversion of these light-duty buses to electric until at least 2028. This delay, while unfortunate, will not significantly impact the ability of the City to achieve its goal of a full conversion to electric- powered public transit by the end of FY 2028-29, well in advance of State mandates.
COUNCIL GOAL COMPLIANCE:
Meets the following City Council goal:
C. Operate City government in a fiscally and managerially responsible and prudent manner to ensure that the City of Thousand Oaks remains one of California's most desirable places to live, work, visit, recreate, and raise a family.
PREPARED BY: Mike Houser, Transit Program Manager
Attachments:
Attachment #1 – Termination Letter to Creative Bus Sales DPW:940-10\mh\ev \Council\2023\050923\EV Bus Contract Cancellation staff report.docx