Public Works staff and the Fleet Committee reviews needs and replacement of older equipment with newer more efficient equipment.  These purchases will allow the Streets Section to maintain its current level of service in a cost effective manner.

• The Streets Section has budgeted $677,000 in Fiscal Year 2015 for the purchase of three (3) all-wheel-drive motor graders with snow wing attachments in account number 040-6-161-0614-6-4401.
• The purchase of all-wheel-drive motor graders using the National contract is $373,000 X 3 = $1,119,000
• The trade in value for the two (2) motor graders and one (1) 1990 motor grader are $81,500 each totaling $244,500
• The trade in value for the two (2) 1988 loaders are $90,600 each totaling $181,200
• The trade in value for the one (1) 1991 loader is $16,800
• Total trade in value of all equipment is $442,500
• By trading in 6 pieces of equipment we are able to purchase three (3) motor graders for $677,000
• Net cost of each motor grader is $225,667

Maintain and deliver quality, reliable infrastructure.

None previously except by adoption of the annual budget where these projected expenditures were contained.

• Option A: Accept National Intergovernmental Purchasing Alliance contract bid from Empire Machinery as the lowest, responsive bidder for the amount of $677,000 for the three (3) all-wheel-drive motor graders with snow wing attachments, and the trade in of two (2) motor graders, one (1) all-wheel-drive motor grader, and three (3) loaders.
• Option B: Conduct competitive bid process.
• Option C: Continue to use existing motor graders

Within the Streets fleet, the equipment has become aged and replacements have been deferred for a few years due to the declining Highway User Revenue Funds (HURF). This year it was identified that the HURF fund balance had the capacity to fund some equipment replacement. One of Streets' top needs was all-wheel-drive motor graders with snow wing attachments. Staff programmed money into the budget using projections from verbal quotes from two distributors. Within the next few years it is projected that equipment replacement needs will grow, and now we have the opportunity to address three needs. As the equipment can be purchased in groups,  this is an opportunity to move the needs apart for future replacements. Streets currently has three (3) motor graders that meet the criteria for replacement. With this National contract, it would address these needs.

The two oldest motor graders are 25 years old (1989); one has 6,000 hours on it and life-to-date costs are $71,000. The other has 8,300 hours on it and life-to-date costs are $80,000. The main concern with these motor graders are that they have become under powered and the hydraulics have become very slow, which affects the efficient operation of the machines. A certified refurbish of these machines would be approximately $200,000 each, which would include an engine rebuild, injectors, fuel system parts and a turbo for the engines to increase the power. It would also include hydraulic cylinders and other major hydraulic parts, and a transmission rebuild. Streets has another motor grader that is 24 years old (1990) and the life-to-date costs are $130,000 due to it being a prototype for one of the first all-wheel-drive machines built. This piece of equipment has had many significant repairs (transmission, drive train and hydraulics) during its lifetime and the operation is similar to the other ones, as it is not as efficient in the daily operation. As these pieces of machinery are older it may be difficult to find parts. The Fleet Committee has reviewed the request to replace the motor graders and they voted unanimously in favor of replacing them.

Staff identified under-utilized loaders that would qualify for trade in to assist with this purchase. The loaders are in need of a significant amount of repairs ( major hydraulic repairs and drive train) that has become too expensive to keep in the Fleet. Streets can sustain their operations without these pieces of equipment as we have identified alternative ways to get the work completed. Staff researched using contractors for this work, utilizing savings in maintenance found by removing the loaders from the fleet, purchasing 3 new motor graders and using savings not hiring temporary labor, which has been difficult to find. The cost of contracting this work would be approximately $25,000 which we could sustain for approximately two years and then we could reevaluate the operation. The Fleet committee was very receptive to this idea, as it helps accomplish the goal of reducing the City's fleet. 

The vendor agreed to accept trade in of all six (6) pieces of equipment with a total trade in value of $442,500, and provide three (3) new all-wheel-drive motor graders with snow wing attachments for a cost to the City of $677,000.

For future replacements, all-wheel-drive motor graders will still be preferred, as they are more efficient in dirt grading and snow plowing operations. The front steering wheels when engaged in all-wheel-drive mode, help pull the material, utilizing the horsepower more evenly, therefore reducing the wear and tear on the machine. Due to the terrain and hills in Flagstaff, all-wheel drive motor graders would provide a safer operation and would help maintain the core services that the Street Section provides.
 
Staff also researched the availability of used equipment for purchase; however, all-wheel-drive motor graders are better for Streets' operation and they are not available on the market to purchase used or to rent.

When preparing to purchase the replacement motor graders, staff looked at the National Intergovernmental Purchasing Alliance contract and found pricing to be the most competitive for these motor grader equipment purchases. This is a national formal solicitation for bids to purchase motor graders. The process identified that Caterpillar Corporation as the most responsive bidder; our local Caterpillar vendor is Empire Machinery.

The warranty on the equipment is fully extended "bumper to bumper" to any defects in workmanship and materials for seven (7) years or 6,000 hours. The warranty does not cover items that are considered to be operating and maintenance items (tires, oil changes, brakes, etc.)  

The City of Flagstaff has had a long working relationship with Empire Machinery, a local business, for the last twenty (20) plus years and has their equipment currently in the fleet. In this time, Fleet Maintenance staff and equipment operators have gained confidence in Empire's abilities to provide warranty work, preventive maintenance and product support needed with this purchase.

With these purchases, it will allow the Street Section to have six (6) out of the nine (9) motor graders in the fleet that would be all-wheel-drive allowing the Street Section to meet the expected level of service as they are more efficient in their operation and will have reduced maintenance costs. 

This would also help reduce the need of replacements in Streets fleet from $4.5M to $950,000 through FY15.   

This would help provide the quality and level of service the community expects.   

Inform

• Option A: Accept National Intergovernmental Purchasing Alliance contract contract bid from Empire Machinery (Empire Southwest, LLC) as the lowest, responsive bidder for the  amount of $677,000 for the three (3) all-wheel-drive motor graders with snow wing attachments, and the trade in of two (2) motor graders, one (1) all-wheel-drive motor grader, and three (3) loaders.
• Option B: Do not trade in three (3) loaders and accept National Intergovernmental Purchasing Alliance contract bid from Empire Machinery (Empire Southwest, LLC) as the lowest responsive bidder for the amount of $874,500 for three (3) all-wheel-drive motor graders with snow wing attachments, and trade in two (2) motor graders and one (1) all-wheel-drive motor grader. This would require additional $197,500 in funding.   
• Option C: Conduct competitive bid process.
• Option D: Continue to use existing motor graders.