Loading...
HomeMy WebLinkAboutStaff Report 6887City of Palo Alto (ID # 6887) Finance Committee Staff Report Report Type: Action Items Meeting Date: 5/12/2016 City of Palo Alto Page 1 Summary Title: Contract For On-Site Fleet Parts And Inventory Program Title: Approval of Staff Recommendation for a Three Year Pilot Contract for an On-site Fleet Parts and Inventory Program With Genuine Parts Company for an Estimated Annual Cost of $171,000 From: City Manager Lead Department: Public Works Recommendation Staff recommends that Finance Committee recommend to City Council a three- year pilot with Genuine Parts Company (Napa)to provide on-site fleet parts and inventory services, including contract staff to procure and manage the auto parts/supplies inventory. Background To maintain the approximately 580 vehicles/equipment fleet, staff time spent procuring, receiving, billing and tracking parts/supplies was equal to approximately $283k in Fiscal Year 2015.Fleet relies on more than 60 vendors for parts/supplies,requiring numerous Fleet and Purchasing staff-hours to establish purchase contracts for access to the variety of vendors needed. Prior to 2014,Fleet operated on an outdated version of AssetWorks, which was not efficient in tracking and managing the parts/supplies inventory. Due to the outdated software capabilities, lack of staff time dedicated to inventory management and the City’s aging fleet, the City has accumulated unusable parts and discrepancies in the inventory. Additionally, the Fleet Services Coordinator, the sole staff person to oversee parts operations on a full-time basis for over 17 years, will be retiring from the City in May 2016. This presents an appropriate time to consider alternative services. City of Palo Alto Page 2 Napa has been in contract with the City of Sacramento for on-site fleet parts and inventory services, including contract staff to procure and manage the auto parts/supplies inventory since 2009. Staff visited the City of Sacramento, with a fleet of approximately 2,800 vehicles/equipment and multiple service locations, to tour the facility and learn from the fleet manager’s experience with Napa. The fleet manager described the City of Sacramento’s parts inventory management prior to outsourcing as lacking in the same areas as the City of Palo Alto and reported after contracting with Napa they saw annual cost savings, an increase in shop productivity as parts were readily available and a reduction in equipment downtime. Sacramento’s fleet manager conveyed Sacramento’s satisfaction with Napa and their excellent quality of service provided. Discussion Inventory Management Fleet staff recognized the challenges of maintaining the fleet parts/supplies inventory and began investigating the option of outsourcing its parts operations in early 2015. This three-year pilot offers an opportunity for staff to explore eliminating inventory ownership and the need for staff to manage inventory.In this pilot, inventory will be reduced an estimated $183k in the first year,assuming 70%of the inventory is non-obsolete. Napa will purchase this portion of current inventory and assist in addressing the remaining 30%surplus and obsolete inventory to ensure the City recovers the maximum possible value. The elimination of time and costs associated with owning inventory and inventory management, shrinkage, and obsolescence will allow staff to focus on maintaining vehicles and equipment, meeting regulatory demands, replacing vehicles in a timely manner and managing vendor contracts outside of parts/supplies. Procurement Fleet and Purchasing staff time will be reduced and administrative costs lowered as fewer purchase orders, receipts, invoices and accounts payables will need to be processed. Napa will utilize the purchasing contracts they have in place, becoming the sole parts/supplies vendor. Napa’s TAMS parts management software fully integrates with AssetWorks software,allowing contract staff to issue parts directly to work orders, handle all paperwork reconciliation and pay vendors directly. In turn, Napa will bill the City monthly for all parts/supplies purchased. City of Palo Alto Page 3 Upon entering into contract with Napa, it is the City’s intent to temporarily freeze one Fleet Services Coordinator position and eliminate one hourly Stock Clerk position,resulting in salary savings of approximately $135k annually. At the end of the pilot’s first year, staffing needs will be evaluated to determine if the Fleet Services Coordinator position should be reclassified or could be eliminated. A cost analysis will be conducted annually for the term of the pilot to determine cost savings in parts/supplies and in salaries and benefits. Bid Process The City’s Municipal code, PAMC section 2.30.360 (j) identifies the process that allows the use of intergovernmental cooperative purchasing agreements. Bids for this purchase were obtained through the approved cooperative group, National Joint Purchasing Alliance (Attachment A). A Request for Quotation (RFQ) was sent to National Joint Powers Alliance and a proposal was received February 3, 2016 from Napa (Attachment B). Staff recommends that Finance Committee recommend this pilot with Napa to City Council for approval to provide on-site fleet parts and inventory services, including contract personnel to procure and manage the auto parts/supplies inventory (Attachment C). Resource Impact This is the first attempt to contract with a vendor for parts operations. In Fiscal Year 2015 staff costs to operate the parts/supplies section of fleet was approximately $283k. The contract with Napa will provide the same services for $171k annually.Although Napa charges a 10%markup on all parts/supplies, it is anticipated that their purchase power and multiple vendor contracts will benefit the City via lower parts costs. Policy Implications The approval of this recommendation to retain the services of Napa is consistent with existing City Policies, including approval from the Fleet Review Committee (FRC) on December 17, 2015.Authorization of this contract does not present any change to the existing policy. Environmental Review The proposed contract is not a project subject to environmental review. City of Palo Alto Page 4 Attachments: ·Attachment A -Operating Expense Quote (XLS) ·Attachment B -Proposal (PDF) ·Attachment C -Sample Contract (DOC) ·Attachment D -NJPA Acceptance and Award (PDF) Location: Palo Alto Option B - 2 Employees Estimated Operating Expenses Monthly % to Annual % to Projection Performa SALES Performa SALES PURCHASES 44,821 537,854 Parts Bill For Customer Less Cost of Sales 40,339 90.00%484,069 90.00% Sales Less Cost 0 0.00%0.00% Less Handling Chrg 0 0.00%0.00% GROSS PROFIT 4,482 10.00% 53,785 10.00% Advertising 0 0.00%0.00% Net Salaries 0 0.00%0.00% Travel 0 0.00%0.00% Sales - Misc.0 0.00%0 0.00% G.M. Travel 0 0.00%0.00% TOTAL SALES EXP.0 0.00%0 0.00% SALARIES - EXEC.448 1.00%5,376 1.00% PAYROLL - Acct. 453 1.01% 5,432 1.01%Fixed Expense @ 1.01% of sales, Accounting & Data Processing Fee -General Office 221 0.49% 2,646 0.49%Fixed Expense @ .49% of sales -Counter - J. S.8,667 19.34%104,000 19.34%1 Store Manager, 1 parts clerk -Delivery 0 0.00%0 0.00% TOTAL PAYROLL 9,340 20.84%112,079 20.84% Bad Debts 0 0.00%0.00% data proc 0 0.00%0.00% Delivery - Ins 0 0.00%0 0.00%Delivery Trucks, Insurance Premium Maintenance 0 0.00%0 0.00%Vehicle Repairs, Fuel Truck Deprec.0 0.00%0 0.00%Delivery Trucks with a Lease/Depreciation Payment Dep- F. & F.0 0.00%0.00% Empl. Ben. - Pen.450 1.00% 5,400 1.00%Fixed Expense @ 1% of sales -Other 1,020 2.28%12,240 2.28%Mainly Group Insurance Premiums Freight & Postage 200 0.45%0 0.00%Freight Charges Incurred by this Operation. Insurance 900 2.01%10,800 2.01%Insurance - General and Worker's Comp Interest 0 0.00%0.00% Legal & Pro.0 0.00%0.00% L.H.&W.0 0.00%0.00% Rent 0 0.00%0 0.00% Sta. & Shipping 0 0.00%0 0.00%Stationary / Shipping Supplies Stock Loss 0 0.00%0 0.00%Restocking Charges for OE Parts Store 0 0.00%0 0.00%Misc. Store Expenses (Fax Machine, Fax Paper, Printer Ribbons etc.) Taxes (Not Income)1,020 2.28%12,240 2.28%Payroll Taxes for Employee's @ this Location Telephone 0 0.00%0 0.00% Travel (Not Sales)0 0.00%0.00% Tams 1,050 2.34%12,600 2.34%1 TAMS Computer & Equipment Lease/Depreciation Expense, Maint./Support Fee's & Tams Misc. Expenses Training 0 0.00%0.00%Training Materials for NAPA Employee's TOTAL MISC. EXP.4,640 10.35%53,280 9.91% Executive Fees 0 0.00% TOTAL EXPENSES 14,428 32.19%170,735 31.74% Operating Income -9,946 -22.19%-116,949 -21.74% Misc. Inc: Disc.(net)0 0.00%0.00% Others 14,228 31.74%170,736 31.74% NAPA ROI 4,282 9.55%53,787 10.00%Net Profit Before Tax Location Annual Rate Monthly RateHourly Rate 1 Store Manager Store Manager 58,000$ Salary 4,833$ 1 Clerk Asst. Manager 46,000$ Hourly 3,833$ Asst. Manager Hourly -$ Asst. Manager Hourly -$ Sub Total 104,000$ 8,667$ Counter Pro -$ Hourly -$ Counter Pro -$ Hourly -$ Counter Pro -$ Hourly -$ Counter Pro Hourly -$ Counter Pro Hourly -$ Counter Pro Hourly -$ Pickers/Stockers Hourly -$ Pickers/Stockers Hourly -$ Pickers/Stockers Hourly -$ Counter Trainee -$ Hourly -$ Counter Trainee Hourly -$ Sub Total -$ -$ Total 104,000$ Driver -$ Hourly -$ Total -$ -$ Accounting -$ -$ Fixed Expense @ 1.01% of sales, Accounting & Data Processing Fee General Office -$ -$ Fixed Expense @ .49% of sales Total -$ -$ Total FTEs 104,000$ 8,667$ Payroll Calcualtor Attachment B City of Palo Alto NAPA IBS On-Site Proposal City of Palo Alto Subject: NAPA IBS To: City of Palo Alto Raul Juarez: February 3, 2016 Genuine Parts Company/NAPA Integrated Business Solutions Division appreciates the opportunity to submit the following proposal to become your contractor for: an on-site Vendor Managed Inventory solution. We have attempted to make our proposal as complete, informative and thorough as possible; however we remain open and ready to discuss any area of the proposal that may require further clarification. As an introduction, Genuine Parts Company, founded in 1928, is a service organization engaged in the distribution of automotive replacement parts, industrial replacement parts, office products, and electric/electronic materials. The company serves numerous private and public sector customers from more than 6, 100 operations and has approximately 39,300 employees. The Automotive Parts Group I NAPA, is the largest division of Genuine Parts Company, distributes automotive replacement parts, accessory items, and service items. This Group operates 62 NAPA Distribution Centers, 3 Rayloc Manufacturing Facilities, 2 Altrom Import Parts Distribution Centers, and 1 Traction Heavy Vehicle Parts Distribution Centers and serves approximately 6, 100 NAPA Auto Parts stores throughout the United States. The Group also includes UAP Inc. with 15 Distribution Centers and 244 NAPA and Heavy Duty Vehicle Facilities in Canada that serve 680 wholesalers. In addition, the Automotive Parts Group includes Auto TODO with 17 Auto TODO Facilities in Mexico. The Automotive Parts Group I NAPA operates, oversees, and supports the Integrated Business Solutions Division. Our Major Products: Automotive, Light Truck Replacement Parts Heavy Duty Truck Equipment Repair Parts Farm and Marine Maintenance Supplies Integrated Business Solutions Division Tools and Equipment Automotive and Truck Accessories Paint and Refinishing Products NAPA AUTOTECH Training Programs This Proposal is fully intended to meet the Goals and Objectives of City of Palo Alto. 1 Pll.llTS. PROOUCllv:T The reduction of total cost to City of Palo Alto has been proven by many successful operations currently in partnership with Genuine Parts Company/NAPA; this includes savings for having one vendor and writing one check to one vendor. Improved pricing and delivery service will be top priority. As demonstrated in our pricing model City of Palo Alto will realize a Jobber Net I Cost plus +10% NAPA I City of Palo Alto: Pricing Plan Summary NAPA Product Cost Billed to Customer at a 10 % gross profit Non-NAPA Product Cost Billed to Customer at a 10 % gross profit Operational Cost Billed t o customer at actual cost • NAPA will agree to purchase NAPA Inventory or existing inventory from City of Palo Alto that has a purchase history over the last twelve months and is considered non-obsolete ........ or, NAPA would agree to work down existing inventory levels at 0 cost and replenish with stock orders that are the ownership of NAPA /BS. • All inventories for the City of Palo Alto /BS will be procured and owned by NAPA including tires, bulk fluids, and automotive, truck parts, or equipment until such time as the item(s) are procured to a City of Palo Alto work order. Overall improvement of City of Palo Alto satisfaction comes with the dedicated staff and resources of our NAPA IBS team. NAPA has a total on site warehouse inventory value of $15,000,000.00. This does not include our other Western Division Centers which brings the total to over 200 Million in inventory Reduction in ordering and delivery time comes in several ways, first by improved on hand inventory. Our service reduces the down/ wait time for parts and supplies. Decrease losses in shelf life and obsolescence will be the result of dedication to have the right inventory in place at the NAPA IBS City of Palo Alto location. NAPA Auto Parts team will adjust inventory as needed or requested at the IBS location. 2 Pt.RTS PROOUC'IMT Increase in inventory accountability and security, will be provided by the state of the art inventory control systems in the TAM'S computer system. NAPA Auto Parts processes insure accurate bar scan order pulling, and delivery tracking. Genuine Parts Company, NAPA Auto Parts will look forward to a long partnership with City of Palo Alto. Executive Summary We understand this is a program in the City of Palo Alto Fleet Maintenance facility to provide an on-site fleet part and inventory program which we refer to as Integrated Business Solutions. The expectations of the program will require parts needs including staffing for the NAPA on site City of Palo Alto location in the most cost effective manner to provide optimum service to City of Palo Alto and assist in reducing costs through improved parts pricing and increase in productivity and efficiency. • City of Palo Alto NAPA IBS would stock identified supplies and parts in quantities based on forecasted usage model • City of Palo Alto NAPA IBS will operate 5 days a week from an embedded location within the City of Palo Alto facility • City of Palo Alto NAPA IBS will auto replenish its local inventory based on usage and/or forecast City of Palo Al to is currently operating in a capacity today of a current multi-vendor base. City of Palo Alto can transition the procurement of parts to fewer or a single supplier, operating costs will be reduced through volume discount and reduced administrative burden. This consolidated model would be an immediate benefit realized by both City of Palo Alto and the NAPA IBS. Once engaged, together we can continue to explore additional options in reducing operating costs and parts acquisition costs. As discussed previous, improved pricing and service will be top priority. As demonstrated in our pricing model City of Palo Alto will realize a Jobber Net +10% Genuine Parts Company/NAPA 's sweet spot is managed inventory. There are no other vendor's who have the influence, availability, total inventory, and logistics that NAPA has in this market nationwide. City of Palo Al to maintenance facilities have a need to repair equipment and vehicles as quickly as possible to minimize the amount of time they are out of service and to maximize the efficiency of the repair technicians. City of Palo Alto 3 requires a reliable and complete source of repair parts to service the needs of the repair facility efficiently. NAPA will provide a well-trained staff that is experienced and knowledgeable, in order to meet or exceed the efficiency objectives of City of Palo Alto. NAPA has alliances formed with outside vendors in order to provide the best possible service and the lowest landed acquisition cost for City of Palo Alto. Genuine Parts Company/NAPA's primary objective is to reduce costs by enhancing and improving the efficiency and service levels of the fleet management division. One vendor -one check. We are aware of the, challenges, and milestones outlined in this Proposal and the following proposal is based on the information provided by City of Palo Alto. We are willing to enter into an agreement with City of Palo Alto and have attempted to make our response as complete and thorough as possible. Genuine Parts Company has the most experience operating Integrated Supply operations with our first location beginning in 1991. By having over 370 Integrated Store locations nationally, NAPA has been in a unique position to handle millions of dollars in automotive and non-automotive products for many of our customers. Our customers consist of many Fleets, Utility Companies, City/County facilities, other Government facilities, Car Dealers, Large Truck Fleets, Manufacturers, and many others. All members of our project team are experienced in implementing and managing supply operations at various levels. All members possess many years of experience with NAPA and dealing with customers from the senior management level to automotive technicians. Description of Services Genuine Parts Company/NAPA propose to provide a complete on-site parts operation of NAPA -owned inventory based primarily on the history file of the existing stock, required inventory concession stocking list, and equipment in fleet. NAPA will provide the personnel and management to properly staff the on-site IBS location . The number of people and/or scheduling will be mutually agreed upon between the parties. Hours of Operation Monday thru Friday Cost for additional services: will be billed at current or overtime rates in accordance with Federal, State and Local laws. 4 ' Prompt Payment Payment terms are net 25th. City of Palo Alto Goals Genuine Parts Company/NAPA understands the primary goal of the fleet. NAPA certainly understands the price of a part is not the actual cost of a part, the list below is some of the items we can reduce from the current price of a part. ·Add RFP or Bid Cost ·Add PO Cost, All Transaction Cost •Add Accounting, Check Cost •Add Inventory and Inventory Caring Cost •Add Shrinkage and Obsolete Inventory Cost •Add Employee Cost •Add Freight Cost •Add Return Cost ·Add Lost Cores and Warranties ·Add Lost Productivity -While Waiting on Parts • NAPA believes having the right inventory in place and available will improve services to the end customer. • This will improve the overall customer satisfaction rate. • Our goal by having the right inventory will reduce ordering and delivery time. This will decrease the customer service time. • NAPA managed inventory approach; Marketplace Inventory Classification (MIC) will decrease losses due to shelf life and obsolete parts. • "MIC" is an award winning program proven to increase inventory accountability. NAPA may provide a delivery driver as needed or requested. The intent of our proposal is to show The City of Palo Alto team that our NAPA Auto Parts Integrated Business Solutions team is uniquely qualified to tackle the challenge of managing the parts system for current and future state of City of Palo Alto. Our proposal will focus on the key differentiators that make NAPA IBS a great strategic partner with City of Palo Alto: Centralized inventory management through the NAPA IBS Network Proven cost savings and efficiency results with over 370 vendor managed inventory sites nationally __ ,..._.-• National network of 62 master distribution centers offering same day or next day delivery on over $1 billion in parts inventory • Centralized billing and accounting • On-site, On-line and product specific training 5 • IBS Network of stores with access to 1,300+ non-NAPA and OE vendors to ensure City of Palo Alto has a basis of comparison on price, quality, and service with other fleet organizations. • NAPA Auto Parts is an absolute rock-solid, financially sound vendor with over 90 years in the parts distribution business with Genuine Parts Company 20+ years of experience in the vendor-managed inventory business for fleet operations from 50 to 13,000 vehicles. • For direct supply, we have the Fresno Distribution Center that provides daily delivery to NAPA City of Palo Alto IBS site .... meaning we are able to provide fast delivery service to the IBS site. • The ability to also leverage the resources and strengths of Genuine Parts entire supply chain: automotive, industrial, office products and much more. Through NAPA and GPC, City of Palo Alto has direct access to 445,000 light, medium, HD parts and accessories. Through our NAPA IBS sites, City of Palo Alto can leverage over 1,300 non-NAPA distributors and manufacturers. Cost of Proposed Services The Parts operation would bill the following: Operational Cost To achieve this goal, NAPA. will bill City of Palo Alto monthly, or as requested: All Operational Expenses associated with City of Palo Alto will be billed transparently. • Any and all cost and expenses associated with the operation of the On Site Store or the vehicles used by NAPA in the operation of the On Site Store. Including, but not limited to salary, benefits and all insurance. • NAPA will provide a monthly Operating Statement provided by NAPA Accountant services. • Local COLA annual wage changes will be reviewed and agreed upon by both parties. All fees and expenses will be agreed upon by both parties: NAPA and City of Palo Alto. Additional overtime expense incurred as a result of peak or emergency response for required hours of operation outside normal business hours will be billed as a separate line item. Cost Plus A GP on standard parts will be 10 % gross profit • A fixed markup will be used from cost; the goal is to achieve a net of 10 % profit. Cost divided by .9 to achieve price. Pricing will be set at Jobber Net store cost, minus any manufacture rebates, if applicable to achieve NET cost. Or in the case of buyouts, it will be lowest invoice cost. .. 6 \ The vision and goal is to provide a cost effective Vendor Managed Inventory system. Emergency Operations Support Emergency services NAPA understands that the needs of maintaining the fleet cannot always be predicted . There may be off schedule needs and emergency situations. NAPA agrees to have the on-site staff fill scheduled overtime events and to make every effort to have staff available for emergency callout in the requested time frame. A current list of names and contact numbers on the NAPA emergency list will posted and copies kept current with key fleet managers. City of Palo Alto fleet will have NAPA and its staff members as its partner in any emergency. The uniqueness of this proposal is that it really calls for a perfect balance of supply chain expertise, pricing, accountability, fast service, and inventory management experience in a fleet environment. This is more than a simple price ... it is a strategic economic, supply and productivity partnership. We hope after you review our proposal that you'll consider NAPA Auto Parts IBS as a strategic partner to work with City of Palo Alto for many years to come. We are committed to make this the model solution. Please feel free to contact us at any time. Regards, Jim Hardesty NAPAIBS Western Division Genuine Parts Company 1422 N Batavia Orange, CA 92867 714-412-1098 7 NJPA CONTRACT Attachment C INTEGRATED SUPPLY AGREEMENT BY AND BETWEEN GENUINE PARTS COMPANY AND ____________________ NJPA CONTRACT INTEGRATED SUPPLY AGREEMENT BY AND BETWEEN GENUINE PARTS COMPANY AND THIS INTERGRATED SUPPLY AGREEMENT (this “Agreement”) is made by and between GENUINE PARTS COMPANY, a Georgia corporation (d/b/a NAPA Auto Parts) (“NAPA”), and , (“CUSTOMER”), to be effective as of the day of , 20 (the “Effective Date”). W I T N E S S E T H Pursuant to a competitive bidding and selection process by the National Joint Powers Alliance (hereinafter, “NJPA”), a Minnesota-based Service Cooperative created by Minnesota Legislative Statute 123A.21, NAPA established a contract on JULY 22nd, 2015 with NJPA to sell certain auto, truck, bus, and equipment parts as well as to provide Integrated Business Solutions (IBS) to its members (hereinafter, “Master Agreement”); and By becoming a participating member of NJPA (hereinafter, “Member”), the ___________________and its related entities (hereinafter, “User Agencies”) are authorized to utilize the pricing and incentives available to NJPA Members set forth in the Master Agreement; and NAPA and NJPA executed contract #061015, (hereinafter, “NJPA Contract”), attached hereto as Exhibit C, to establish a source of supply for certain auto, truck, and bus parts as well as to provide Integrated Business Solutions services; and CUSTOMER desires to become a User Agency under such NJPA Contract and desires to receive integrated business solutions services from NAPA; and CUSTOMER AND NAPA agree that the NJPA Contract is a vehicle by which CUSTOMER may contract directly with NAPA for parts and services, but that the terms and conditions of this Agreement and not the terms and conditions of the NJPA Contract shall govern the relationship of the parties; and NAPA desires to provide integrated business solutions services and to establish inventories in CUSTOMER’s locations to service the fleet parts needs of CUSTOMER and to serve as the primary supplier of automotive replacement parts and other supplies and/or equipment (the “Inventory”) to serve the needs of CUSTOMER; and NJPA Contract CUSTOMER desires to provide space for the Inventory on the premises of CUSTOMER for use by NAPA (“On Site Store”) and agrees that NAPA will be its primary supplier of the Inventory pursuant to the terms herein. NOW THEREFORE,in consideration of the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereto agree as follows: AGREEMENT 1.DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings set forth below: (a)Primary Supplier shall mean the parts supplier that provides a minimum of ninety percent (90%) of the Inventory needs of CUSTOMER. (b)NAPA Owned Store shall mean an auto parts store lawfully using the tradename or trademark “NAPA” which is wholly owned by NAPA. (c)NAPA Jobber shall mean an auto parts store lawfully using the tradename or trademark “NAPA” with respect to which NAPA maintains no ownership interest. 2.CUSTOMER’S CURRENT LOCATIONS. NAPA will establish On Site Store(s) at the CUSTOMER’S following location(s): Manager: Additional locations of the CUSTOMER may be added to this Agreement but only by a written amendment executed and agreed to by both the CUSTOMER and NAPA. 3.TERM. This Agreement shall begin the date this Agreement is fully executed and shall end when the NJPA Contract terminates or expires or when terminated earlier in accordance with the applicable terms and conditions stated herein. As the NJPA Agreement is renewed or extended, this Agreement may be renewed or extended for a period of time equal to or shorter than the period of time the NJPA Agreement is renewed or extended upon the mutual written agreement of the Parties. This Agreement shall terminate automatically upon the termination, for any reason, of the NJPA Contract or the Master Agreement. Notwithstanding the foregoing, either party may terminate this Agreement at any time for its convenience by giving the other party sixty (60) days prior written notice of such termination. NJPA Contract 4.DUTIES AND RESPONSIBILITIES OF NAPA. NAPA shall have the following duties and responsibilities during the term of this Agreement: (a)NAPA will operate the On Site Store(s) and provide the Inventory to CUSTOMER’s now existing locations. NAPA shall provide all personnel required to operate the On Site Store(s). (b)In those circumstances when delivery is required by CUSTOMER, NAPA will provide parts to CUSTOMER’s locations on a daily route basis. In addition, NAPA will accelerate delivery on those items CUSTOMER requires to be delivered on an expedited basis. NAPA will make all reasonable efforts to ensure prompt delivery to the CUSTOMER’s location(s) requesting part(s). (c)NAPA shall provide all computers and reports necessary to monitor monthly expenses as they pertain to the daily operation of the On Site Store(s). NAPA shall provide computer ordering and cataloging to each On Site Store. (d)NAPA shall provide a profit and loss statement of the parts operations to the CUSTOMER on approximately the 25th of each month for each On Site Store. (e)NAPA shall provide back-up emergency service during non-working hour contingencies. This overtime expense (calculated at time and one half) will be charged on a cost basis to CUSTOMER, and must be pre-approved by CUSTOMER. The parties shall mutually agree upon the pre-approval process for such emergency situations. NAPA will provide a list of personnel, including telephone numbers, who will respond to emergency service requests. 5.DUTIES AND RESPONSIBILITIES OF CUSTOMER. CUSTOMER shall have the following duties and responsibilities during the term of this Agreement: (a)CUSTOMER shall provide, at its sole expense, usable space for NAPA’s On Site Store(s) and the Inventory. CUSTOMER shall provide access to restroom facilities for NAPA employees. Further, CUSTOMER shall furnish, at its sole expense, all utilities for the On Site Store(s) including: water, sanitation, sewer, light, telephone, heat, gas, electricity, power, fuel, janitorial and all other utilities and services rendered or delivered to the On Site Store(s) whatsoever. CUSTOMER shall provide NAPA a safe work environment that is free from hostility, violence, or discrimination. NAPA reserves the right to terminate the contract immediately should NAPA encounter a hostile, violent, discriminatory, or unsafe work environment. (b)CUSTOMER intends to use NAPA as its Primary Supplier of the Inventory under this Agreement. CUSTOMER reserves the right to purchase any item outside this Agreement where it is determined to be more economical or timely so long as the purchase of aforesaid part or parts does not result in NAPA no longer being CUSTOMER’s Primary Supplier in which case NAPA may terminate this Agreement. NJPA CONTRACT (c)Each On Site Store location shall be appropriately secured or otherwise maintained separate and apart from the business of CUSTOMER. There shall be no intermingling of CUSTOMER’s parts or other inventory with NAPA’s parts or inventory. Access to the secured On Site Store(s) shall be restricted to NAPA employees and authorized NAPA representatives only. CUSTOMER’S employees, contractors or agents shall not be permitted to enter the secured On-Site Store area unless accompanied by a NAPA employee or other authorized NAPA representative. (d)CUSTOMER shall, at all times during the term of this Agreement, at CUSTOMER’S sole expense, maintain in good condition and repair (so as to prevent any damage or injury to NAPA’s employees, the Inventory or other personal property located in the On Site Store(s)) the roof, exterior walls, foundation, and structural portions of the On Site Store(s) and all portions of the electrical and plumbing systems lying outside of the On Site Store(s) but serving the On Site Store(s). (e)CUSTOMER shall provide information regarding fleet changes to NAPA as soon as possible. Fleet changes include but are not limited to the removal of types of vehicles from the fleet and the addition of new vehicles to the fleet. 6.ALTERNATIVE SUPPLIERS. Each On Site Store may be serviced by a NAPA Owned Store or a NAPA Jobber. CUSTOMER acknowledges that whether it will be serviced by a NAPA Owned Store or a NAPA Jobber will be determined by NAPA, in its sole discretion, and that if CUSTOMER is to be serviced by a NAPA Jobber, then such NAPA Jobber must evidence its desire to abide by the terms of this Agreement by entering into an Assignment in the form of Exhibit A hereto. 7.PAYMENT TERMS/PRICING. NAPA shall invoice the CUSTOMER for all Inventory purchased pursuant to this Agreement on a monthly basis according to the pricing plan below. CUSTOMER agrees to pay the entire amount of all statements received from NAPA by the 25th day of the month following receipt of any such statement. If CUSTOMER has not paid the entire amount of all statements received from NAPA within 10 days of 25th day of the month following receipt of such invoice, CUSTOMER shall be put on COD until such amount is paid in full. No prompt pay discount is available under this Agreement. There are two pricing options available to CUSTOMER. The pricing option for this Agreement must be indicated by CUSTOMER initials, below. PRICING OPTION #1 CUSTOMER INITIALS: _______ The overall goal of CUSTOMER’s pricing plan is to achieve a 10% percent (10%) net profit for NAPA (the “Net Profit Target”) by adjusting the pricing of two elements: (a)Product Costs. The pricing of the Inventory to be supplied to CUSTOMER by NAPA pursuant to this Agreement. Product Costs shall NJPA Contract be further divided into “NAPA Product Costs,” which is the pricing of NAPA supplier manufactured products, and “Non-NAPA Product Costs,” which is the pricing of products which have not been manufactured by NAPA suppliers but which have been acquired for CUSTOMER by NAPA pursuant to this Agreement. (b)Operational Costs. Any and all costs and expenses associated with the operation of the On Site Store(s) or the vehicles used by NAPA in the operation of the On Site Store(s), including, but not limited to, salary and benefits payable to NAPA employees at the On Site Store(s), worker’s compensation benefits and insurance, unemployment insurance, personal property insurance for the On Site Store(s) and Inventory, any deductible for losses covered under the personal property,automobile liability or general liability insurance policies of NAPA and all equipment supplied by NAPA shall be borne by NAPA and are already factored into the pricing profile of products sold under this Agreement. An example of a profit and loss statement reflecting such costs and expenses is attached hereto as Exhibit B. PRICING PLAN SUMMARY NAPA Product Costs Non-NAPA Product Costs Billed to CUSTOMER at 9071 NJPA Profile Price Billed to CUSTOMER at a 25% gross profit rate Operational Costs Paid entirely by NAPA Net Profit Target Amounts will be refunded or charged based on failure to achieve an overall 10% net profit for the previous month. NAPA Product Costs shall be billed to CUSTOMER based on a “9071 NAPA Pricing Profile” which has been provided to CUSTOMER in connection with this Agreement. Non-NAPA Product Costs shall be billed by NAPA to yield a gross profit of twenty five (25%). All Operational Costs shall be borne by NAPA. Sales at each On Site Store location will be reviewed after the first ninety (90) days of operation and on a month by month basis thereafter to ensure a ten percent (10%) net profit for NAPA. If monthly sales at each On Site Store, independently as opposed to in the aggregate, are producing more than a ten percent (10%) net profit for NAPA, NAPA will pay to CUSTOMER, via a refund check, the overage. Conversely, if NAPA’s net profit for the preceding month is less than ten percent (10%), NAPA will bill CUSTOMER for the deficiency. CUSTOMER and NAPA mutually agree that Customer’s maximum payment obligation pursuant to this profit guarantee shall be set at $_________; and Customer has encumbered such amount to cover this potential liability. The parties agree to mutually work together to adjust the amount if such amount must be increased during the Term of the contract. NJPA Contract CUSTOMER INITIALS _______ In addition, NAPA may use any sub-contractor for the procurement of “outside” purchases or services (i.e., those parts or services not traditionally stocked or performed by NAPA), and CUSTOMER will be billed an additional charge for any such purchases so as to yield NAPA a twenty five percent (25%) gross profit on such purchases. CUSTOMER must provide pre-approval in writing for such outside purchases. PRICING OPTION #2 CUSTOMER INITIALS: _______ The overall goal of CUSTOMER’s pricing plan is to achieve a ten (10%) net profit for NAPA (the “Net Profit Target”) by adjusting the pricing of two elements: (a)Product Costs. The pricing of the Inventory to be supplied to CUSTOMER by NAPA pursuant to this Agreement. Product Costs shall be further divided into “NAPA Product Costs,” which is the pricing of NAPA supplier manufactured products, and “Non-NAPA Product Costs,” which is the pricing of products which have not been manufactured by NAPA suppliers but which have been acquired for CUSTOMER by NAPA pursuant to this Agreement. (b)Operational Costs. Any and all costs and expenses associated with the operation of the On Site Store(s) or the vehicles used by NAPA in the operation of the On Site Store(s), including, but not limited to, salary and benefits payable to NAPA employees at the On Site Store(s), worker’s compensation benefits and insurance, unemployment insurance, personal property insurance for the On Site Store(s) and Inventory, any deductible for losses covered under the personal property,automobile liability or general liability insurance policies of NAPA and all equipment supplied by NAPA. An example of a profit and loss statement reflecting such costs and expenses is attached hereto as Exhibit B. PRICING PLAN SUMMARY NAPA Product Costs Non-NAPA Product Costs Billed to CUSTOMER at a 10% gross profit rate Billed to CUSTOMER at a 10% gross profit rate Operational Costs Billed to CUSTOMER at cost Net Profit Target 10% net profit for NAPA Both NAPA Product Costs and Non-NAPA Product Costs shall be set by NAPA to yield a gross profit of ten percent (10%). Operational costs will be charged to NJPA Contract CUSTOMER at cost, with all such charges for Operational Costs to be included in CUSTOMER’s monthly billing statement. CUSTOMER will be billed at the end of each month for operational costs on an “in arrears” basis. CUSTOMER and NAPA mutually agree that Customer’s maximum payment obligation pursuant to this profit guarantee shall be set at $_________; and Customer has encumbered such amount to cover this potential liability. The parties agree to mutually work together to adjust the amount if such amount must be increased during the Term of the contract. CUSTOMER INITIALS ______ In addition, NAPA may use any sub-contractor for the procurement of “outside” purchases or services (i.e., those parts or services not traditionally stocked or performed by NAPA), and CUSTOMER will be billed an additional charge for any such purchases so as to yield NAPA a ten percent (10%) gross profit on such purchases. CUSTOMER must provide pre-approval in writing of such outside purchases. 8.INSURANCE. (a)CUSTOMER is a state agency and is self-insured for liability and workers compensation through the Department of Administrative Services. CUSTOMER shall provide to NAPA, upon execution of this Agreement, a copy of all Certificates of Insurance evidencing the insurance coverages above. (b)NAPA shall maintain during the term of this Agreement worker’s compensation insurance coverage for its employees located at the On Site Store(s) in amounts required by law. In addition, NAPA shall maintain personal property insurance during the term of this Agreement in an amount sufficient to cover any loss or damage to the Inventory and any other personal property owned by NAPA that is located at the On Site Store(s). (c)The insurance policies in this section required to be held by each party shall contain a waiver of subrogation against the other party. (d) Neither Customer nor the Department of Administrative Services shall procure or provide insurance for NAPA property or Inventory. 9.NO LIENS. (a)CUSTOMER warrants that it shall take no action, including but not limited to the granting of a security interest, or fail to take any action, which would operate or does operate in any way to encumber the Inventory of NAPA located in the On Site Store(s). (b)CUSTOMER grants NAPA a power of attorney to execute such documents as are necessary to protect NAPA’s interest in the Inventory on consignment on CUSTOMER’s premises, including any UCC-1 statements. NJPA Contract 10.PERSONNEL. NAPA and CUSTOMER shall attempt in good faith to mutually agree upon the identity of the persons that will be selected to staff the On Site Store(s). In the event that CUSTOMER for any reason wishes to remove or replace any of the NAPA personnel in the On Site Store(s), the parties will attempt to resolve CUSTOMER’s request by mutual agreement. 11.WARRANTY DISCLAIMER. All automotive parts supplied pursuant to this Agreement are subject to the terms of written warranties provided by the manufacturer of each part, and NAPA shall use reasonable commercial efforts to assist the CUSTOMER in processing all warranty claims that the CUSTOMER may have against a manufacturer. The manufacturer’s warranty will be the sole and exclusive remedy of the CUSTOMER in connection with any claims concerning the parts supplied to CUSTOMER pursuant to this Agreement. ALL OTHER WARRANTIES, BOTH EXPRESS AND IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY EXCLUDED. Copies of the manufacturers’ warranties are available to CUSTOMER upon request. 12.TERMINATION FOR CAUSE. This Agreement may be terminated immediately, unless otherwise stated in this Section 12, by either party for cause: (a)In the event that the other party fails or refuses to pay any amounts due under this Agreement and such failure continues for ten (10) days; (b)In the event that the other party fails or refuses to perform any other obligation required under this Agreement, and such failure or refusal continues for thirty (30) days after written notice thereof; or (c)In the event that the other party files any bankruptcy petition, has any bankruptcy petition filed against it, makes any assignment of its assets for the benefit of creditors, or admits in writing its inability to pay its debts as they become due. 13.EFFECT OF TERMINATION. Immediately upon termination of this Agreement by either party for any reason: (a)All duties, responsibilities and other obligations of each party hereunder shall terminate, except for the payment of any amounts due and owing to NAPA at the time of termination. (b)Each party shall immediately return to the other party all equipment, software, books, records, tools and any other personal property owned by the other party that are in such party’s possession. CUSTOMER shall allow NAPA full and unrestricted access to enter into the On Site Store(s) and immediately remove all equipment and other items of personal property owned by NAPA without being deemed guilty of trespass or NJPA Contract any other violation of the law. All inventory records, sales history, sales analysis and all other information generated by NAPA under this Agreement will be returned to CUSTOMER. Nothing contained in this Section shall be deemed a waiver of, or in any other manner impair or prejudice, any other legal rights that either party may have against the other party for any breach of this Agreement. The provisions and obligations of Sections 9, 11, 15, 18, and 20 shall survive the termination of this Agreement for any reason. 14.BUY-BACK OF INVENTORY. Upon termination, expiration, or non- renewal of the contract,NAPA shall have the option to require CUSTOMER to purchase all non-NAPA branded Inventory, and CUSTOMER shall have the option to purchase all NAPA branded Inventory, owned by NAPA and located in the On Site Store(s) at NAPA’s current acquisition cost. [The parties may negotiate a “not to exceed amount”, if CUSTOMER requires it for budgeting purposes.] CUSTOMER INITIALS: _______ 15.CHANGE OF CONTROL. NAPA may unilaterally terminate this Agreement by giving thirty (30) days written notice to CUSTOMER upon the occurrence of any one or more of the following events: (a)A change in the management or ownership of CUSTOMER; (b)A sale, lease, assignment or other transfer of CUSTOMER’S business or assets, whether through a stock purchase, merger, asset purchase, or other similar transaction, of at least a ten percent (10%) interest therein. 16.LANDLORD CONSENT AND WAIVER. If CUSTOMER does not own, in unencumbered fee simple title, all property upon which the On Site Store(s) is/are located, CUSTOMER agrees to acquire from each Landlord or Mortgagee a fully executed Landlord Consent and Waiver which is attached here to as Exhibit C. The Landlord Consent and Waiver(s) shall be returned to NAPA prior to the commencement of operations on such On Site Store(s). 17.INDEMNIFICATION. NAPA shall be responsible for and shall indemnify and hold CUSTOMER harmless from and against all damages, claims or demands that may, during the term of this Agreement, arise or be occasioned by the negligent or intentional acts of NAPA or NAPA’s employees. 18.NOTICES. Whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be hand-delivered in person or sent via facsimile, by overnight mail through a reputable service, or by certified mail, return receipt requested, to the addresses set forth below: As to NAPA: NJPA Contract Attn: Telephone: () Facsimile: () As to CUSTOMER: Attn: Telephone: () Facsimile: () Each such notice shall be deemed delivered (i) on the date of receipt if delivered by hand, overnight courier service or if sent by facsimile, or (ii) on the date three (3) business days after depositing with the United States Postal Service if mailed by registered or certified mail. Either party may change its address specified for this notice by giving the other party at least ten (10) days written notice in accordance with this Section 19. 19.FORCE MAJEURE / DAMAGE OF PREMISES. (a)Whenever performance by either party of any of their respective obligations (other than the obligation to make payment of money due hereunder) is substantially prevented by reason of any act of God, other industrial or transportation disturbance, fire, floods, riots, acts of enemies, national emergencies or by any other cause not within the reasonable control of such party and not occasioned by its negligence, then such performance shall be excused and the performance of such obligations under this Agreement shall be suspended for the duration of such prevention and for a reasonable time thereafter. (b)NAPA may terminate this Agreement immediately in the event that the CUSTOMER’s premises are damaged by any casualty, or such portion of the premises is condemned by any legally constituted authority, such as will make the CUSTOMER’s premises unusable for the On Site Store(s) in the reasonable judgment of NAPA. 20.SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective officers, directors, employees, successors and assigns. Notwithstanding the foregoing, the rights and obligations of either party to this Agreement may not be assigned without the prior written consent of the other party hereto, which consent shall not be unreasonably withheld. 21.AMENDMENTS. No amendment to this Agreement shall be binding on either party hereto unless such amendment is in writing and executed by both parties with the same formality as this Agreement is executed. NJPA Contract 22.NO WAIVER OF RIGHTS. No failure of either party hereto to exercise any power given such party hereunder or to insist upon strict compliance by the other party to its obligations hereunder, and no custom or practice of the parties in variance with the terms hereof, shall constitute a waiver of either party’s right to demand exact compliance with the terms hereof. 23.LIMITATIONS ON RIGHTS OF THIRD PARTIES. All obligations of a party under this Agreement are imposed solely and exclusively for the benefit of the parties, and no other person shall, under any circumstances, be deemed to be a beneficiary of such obligations. 24.INDEPENDENT CONTRACTOR. The parties hereto are independent contractors. Nothing in this Agreement shall create or shall be deemed to create any fiduciary relationship or the relationship of principal and agent, partnership, joint venturers or any other similar or representative relationship between the parties hereto. 25.CHOICE OF LAW. This Agreement shall be construed and interpreted under the laws of the State of Georgia. 26.COUNTERPARTS. This Agreement may be executed in one or more counterparts and each counterpart shall, for all purposes, be deemed an original, but all such counterparts shall together constitute but one and the same instrument. 27.SECTION HEADINGS. Section titles or captions contained herein are inserted only as a matter of convenience for reference and in no way define, limit, extend, or describe the scope hereof or the intent of any provision hereof. 28.SEVERABILITY. In the event any part of this Agreement shall be finally determined by a court of law to be illegal or unenforceable for any reason, then that illegal or enforceable part shall be severed from the Agreement, and the remaining terms shall continue in full force and effect. 29.ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties hereto and no prior representation, inducement, promise or agreement, oral or written, between the parties not embodied herein shall be of any force and effect. [Signatures Appear on Next Page] NJPA CONTRACT IN WITNESS WHEREOF, the parties hereto cause their hands and seals to be affixed by their duly-authorized representatives effective as of the date and year first above written. GENUINE PARTS COMPANY By: Name: Title: [Name of Company] By: Name: Title: NJPA CONTRACT EXHIBIT A ASSIGNMENT See attached. NJPA Contract ASSIGNMENT FOR GOOD AND VALUABLE CONSIDERATION,the receipt and sufficiency of which are hereby acknowledged, GENUINE PARTS COMPANY, a Georgia corporation (hereinafter “Assignor”), hereby assigns, transfers, sets over and delivers to [JOBBER/POP], a (hereinafter “Assignee”), all of Assignor’s rights, obligations and interest, including any options to renew or extend the contract term, in those certain location(s) as set forth below, as governed by the Integrated Supply Agreement dated by and between Genuine Parts Company and [CUSTOMER] (the “Integrated Supply Agreement”). Location(s): Assignee hereby accepts the assignment of the Integrated Supply Agreement, agrees to provide the services and perform all other obligations required to be performed by “NAPA” in said Integrated Supply Agreement at the times and in the manner set forth in said Integrated Supply Agreement, and shall be bound by all other terms, covenants and conditions of said Integrated Supply Agreement with regard to the location(s) set forth above, all with the same force and effect as if Assignee were originally named as “NAPA” therein. [CUSTOMER] hereby consents to the above assignment of the Integrated Supply Agreement on the terms set forth herein. The parties hereto agree that the assignment as set forth herein shall be effective as of midnight on . IN WITNESS WHEREOF, the undersigned have set their hands this day of , 20 . ASSIGNOR:ASSIGNEE: GENUINE PARTS COMPANY [JOBBER/POP] By: By: Name: Name: Its: Its: Agreed and acknowledged: [CUSTOMER] By: Name: Its: NJPA CONTRACT EXHIBIT B SAMPLE PROFIT AND LOSS STATEMENT See attached. NJPA CONTRACT EXHIBIT C NJPA CONTRACT See attached. Attachment D FORM D Contract Award RFP #061015 Formal Offering of Proposal (To be completed Only by Proposer) FLEET-RELATED MAINTENANCE EQUIPMENT, SUPPLIES, SERVICES, AND INVENTORY MANAGEMENT SOLUTIONS In compliance with the Request for Proposal (RFP) for FLEET-RELATED MAINTENANCE EQUIPMENT, SUPPLIES, SERVICES, AND INVENTORY MANAGEMENT SOLUTIONS, the undersigned warrants that I/we have examined this RFP and, being familiar with all of the instructions, terms and conditions, general specifications, expectations, technical specifications, service expectations and any special terms, do hereby propose, fully commit and agree to furnish the defined equipmenVproducts and related services in full compliance with all terms, conditions of this RFP, any applicable amendments of this RFP , and all Proposer's Response documentation. Proposer further understands they accept the full responsibility as the sole sou rce of responsibility of the proposed response herein and that the performance of any sub- contractors employed by the Proposer in fulfillment of this proposal is the sole responsibility of the Proposer. Company Name: Genuine Parts Company/NAPA Integrated Business Solutions (IBS) Date: June 10, 2015 Company Address: 2999 Circle 75 Parkway SE City: Atlanta State: _G~A ___ Zip: 30399 Contact Person: _J=-e=t"--t '"""K=u'""'"nt=z--------r---__,.~ Title: __ V~i=c=-e~P~re=-s~id=e=-n~t~N'--A"""P~A'--l=B~S~-------- FormE Contract Acceptance and Award (To be completed only by NJP A) NJPA! 061015 FLEET-RELATED MAINTENANCE EQUIPl\ilENT, SUPPLIES, SERVICES, AND INVENTORY MANAGEMENT SOLUTIONS Genuine Parts Company/NAPA Integrated Business Solutions (IBS) Proposer's full legal name Your proposal is hereby accepted and awarded. As an awarded Proposer, you are now bound to provide the defined product/equipment and services contained in your proposal offering according to all terms, conditions, and pricing set forth in this RFP, any amendments to this RFP, your Response, and any exceptions accepted or rejected by NJPA on Form C. The effective start date of the Contract will be _ _,_,__,,,_.-v-.,.._-L-«~SJ ____ , 20 IS and continue for four years ~~ ........ ~of a fifth year renewal option at the discretion ofNJP A. NJPA Authorized signature: (-~2~~~~~~=----­ JPA Executive Director (Name printed or typed) Awarded this a\~: day of~ u.\ y , 20 NJPA Authorized signature: ----;?~t--t-"-W'·t""'""'"""_\ ...... k,__~---- :? NJP A Board Member Executed this d.~ day of 51.A,\ y , 20 \6 NJPA Contract Numbcr~61 \)1 5-GPC[ Swt-+ u ero N2-() (Name printed or typed) bS NJP A Contract Number 1061015-GPC Vendor Authorized signature: -=~--r"°'-'-'-+_,,_-'---"'-\:-----,f---- T itle: llc~ &~, ck-vt -N,11?/t !r3S (Name printed or typed) Executed this __ Q?J J.C/ day of _J-_J_1----' 20 _ / C NJP A Contract Number \QQ.! ,Vl5-G PC 42