HomeMy WebLinkAboutStaff Report 14193
City of Palo Alto (ID # 14193)
City Council Staff Report
Meeting Date: 6/6/2022 Report Type: Consent Calendar
City of Palo Alto Page 1
Title: Approval of the Second Amended and Restated Purchase Order
Number 4521000199 with Altec Industries, Inc., to Increase the Purchase
Order Amount by $40,024 to a New Not-to-Exceed Amount of $707,092, for
the Purchase of Two Peterbilt Crane Trucks through a Cooperative Contract,
in the Scheduled Vehicle and Equipment Replacement -Fiscal Year 2020
Capital Improvement Project (VR-20000), with the Not-to-Exceed Amount
Including $687,222 for the Two Trucks and a Contingency Amount of $19,870.
From: City Manager
Lead Department: Public Works
Recommendation
Staff recommends that Council approve and authorize the City Manager or their designee to
execute the Second Amended and Restated Purchase Order No. 4521000199 with Altec
Industries, Inc., to increase the previously approved Purchase Order amount by $40,024, for a
new total not to exceed amount of $707,092. This is to be funded in the Scheduled Vehicle and
Equipment Replacement - Fiscal Year 2020 Capital Improvement Project (VR-20000) for the
purchase of two 2022 Model DH50 Hydraulic Digger Derrick rear-mount Peterbilt Model 548
crane trucks, utilizing a cooperative purchase agreement via Sourcewell (contract number
012418-ALT) pursuant to Palo Alto Municipal Code section 2.30.360 (j). The $707,092 not-to-
exceed amount includes $687,222 for the two Model 548 crane trucks and a contingency
amount of $19,870 to allow any future unforeseen cost increases to be addressed swiftly.
Background
Purchase Order 4521000199, in the amount of $633,866 was initially issued with Altec
Industries, Inc. (Altec) on January 13, 2021, after Council’s approval on January 11, 2021 (ID#
11582). On November 29, 2021, Council approved a request to amend and restate purchase
order no. 4521000199 with Altec Industries Inc., to increase the purchase order amount by a
total of $33,202 for a new not-to-exceed amount of $667,068 for the purchase of the two new
trucks (ID # 13652). These increases were primarily due to the rise in materials costs over the
last 1-2 years.
Discussion
City of Palo Alto Page 2
On February 9, 2022, Altec reached out to Public Works Fleet staff again and indicated that the
rise in materials costs has continued, and that Peterbilt has discontinued the 348 model, as
originally specified, due to supply chain issues. Peterbilt has started production early on the 548
model which will replace the 348 and has secured a 548 chassis build slot for each of their
existing 348 purchase orders including the City’s order. Switching the trucks from the 348
model to the 548 model results in an additional $5,711 per truck (Attachment A). Peterbilt is
also adding a second chassis/materials surcharge in the amount of $3,500 per truck to cover
increased costs of aluminum, plastics, rubber, and freight (Attachment B). These increases,
along with a $50 increase for administration fees and the increase in tax, total $20,154, bringing
the most recent revised quote to $687,222 (Attachment C). Staff is also requesting a
contingency amount of $19,870, to allow any future unforeseen cost increases to be addressed
swiftly. The new not to exceed amount is $707,092.
Procurement Process
Palo Alto Municipal Code section 2.30.360 (j) allows the use of cooperative purchasing
agreements in lieu of conducting a competitive solicitation. Altec was awarded a contract by
Sourcewell (formerly known as the National Joint Powers Alliance or NJPA), a cooperative
purchasing agency serving governmental, higher education, K-12 education, not-for-profit,
tribal government, and other public agencies. Sourcewell conducted a Request for Proposals
under which Altec Capital was an awarded vendor. Altec’s contract with Sourcewell was
subsequently amended to allow Altec to increase its contract pricing.
If this request is not approved, the City will forfeit the two 2022 Peterbilt chassis that are
designated for this build. Staff would then have to request a new specification and quote for a
later year model chassis and return to Council for approval. At this time, Peterbilt is advising
that chassis will next come available in 2024/2025. This would further increase the purchase
cost and delay the delivery of these new vehicles.
Resource Impact
Funding was approved for the purchase of two 2022 Model DH50 Hydraulic Digger Derrick rear
mount crane trucks in the Fiscal Year 2020 Scheduled Vehicle and Equipment Replacement
Capital Improvement Project (VR-20000). Funding appropriated in VR-20000 in the FY 2022
Budget is sufficient to cover the increased costs of the purchases recommended in this report.
Stakeholder Engagement
Requests for vehicle replacements are presented to the Fleet Review Committee (FRC) for
approval. FRC approved the replacement of these two vehicles through the scheduled five-year
replacement review.
Policy Implications
The approval of this request to purchase vehicles is consistent with existing City policies,
including the Council-approved Utilities Strategic Plan. The Utilities Strategic Plan includes
City of Palo Alto Page 3
operating the electrical distribution system in a cost-effective manner, which includes
investments in vehicles and infrastructure to deliver reliable service.
Environmental Review
This purchase is exempt from the provisions of the California Environmental Quality Act (CEQA)
under Sections 10560 and 10561.
Attachments:
• Attachment A - Peterbilt Price Increase Summary Email
• Attachment B - 2022 HD & MD Customer Surcharges
• Attachment C - Sourcewell Quote - City of Palo Alto - DH50H
1
Steven Ankney
From:Bob Souza <bsouza@coastcounties.com>
Sent:Monday, March 7, 2022 11:21 AM
To:Steven Ankney; William P Hamburger
Subject:Palo Alto order and surcharges
Attachments:DB 22-12 2022 HD & MD CUSTOMER SURCHARGES.pdf
Importance:High
Hi Steven and William,
Here is an update on what William and I discussed and the subsequent additional surcharge from Peterbilt
that came out the end of last week.
We started last year with a model 348 at $91,105/ea
After surcharges ($2,500) and mandated CARB warranty ($2,460) the 2022 price for the 348 was up to
$96,065/ea
Updating from the now discontinued 348 to the new 548 raised the price to $104,016/ea
Dropping the front frame extension and using the aero hood design reduced the price by $2,240/ea for
a new price of $101,776/ea
Late last week we were notified of a new surcharge per the attached bulletin, it is much greater than anything
we have had before at $3,500 per truck for all medium duty units in production on/after April 1. Cost increase
drivers were primarily cited as higher than expected material costs and such noted below, and reaching out to
dual line dealers we find it is going on across the industry.
-Aluminum (+53% ytd), Plastics (+48% ytd) and Rubber (+13% ytd)
-High oil prices / Diesel at highest price since 2013 resulting in freight surcharges and related
commodity spikes
-Brokered microchip supplies and reduced availability – average broker premium of 54x price
basis
-Industry liquidity investments required into suppler chain to maintain production and follow of
parts
-Uncertainty of war impact on Palladium (in exhaust filters, +43% in 3 months, primary supplier
Russia), Oil and Neon (microchips, 70% of world supply from Ukraine)
-Producer Price Index increase nearly 10% last 4 months, no sign of easing
We do have the option to cancel any unbuilt units through March 14, but knowing current pricing on new
orders is up an additional +$5-6K and lead times well into next year the consequences of that are much worse
than the present options and would be ill advised, assuming the need is still there for the equipment.
Thank you for your attention and understanding, your business is valued and important. This has been a very
difficult position to be immersed into over the past year handling decisions made outside of any influence that
do not align with my values. Please confirm and let me know your intentions as soon as possible along with
any questions.
DB # 22-12 Page 1 of 1
SUBJECT: CUSTOMER ORDERS SURCHARGE DB # 22-12
DATE: 3-4-22
The Transportation industry continues to be challenged by unprecedented and escalating economic
conditions. This prolonged environment has resulted in cost increases that have far exceeded original
expectations. These raw material and component cost increases are driven by, but not limited to,
excessive price increases for microchip processors, steel, aluminum, oil, resins, and rubber. Factors
further contributing to cost increases include the impact of industry wide labor shortages, inbound
freight surcharges, the expediting of components to keep the factory running, and the highest
production inflation in nearly 40 years.
Recognizing the impact to our dealers and customers, Peterbilt and PACCAR have worked to mitigate
these increases while continuing to maintain factory production and customer deliveries to meet
unprecedented levels of demand. However, because of this continued volatile and inflationary
environment, it is necessary for Peterbilt to implement a pricing surcharge on 2023 MY trucks.
Customer Orders
• $5,000 Heavy Duty pricing surcharge
• $3,500 Medium Duty pricing surcharge
Timing
• Surcharge will be applied to chassis not offline as of Close of Business 3/31/22
• Offline trucks as of 3/31/22 not subject to surcharge
Other
• Surcharge will be rolled into “Total Surcharge/Options Not Subject to Discount” line on invoice.
• Peterbilt Dealers are responsible for notifying customers of the surcharge immediately.
• HD and MD trucks may be cancelled at no charge by March 14th, 2022.
o Cancelled trucks that are firm sequenced will be built as specified and placed in the
offline for future sale. Pricing is subject to change depending on the new customer.
o Cancelled trucks that are tentatively scheduled will be moved out in the schedule for
specification and pricing changes, and re-scheduled based on constraints.
• Standard cancellation policy rules will apply starting March 15th, 2022.
These are unprecedented times to navigate. Peterbilt respects and honors the partnerships that have
been built with both dealers and customers. Together we will manage through these challenges.
Robert Woodall
Assistant General Manager – Sales & Marketing
Quote Number:694090-1
Opportunity Number:10569607
Sourcewell Contract #:012418-ALT
Date:3/14/2022
REFERENCE ALTEC MODEL
50' Fully Hydraulic derrick, rear mount $225,797
(A.)
1
(A1.)
1 UHBD Aluminum Bayonet Capstan Drum (fits any winch extended shaft)$568
2 DP Dica Pads and Pad Holder - 24" x 24" x 1", With Rope Handle (Pair)$633
3 SPOT6 Remote Spot Light, LED, Permanent Mount, With Wireless Dash Mounted Controls
And Programmable Wireless Remote $709
4 VCAM Backup Camera System $835
5 TBE ELECTRIC TRAILER BRAKE CONTROLLER. Controls Trailers with Electric
Brakes, Wired to 7-Way Plug Next to Pintle Hook $233
6 ISG Inverter Storage Inside of Body Compartment with Guard $588
SOURCEWELL OPTIONS TOTAL:$229,363
(B.)
1 UNIT
2
UNIT & HYDRAULIC ACC
10' JIB and braket, AB chance adapter, PCD24B Capstain w/ foot controller, Hyd
hose reel (50'), Tiiger pole puller w/ brackets, custom rope guides, custom subbase
compartmentation
$11,700
3 BODY Custom 2020 Altec Body with ladder, hotstick and open top storage boxes ILO
Sourcewell contract $9,184
4
BODY & CHASSIS ACC
Holland pintle hitch, custom derrick access step, cone holder (underhung), shovel
storage, modified exhaust tip, sign base holder, rigging D-ring for capstan, two-pole
capacity pole rack
$4,251
5
ELECTRICAL
TruckLite spot light above rotation, 42" LED directional light bar, four (4) 4.75" flood
lights, four (4) Federal Signal lights, 3600W Inverter and two (2) Aux batteries,
120V GFCI quad receptacle and two (2) standard 120V GFCI, boom out of stow
indicators, additional strobe
$10,785
6 FINISHING Non-Regional build, CA Crane Certification (Incl/ horn at lower controls)$408
7 CHASSIS Custom Peterbilt 348 ILO Sourcewell Contract $21,708
OPEN MARKET OPTIONS TOTAL:$58,036
SUB-TOTAL FOR UNIT/BODY/CHASSIS:$287,399
Delivery to Customer:$3,568
Doc/Admin Fee $125
Peterbilt Chassis Surcharges in 2021: $4,960
Peterbilt Mandated Model Update from 348 to 548:$7,951
Chassis Spec Simiplification after Altec Sits Down with Peterbilt:-$2,240
Peterbilt Chassis Surcharges in 2022:$3,500
Altec Material Surcharge:$9,924
UPDATED SUBTOTAL FOR UNIT/BODY/CHASSIS $315,187
ESTIMATED Sales Tax (9.125%)$28,424
TOTAL FOR UNIT/BODY/CHASSIS:(each)$343,611
TOTAL FOR UNIT/BODY/CHASSIS QUANITY OF TWO (2):$687,221
(C.)
1
**Pricing valid for 45 days**
NOTES
PAINT COLOR: White to match chassis, unless otherwise specified
Altec Account Manager: Steven Ankney
BUILD LOCATION: St. Joseph, MO
WARRANTY: Standard Altec Warranty for Aerials and Derricks - One (1) year parts warranty One (1) year labor warranty Ninety
TRADE-IN: Equipment trades must be received in operational condition (as initial inspection) and DOT compliant at the time of
CHASSIS: Per Altec Commercial Standard
TERMS: Net 30 days
BEST VALUE: Altec boasts the following "Best Value" features: Altec ISO Grip Controls for Extra Protection, Only Lifetime
TO ORDER: To order, please contact the Altec Account Manager listed above.
Altec Industries, Inc.
SOURCEWELL OPTIONS ON CONTRACT (Unit)
SOURCEWELL OPTIONS ON CONTRACT (General)
OPEN MARKET ITEMS (Customer Requested)
ADDITIONAL ITEMS (items are not included in total above)
DH50
Quoted for: City of Palo Alto
Sourcewell Quote - City of Palo Alto - DH50H