Title
Recommendation to Authorize the Purchase of Two (2) Pierce Manufacturing, Inc. Enforcer 1500 GPM Pumpers/Engines from Golden State Fire Apparatus in an Amount Not-to-Exceed $2,452,522; and
Adoption of Resolution Amending the Fleet Replacement Fund (601) Budget to Reduce Expenditure Budget for Fiscal Year 2024-25 by $1,522,500 and Increase Expenditure Budget for Fiscal Year 2023-24 by $1,002,000 to Purchase Two Fire Apparatus Engines. (Public Works 60141581)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
Two fire apparatus engines are at or approaching their frontline service life expectancy (12 years). Due to supply challenges and increased demand for manufacturing the lead time for delivery of new fire apparatus is 45-48 months (Fiscal Year 2028). Therefore, if new engines are ordered now, the existing engines will be in service for three to four years past their frontline life expectancy. Additionally, staff has concerns that costs for fire apparatuses will continue to escalate. By entering into a contract now to purchase the replacement engines, the City of Alameda (City) will be insulated from further cost escalations.
As part of the Fiscal Year (FY) 2023-25 operating budget, City Council authorized the purchase of a replacement fire engine in Year 2. Additionally, Resolution No. 16060, which adopted the operating and capital budget for Fiscal Years (FYs) 2023-25, the City Manager or their designee was authorized to carry-over into FY 2023-24 the remaining, unexpended General Fund FY 2022-23 budget at year-end, up to a not-to-exceed amount of $3,000,000, for the purchase of police radios and a fire engine. In the Fleet Replacement Fund (Fund 601), $1,155,064 has accrued for the two fire apparatus engines approaching their frontline service life. Thus, no additional budget appropriation is necessary, but there is a need to shift purchasing authority for one of the engines from Year 2 of the budget to Year 1.
Staff recommends and seeks approval to purchase two replacement Pierce Manufacturing, Inc. Enforcer 1500 GPM Pumpers from Golden State Fire Apparatus in an amount not-to-exceed $2,452,522. Funding would be $1,155,064 in the accrued Fleet Replacement Funds, $862,468 in General Funds included in the FY 2023-24 adopted budget, and $434,990 in carry-over funds. The purchase requires two actions from City Council: authorization of the purchase from Golden State Fire Apparatus and adoption of a resolution to amend the FYs 2023-25 budget to reduce the expenditure budget in the Fleet Replacement Fund (601) for FY 2024-25 by $1,522,500 and increase the FY 2023-24 expenditure budget by $1,002,000.
BACKGROUND
The Fire Department and Fleet Services are responsible for replacing fire apparatus, vehicles, and equipment according to the City's Vehicle (Fleet) and Equipment Replacement Policy. Administrative Policy 48, the City’s fleet replacement policy, is based on the City’s Fleet Replacement Criteria, which considers the useful life of vehicles and equipment in terms of age, mileage (or hours), and usage. Vehicles and equipment scheduled for replacement are reviewed and analyzed for safety history and operating performance to determine if a vehicle or equipment may be replaced later. Vehicles and equipment are also reviewed to determine if the minimum use guidelines are met.
Two fire pumper engines, AFD-4 and AFD-5, are at or approaching the twelve (12) year frontline service life for this type of fire apparatus. AFD-4 was purchased in 2012 and AFD-5 in 2013. A fire pumper engine is moved to reserve status for an additional five (5) years when the replacement apparatus is placed in service. Due to significant supply challenges and increased demand for manufacturing, the lead time for delivery of new fire apparatus is 45-48 months (FY 2028). AFD-4 and AFD-5 will have been in frontline service for 16 and 15 years, respectively, if replacement engines are ordered now and placed in service in 48 months (4 years).
Prior to FY 2020-21, fire apparatus were not depositing an annual depreciation amount into the Fleet Replacement Fund. Historically, when fire apparatus were leased, they were paying the lease payment only and not the depreciation. Starting in FY 2020-21, all apparatus pay depreciation into the fund; however, there is a gap in funding for the years that deposits were not made. The total amount deposited through FY 2024-25 for each engine, AFD-4 and AFD-5, is $577,532 for a combined total of $1,155,064. From an expenditure budget standpoint, one replacement engine was planned for purchase in FY 2023-24 and the other in FY 2024-25. However, staff wants to insulate the City from further cost escalations by entering into purchase contracts sooner, especially as interest rates have dramatically increased and leasing vehicles no longer makes fiscal sense.
In accordance with City Administrative Instruction Number 5 (“Purchasing Policy”), vehicles may be purchased by piggybacking on another agency’s purchase agreement or through cooperative purchasing. The City Council must approve an award of vehicle purchases to a single vendor made through either piggybacking or cooperative purchasing in excess of a cumulative total of $75,000 in any given fiscal year.
DISCUSSION
Pierce Manufacturing, Inc. (Pierce) is a reputable company founded in 1913 and is well known for providing a high-quality product. The Fire Department has purchased all of its fire apparatus from Pierce since 1991. Pierce holds a Sourcewell Contract #113021-OKC-1CAT. Sourcewell is a cooperative purchasing agency that solicits and awards contracts through a public competitive procurement process compliant with state statutes. The City is a participating member of Sourcewell and is therefore able to utilize pricing in the Pierce-Sourcewell contract. Golden State Fire Apparatus is the northern California dealer for Pierce Manufacturing, Inc. Staff recommends the purchase of two replacement fire pumper engines from Golden State Fire Apparatus.
AFD-4 and AFD-5 have deposited a combined total of $1,155,064 into the Fleet Replacement Fund. As part of Resolution No. 16060, which adopted the operating and capital budget for FYs 2023-25, the City Manager or their designee was authorized to carry-over into FY 2023-24 the remaining General Fund expenditure budget from FY 2022-23 at year-end, up to a not-to-exceed amount of $3,000,000, for the purchase of police radios and a fire engine. Funding for the police radios was allocated prior to the end of FY 2022-23, so the funding authorized in Resolution No. 16060 remains available to carryover for the fire engines. Due to concerns of continuing cost escalations and extensive lead times for vehicle delivery, staff recommends using the $1,155,064 of accrued funds in the Fleet Replacement Fund (Fund 601), $862,468 in General Funds included in the FY 2023-24 adopted budget, and $434,989.32 of the carry-over funds to purchase replacement engines for AFD-4 and AFD-5 now. Availability of the carryover funds allows both engines to be purchased now, which avoids cost escalations from inflation in later years and given the extremely long production timelines, buying now limits the duration the existing units exceed their front-line in-service date, in accordance with Administrative Policy 48, the City’s fleet replacement policy.
Golden State Fire Apparatus offers a discount for full payment at contract signing that is credited to the final cost of the engines. This credit if payment for both pumper engines are paid in full is $361,213 for a total savings of $400,938 when sales tax savings are included. Golden State Fire Apparatus issues a performance bond as part of the purchase to protect the upfront payment. The total not-to-exceed amount for the two engines with upfront payment is $2,452,522.
In regards to electrifying the fleet, electric fire apparatus have recently been introduced to the fire service as a replacement option. They are priced at double the cost of a traditional engine due to this being new technology and limited volume in the fire industry. Electric fire apparatus also requires a significant upgrade to firehouse infrastructure that is estimated at $150,000 to $400,000 per station depending on the existing infrastructure, duty cycle of the pumper, existing power grid capability, and charging speed to maintain the pumper duty cycle. This technology is new to the fire service and continues to be tested and modified to meet the demands of the variable situations in which these apparatus must operate. Due to the increased cost and concerns with this new design still evolving, the recommendation is not to purchase electric fire engines with this procurement. The recommended Pierce Manufacturing, Inc. Enforcer 1500 GPM Pumpers will be equipped with the most stringent Clean Diesel technology. They will be in compliance with the US Environmental Protection Agency 2027 emission standards for heavy-duty engines and vehicles.
ALTERNATIVES
• Approve the purchase of two (2) Pierce Manufacturing, Inc. Enforcer 1500 GPM Pumpers to replace existing fire engines.
• Delay one or both fire engine replacement purchases. Due to likely downtime from costly repairs and increased maintenance on the existing units, Fire Department services may be adversely affected.
FINANCIAL IMPACT
Staff propose using $862,468 in General Funds included in the FY 2023-24 adopted budget and $434,989.32 in previously approved carry-over General Funds from FY 2022-23, pursuant to Resolution No. 16060, and $1,155,064 in accrued Fleet Replacement Funds (Fund 601) to execute the purchase of two replacement fire engines from Golden State Fire Apparatus. Replacement of one engine was budgeted in FY 2023-24 and another in FY 2024-25. Staff recommends increasing the Fleet Replacement Fund budget in FY 2023-24 by $1,002,000 and decreasing the budget in FY 2024-25 by $1,522,500 to execute the purchase sooner in consideration of long production times and costs savings given inflation.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
The Fleet Replacement Policy is consistent with the City’s recently adopted Climate Action and Resiliency Plan and emphasizes greenhouse gas emission reductions. The revised policy includes a focus on right-sizing the City fleet, the purchase of electric vehicles when feasible, and lowering the fleet’s greenhouse gas emissions through acquisition of low emission vehicles.
All replacements will be equipped with “Clean Diesel Technology” and will meet or exceed all current state and federal emission requirements. These “Clean Diesel” vehicle purchases confirm the City’s commitment to a green fleet. The new vehicles will cut carbon dioxide and diesel particulate matter in emissions by nearly 50% from the vehicles they replace.
RECOMMENDATION
Authorize the purchase of two (2) Pierce Manufacturing, Inc. Enforcer 1500 GPM Pumpers/Engines from Golden State Fire Apparatus in an amount not-to-exceed $2,452,522; and
Adopt a resolution amending the Fleet Replacement Fund (601) budget to reduce expenditure budget for Fiscal Year 2024-25 by $1,522,500 and increase expenditure budget for Fiscal Year 2023-24 by $1,002,000 to purchase two fire apparatus engines.
Respectfully submitted,
Erin Smith, Director of Public Works
By,
Carlo Balboni, Fleet Supervisor
Financial Impact section reviewed,
Margaret O’Brien, Finance Director
Exhibit:
1. Quote for Two (2) Pierce Manufacturing, Inc. Enforcer 1500 GPM Pumpers with Golden State Fire Apparatus