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HomeMy WebLinkAbout~Master - Rejection of all bids for Wheel Loader RESOLUTION NO. 13-547 RESOLUTION REJECTING ALL BIDS FOR WHEEL LOADER AND APPROVING CONTINUED USE OF THE EXISTING WHEEL LOADER AT THE POWER PLANT'S COAL YARD FOR THE CITY OF AMES,IOWA WHEREAS, a 2010 John Deere rubber-tired wheel load is operated in the Power Plant coal yard, and on March 23,2010,the Council awarded a contract to Murphy Tractor and Equipment of Altoona, Iowa, to purchase this Wheel Loader at a cost of $128,000 with a $89,000 buyback guarantee; and, WHEREAS, Murphy's buyback guarantee is for four years and 5,000 hours of use; and, WHEREAS,the Wheel Loader was purchased based on the net low evaluated cost by using the cost of the machine, less the guaranteed buyback; and, WHEREAS,on December 1,2013,this Wheel Loader had approximately 4,765 hours on the hour meter for three years of use, and to use this machine the full four years will accumulate hours well beyond the 5,000-hour limit to receive the full $89,000 buyback guarantee; and, WHEREAS,under the existing purchase agreement,Murphy will deduct from the buyback $39.21 per hour over 5,000 hours; and, WHEREAS, the average annual use over the past three years is 1,667 hours; and, WHEREAS,typically,the option to exercise the buyback guarantee significantly benefits the City, since the hours and replacement cycle of the Wheel Loader closely follow the plan,however, during this cycle, the hours have accumulated faster than expected, making the buyback less beneficial to the City; and, WHEREAS,choosing to keep this wheel loader in service for an extended period and thereby diminishing or foregoing the buyback can be a better financial decision if the existing wheel loader's condition is acceptable to be used for the extended period; and, WHEREAS, Fleet Services staff has evaluated the condition of this wheel loader and feels confident the condition is satisfactory to continue use in the same capacity for three more years;and, WHEREAS,with Council's approval,the City can choose to keep the current wheel loader in service beyond the limits of the buyback,without penalty,while recognizing that the buyback will be diminished or foregone; and, WHEREAS, bids for a new wheel loader to replace the existing loader were received in November 2013, and they were evaluated to determine the net low evaluated cost; and, WHEREAS, a financial analysis demonstrates that rejecting the bids and retaining the existing Wheel Loader will be the most cost-effective option over the next three years, and, in making this determination,staff also considered the timing of the Power Plant's pending conversion from coal to natural gas; and, WHEREAS, that conversion should be accomplished in under three years, which can be covered by the remaining life of the existing Wheel Loader. NOW, THEREFORE,BE IT RESOLVED,by the City Council of the City of Ames, Iowa, that all bids received for a new Wheel Loader are hereby rejected,and continued use of the existing 2010 John Deere 624K Wheel Loader at the Power Plant coal yard is hereby approved. ADOPTED THIS 1 Oth day of December, 2013. C�AA�"'R 14ad, Ate / Diane R. Voss, City Clerk Ann H. Campbell, Mayor Introduced by: Goodman Seconded by: Davis Voting aye: Davis, Goodman, Larson, Orazem, Szopinski, Wacha Voting nay: None Absent: None Resolution declared adopted and signed by the Mayor this 1 Ot'day of December, 2013.