Item No: 5F.
Meeting Date: June 24, 2013
From: Mike Thornton, Purchasing Manager for
Patrick Foster, Deputy Director Electric Utility
Subject: Resolution authorizing execution of a first amendment to an agreement for a power transformer stocking program
Staff recommends execution of the first amendment adopting lower unit prices and extending the term of the agreement an additional five years.
On July 14, 2008 the City Commission approved execution of an Agreement with Gresco Utility Supply, Inc. (Gresco) for the purchase of electric power transformers. The Agreement also required Gresco to provide a stocking program. Under the stocking program Gresco is required to keep quantities of transformers used by the City on hand in their inventory. The City does not pay for the transformers held by Gresco until they are requested and delivered to the Electric Utility.
The Agreement was established as a result of Invitation to Negotiate (ITN) 70124 issued by the Purchasing Division. Prior to this agreement, the City participated in the Florida Municipal Power Association (FMPA) cooperative agreement for transformers. The City has experienced ongoing quality and service problems with the FMPA contracted vendors. Additionally, the FMPA agreement does not provide for the vendor to stock transformer on behalf of the City. These two reasons prompted the Electric Department to seek a different supplier(s); one that could better meet the needs of the City of Leesburg.
This Agreement allows the City to purchase transformers at a competitive price and the stocking program allows the electric utility to better manage the inventory. Prior to the stocking program, the utility would have to keep a large inventory of transformers due to the long lead times from the manufacturers. A complete spending and savings analysis of the contract over the past five years of the agreement is attached for your review.
The pricing in this agreement, along with the changes in transformer specifications, will provide an annual savings of approximately $44,730.73. There will be an estimated five year savings of $223,653.79 over the life of the contract extension.
1. Approve execution of the agreement with Gresco Utility Supply, Inc; or
2. Such alternative action as the Commission may deem appropriate
Based on historical annual use of transformers the annual savings to the Electric Utility is estimated to be $44,730.73. The overall fiscal impact will be lower transformer unit prices to the City. By Gresco agreeing to stock commonly used transformers for the City, the City will not have as much cash tied up in inventory.
Department: _Electric Utility_______
Prepared by: _Mike Thornton_________
Attachments: Yes_X_ No ______
Advertised: ____Not Required __X___
Attorney Review : Yes___ No ____
Reviewed by: Dept. Head ________
Finance Dept. _BLM,__________
Deputy C.M. ___________________
City Manager ___________________
Account No. _Various EL Accounts_
Project No. ___________________
WF No. ______________________
RESOLUTION OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A FIRST AMENDMENT TO AN EXISTING AGREEMENT WITH GRESCO, INC. FOR AN ELECTRIC POWER TRANSFORMER STOCKING PROGRAM; AND PROVIDING AN EFFECTIVE DATE.
BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA:
THAT the Mayor and City Clerk are hereby authorized to execute a First Amendment to an existing agreement approved by resolution 8215 with GRESCO UTILITY SUPPLY, INC. whose address is 6421 CR 219, Wildwood Florida 34474 for an electric power transformer purchase and stocking program pursuant to RFP 70124.
THAT this resolution shall become effective immediately.
PASSED AND ADOPTED by the City Commission of the City of Leesburg, Florida, at a regular meeting held the __24th__ day of __June___ 2013.