June 17, 1998

  To:Budget Committee

 From:City Clerk

 Subject:Extension of Contract No. T-27-96:

Maintenance of Traffic Control and Related Devices

 Recommendation:

 The Urban Environment and Development Committee on June 15 and 16, 1998 recommended to the Budget Committee, the Strategic Policies and Priorities Committee, and Council the adoption of the report (May 26, 1998) from the Interim Functional Lead, Transportation, wherein it is recommended that:

 "Contract No. T-27-96 with Stacey Electric Company Limited be extended from January 1, 1999, to December 31, 1999, under the terms and conditions of the original contract, by exercising the "Option of Extension" clause (Part C, Section 15)."

 The Urban Environment and Development Committee reports, for the information of the Budget Committee, the Strategic Policies and Priorities Committee, and Council, having requested the General Manager, Transportation Services, to:

 (a) consult with employee groups during the development of the consolidated service delivery plan; and

 (b)submit a report to the Urban Environment and Development Committee with regard to the details of the tendering specifications, prior to re-tendering.

 Background:

 The Urban Environment and Development Committee had before it a report (May 26, 1998) from the Interim Functional Lead, Transportation recommending that Contract No. T-27-96 with Stacey Electric Company Limited be extended from January 1, 1999, to December 31, 1999, under the terms and conditions of the original contract, by exercising the "Option of Extension" clause (Part C, Section 15); advising that Contract No. T-27-96 was issued as a two-year contract from January 1, 1997 to December 31, 1998, with two one-year extensions in 1999 and 2000, each of which requires the approval of Toronto City Council; that the Contract was written in this way to achieve cost savings in the area of maintenance of traffic control devices, while maintaining the quality of maintenance work; stating that these benefits have been experienced with the current electrical contractor, Stacey Electric Company Limited; and that the funds for the activities included within this Contract will be contained in the Works and Emergency Services Current Budget estimates for 1999.

 City Clerk

 R. MacKenzie/lv

 Copy to:Chief Financial Officer and Treasurer

Commissioner of Works and Emergency Services

General Manager, Transportation Services

Mr. Shekhar Prasad, Director, Finance Department

Mr. Rob Hatton, Finance Department

Ms. Keshwer Patel, Finance Department

(Report dated May 26, 1998, addressed to the

Urban Environment and Development Committee from the

Interim Functional Lead, Transportation.)

 Purpose:

 To extend by one year the contract for the maintenance of traffic control and related devices - Contract No. T-27-96.

 Funding Sources:

 The funds for the activities included within this contract will be contained in the Works and Emergency Services Current Budget estimates for 1999.

 Recommendation:

 It is recommended that Contract No. T-27-96 with Stacey Electric Company Limited be extended from January 1, 1999 to December 31, 1999, under the terms and conditions of the original contract, by exercising the AOption of Extension@ clause (Part C, Section 15).

 Background:

 Contract No. T-27-96 encompasses the maintenance of all traffic control signals within the boundary of the new City of Toronto; and all pedestrian crossovers and illuminated signs on major arterials which were formally Metro roads. It also includes sign installation and a small element of pavement markings on major arterials.

 Contract No. T-27-96 was issued as a two-year contract from January 1, 1997 to December 31, 1998, with two one-year extensions: 1999 and 2000. Each extension requires the approval of Toronto City Council.

 Discussion:

 Considerable staff time and effort was spent in 1995 and early 1996 to research and re-write our municipal traffic plant maintenance tender. The three principal objectives were as follows:

 (1)to provide greater accessibility for contractors by reducing the barriers to bidding, through the size, scope and duration of the contract;

 (2)to provide incentives for contractors to deliver their services at a lower cost to the municipality; and

 (3)to provide a contract structure which is manageable and contract services which are efficiently co-ordinated.

 The result was a brand new tender which fundamentally changed the structure and administration of the historical traffic plant maintenance contract.

 One of the primary innovations was the change from a Atime and materials@ base to a Aset price@ performance base. The new contract provides a fixed fee per intersection to the contractor to maintain the traffic control signals, rather than paying for each visit to the site. Therefore there is an incentive for the work to be of high quality and performed as efficiently as possible, to avoid repeated site visits by the contractor.

 In order to provide for the opportunity for smaller contractors to compete, the tender was organized into three districts, which lowered the financial obligation required and the potential investment in equipment and vehicles. In order to fully realize the benefits of their investment, it was understood that the contract should be three or four years long. However, because of fundamental changes to the previous contract, it seemed prudent to provide both the City and the contractor with an option to terminate the contract after two years if it was not working. The expectation amongst staff and contractors was that the AOption of Extension@ would be exercised by both parties if the quality of work was good, if the anticipated savings materialized, and if the savings could be sustained by extending the contract.

 The significant effort applied to rewrite the tender has provided the benefits which staff had hoped for. Not only is the quality of work being performed as prescribed in the contract, the cost of electrical maintenance in 1997 was 13 percent less than in 1996, a saving of over $600,000.00.

 When Contract No. T-27-96 was awarded in 1996, bids were received from three contractors and the contract was awarded to the lowest bidder, Stacey Electric Company Limited. The annual total bid prices submitted were as follows:

 Stacey Electric$4,033,072.00

Guild Electric$4,514,406.00

Cliffside$12,692,272.00

 Stacey Electric Company Limited have agreed to an extension of the contract with no increases to the current bid prices, and under the terms of the existing contract. Therefore staff recommend that Contract No. T-27-96 with Stacey Electric Company Limited be extended from January 1, 1999 to December 31, 1999.

 The one-year extension lends itself to the on-going amalgamation process. The current contract is based on three districts, but, as a result of amalgamation, the number and area of each district will be different. Secondly, maintenance of traffic plant under the jurisdiction of the former municipalities is currently delivered through a combination of in-house and contracted out service arrangements. Therefore, a consolidated service delivery plan will be developed in 1998 and a tender re-write will be undertaken early in 1999 to prepare for the new service delivery requirements in the year 2000.

 Conclusions:

 Contract No. T-27-96 was written in order to achieve cost savings in the area of maintenance of traffic control devices, while maintaining the quality of maintenance work. These benefits have been experienced with the current electrical contractor, Stacey Electric Company Limited, and staff recommend that the contract be extended by one year according to the provisions of the contract.

Contact Name:

 Peter K. Hillier, Senior Manager, Traffic Regions, 416-392-5348.