Procurement of Used Buses.

The Urban Environment and Development Committee reports having received the following communication (May 22, 1998) from the General Secretary, Toronto Transit Commission; and having directed that such communication be submitted to Council for information:

At its meeting on Wednesday, May 20, 1998, the Toronto Transit Commission (Commission) considered the attached report, entitled "Procurement Of Used Buses."

The Commission approved the Recommendation contained in the above report, as listed below, at an upset limit amount for procurement which was specified in a confidential report received from D. Gunn, Chief General Manager concerning this matter:

"It is recommended that the Commission:

(1)receive this report for information noting that it may be uneconomical to rebuild some of the current and future Flyer 12-Year rebuild candidate buses due to their condition and the intention is to procure used GM or RTS buses for rebuild in their place;

(2)delegate authority to the Chair, one other Commissioner and the Chief General Manager to approve the submission of bids which will result in the procurement of up to 100 used buses;

(3)delegate authority to the Chief General Manager to approve funds in the upset limit amount of $30,000.00 to cover the cost for travel and accommodation for staff to inspect used buses; and

(4)forward this report to the City of Toronto for information."

The foregoing is forwarded to City of Toronto Council for information.

(Toronto Transit Commission Report No. 2, entitled"Procurement of Used Buses".)

Recommendation:

It is recommended that the Commission:

(1)receive this report for information noting that it may be uneconomical to rebuild some of the current and future Flyer 12-year rebuild candidate buses due to their condition and the intention is to procure used GM or RTS buses for rebuild in their place;

(2)delegate authority to the Chair, one other Commissioner and the Chief General Manager to approve the submission of bids which will result in the procurement of up to 100 used buses;

(3)delegate authority to the Chief General Manager to approve funds in the upset limit amount of $30,000.00 to cover the cost for travel and accommodation for staff to inspect used buses; and

(4)forward this report to the City of Toronto for information.

Funding:

These purchases will be charged to Inventory Accounts and subsequently charged to the appropriate Rebuild Program Expense Account when the parts are removed from inventory.

Background:

To enable an 18-year bus life, the TTC rebuilds buses at the 6- and 12-year point in their life cycle. The Bus Fleet Status presentation on April 8, 1998 provided the Commission with the overall background to this report. The Bus Heavy Rebuild Program, started in 1995, currently rebuilds two six-year-old buses per week at a cost of $107,000.00 each; two 12-year-old buses per week at a cost of $117,000.00 each; and one 18-year-old bus per week at a cost of $140,000.00 each.

Discussion:

The following table illustrates the current 12-year bus rebuild schedule by bus model for the next five years.

The "Body Type" column in the table denotes whether the main structure is mono-coquet (MONO) or Tubular Space Frame (TUBE). Previous Commission reports have detailed the differences and relative advantages of the mono-coquet structure over the tubular frame structure.

Bus Heavy Rebuild Program - 12-Year Rebuild Schedule

Of particular interest, are the tubular-frame Flyer Model D-901 buses which are currently being rebuilt and the tubular-frame Flyer Model D-40 buses which are scheduled to start the rebuild late in 2000 with the first buses coming off the line early in 2001.

The Flyer D-901's are significantly more expensive to rebuild ($10,000.00 each on average) than the previous GM mono-coquet series and some of the individual buses may require incremental repairs exceeding $20,000.00. Given this premium, plus the risk of these repairs not lasting the required six years to retirement, it may not be economical to rebuild some of the buses in this series. It is estimated that up to 25 percent or 50 buses may have to be prematurely retired.

The Flyer D-40-87's are exhibiting serious corrosion-related structural failures now, to the point where extensive repairs are required to get them to their scheduled rebuild. There are 60 buses in this series and it is estimated that the majority will fail before their scheduled rebuild in 2001.

The Flyer D-40-88's and D-40-89's were rebuilt under the six-year program in 1995/6 and are now exhibiting corrosion around the windows. This work was not part of the scope of the 6-year program.

The Flyer D-40-90's were rebuilt under the six-year program in 1996/7. Extensive structural work had to be undertaken at that time due to corrosion causing significant frame failures. It is unknown, at this time, what level of structural work will be required at the 12-year point in the life of these buses.

In conclusion, the tubular frame design is problematic due to the uncertainty surrounding the longevity of any structural repairs. The structure does not lend itself to an economical wholesale frame replacement such as is the case with the GM mono-coquet structure. Any repairs are, of necessity, simply individual frame-member replacements, with no guarantee of the longevity of the unreplaced members.

It is therefore proposed to plan for the eventuality of premature retirement of some of these tubular-frame buses at their 12-year life and their replacement with used mono-coquet structure buses. The used buses would replace the premature failures in the rebuild schedule and thus ensure at least a six year life.

Staff are currently investigating the opportunities to purchase mono-coquet framed buses that have been retired from service (i.e. GM New Look and Classic buses and RTS buses). Efforts are being concentrated in the southern United States as there will generally be less corrosion than a bus that has been exposed to the road salt conditions typical of a winter in Canada and the northern United States.

Based on research completed to date, used GM buses from transit properties located in the southern States meeting the TTC's requirements will be coming available in the near future. However, it will be necessary for staff to submit bids to buy these buses as they will be sold either on a publicly advertised competitive bid basis or at auction. Further, investigation has revealed it is unlikely that staff will be able to purchase 100 used buses from any one source. Realistically a number of sources will be required to purchase a total of 100 used buses.

The bid period for a sale by public tender is normally 3 weeks and if the buses are sold by auction, there is normally a 3 to 5 day inspection period followed by a one day auction. To be able to submit a bid to purchase buses that may become available, staff would first have to inspect the buses to determine if they are in an acceptable condition and meet TTC's requirements. This would also enable staff to determine a reasonable bid price depending on the condition of the buses.

It is therefore apparent that there would be insufficient time for staff to complete the inspection and determine a bid price as well as obtain Commission approval in time to submit a bid to purchase the buses.

Therefore, it is necessary to request that the Commission delegate authority to the Chair, one other Commissioner and the Chief General Manager to approve the submission of bids which will result in the purchase of used buses.

In addition, to ensure expeditious approval of funds to cover the cost of travel and accommodation for staff to inspect the used buses, it is recommended that the Chief General Manager be delegated the authorization to approve funds in the upset limit amount of $30,000.00 on an as required basis for associated travel and accommodation costs for inspection staff.

Justification:

The intention of this initiative is to purchase used mono-coquet structure buses to replace buses that have prematurely failed to the extent that a rebuild is not economically viable. It is assumed that the purchase price of the used bus plus its rebuild cost minus the salvage cost of the failed tubular frame bus would not exceed the cost of the rebuild plus the necessary structural repairs of the premature failure tubular frame bus.

Delegation of authority to the Chair, one other Commissioner and the Chief General Manager to approve the submission of bids which will result in the purchase of used buses as well as the travel and accommodation costs associated with inspecting buses is requested due to the potential requirement to participate in an auction or public bid for buses and the requirement to act quickly in this process.