To: Community Services Committee

From: Commissioner, Works and Emergency Services

Chief Financial Officer and Treasurer

City Solicitor

Date: January 19, 2000

Subject: Integrated Fire and Police Radio Communications System

Purpose:

To report on protective measures that are being employed through contractual arrangements with Motorola Canada Ltd. to ensure competitive pricing for the Integrated Fire and Police Voice Radio Communications System.

Funding Sources, Financial Implications and Impact Statement:

The Integrated Fire and Police Radio Communications System was approved by Council at a cost not to exceed $34.5 Million. Funding for this project of $29.2 Million and $5.3 Million was included in the approved capital budgets of the Fire Service and Police Service, respectively. There are no funding implications associated with the presentation of this report.

Recommendations:

It is recommended that this report be received for information.

Council Reference and Background:

At its meeting on December 16^th and 17^th, 1998, City Council adopted report 14 clause 3c, 1999-2003 Capital Budget review - Toronto Fire Department - Radio Communications System, Toronto Police Services and Toronto Fire Services as recommended by the Works and Emergency Services Committee to the Budget Committee (December 2) by the adoption of the recommendations contained in reports to the Budget Committee on December 2, 1998 which included the following:

1. The Commissioner, Works and Emergency Services, the Chief Financial Officer and Treasurer and the City Solicitor be requested to report to the Emergency and Protective Services Committee on protective measures that can be employed though contractual arrangements with Motorola Canada Ltd. and suppliers to ensure competitive pricing for spare parts, maintenance and future system upgrades and enhancements for the integrated Fire-Police voice radio communications system.

Comments:

In December 1998, a contract was signed with Motorola Canada Inc., the supplier of the Integrated Fire and Police Radio Communications System, at a cost up to $34.5 Million including taxes. In accordance with the contract, an initial payment of $2.7 Million was made upon contract signing and a final payment of $2.7 Million will be made at the end of the radio communications project following final acceptance of the system. A payment schedule, based on various prescribed milestones, forms the basis of future payments to Motorola.

Following the completion of the critical design review in August of 1999 and prior to factory acceptance in November, 1999 a revised equipment list and revised Motorola base price of $27,472,148.75 was established. The balance of the monies for this project are required for site development; the Fault Management system; the In Building & Subway/Path coverage; project staffing and the possible addition of more radio sites once coverage testing and analysis is complete. The remaining requirements referenced above will not necessarily be fully contracted through Motorola. Where appropriate, some of the requirements, that originally formed part of the contract, will be contracted outside of the Motorola contract, by competitive bid through the Purchasing and Materials Management Division.

The contract, which was finalized with Motorola Canada Limited, contains the following clauses:

"Price Justification

If requested by the Customer, Motorola shall provide Customer with a justification for prices charged for any and all equipment provided under this Agreement, or for products requested by the Customer at any time subsequent to termination of this Agreement in relation to Equipment provided under this Agreement.

Motorola may satisfy its obligations to provide a justification for prices by submitting to Customer one or more of the following:

1. a current published price list indicating the percentage discount available to Customer;

2. paid invoices for products or services of a similar quality and quantity provided to other Motorola customers; or

3. a price breakdown indicating, as applicable, the cost of direct labour, direct materials, purchased items, engineering and plant overheads, general and administrative overhead, cost of transportation, profit and any other similar elements involved in establishing prices.

When providing any of the information identified above, Motorola shall certify that the information supplied is genuine and accurate and that prices quoted by Motorola to Customer are commercially reasonable and do not include an element of profit that is in excess of that normally obtained by Motorola on the sale of products and services of a similar quality and quantity.

In addition to the foregoing, Motorola agrees that, if requested by the Customer, it will make reasonable and good faith efforts to negotiate an agreement with Customer on methods for satisfying any concerns Customer may have with Motorola's pricing other than those identified above."

These terms and conditions are considered by the Commissioner of Works and Emergency Services, the City Solicitor and the Chief Financial Officer and Treasurer to adequately protect the City with respect to guaranteeing fair and reasonable pricing from Motorola Ltd.

Conclusion:

This report provides the information requested by the Budget Committee with regard to the contract with Motorola Canada Ltd., for the integrated Fire and Police Radio Communication system. This contract includes terms and conditions which are considered by the Commissioner of Works and Emergency Services, the City Solicitor and the Chief Financial Officer and Treasurer to adequately protect the City with respect to guaranteeing fair and reasonable pricing from Motorola Canada Ltd.

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