Department of Finance
Reference: Procurement Waiver of Solicitation for Fleet Vehicles and Equipment
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Catrina Asher, Director of Finance
Kelsey Archuleta, Procurement & Contracts Manager
Date Prepared: October 17, 2023
PURPOSE
To request Council’s approval to purchase fleet vehicles and/or equipment priced at or below MSRP or Kelley Blue Book value directly and waive formal solicitation requirements.
BACKGROUND
Municipal Code requires that purchases over $50,000 be formally solicited. This requirement can be met through a formal process administered by the City or through cooperative purchasing (e.g. state award contracts).
The 2024 Budget includes funds for the purchase of standard fleet vehicles and equipment. These purchases are facilitated by the Facilities & Fleet Department. The most common way to purchase new vehicles/equipment and meet procurement requirements is to utilize cooperative agreements. These agreements generally allow for specific ordering windows and have limited inventory available. When inventories become eligible for order placement, City staff are consistently responsive during the date-specific ordering window. However, lead times on successfully placed orders through these programs currently extend up to 78 weeks from the date an order is placed. Order fulfillment is often prioritized by purchasing volume; therefore, agencies purchasing in larger quantities than the City of Brighton more frequently attain the vehicles ordered through these programs. Additionally, dealerships that have been awarded cooperative agreements by other agencies have been unable to establish base pricing for the 2024 model year as the timeline is continuously moved later into the year by the manufacturers.
These challenges have made utilizing cooperative agreement programs slow or unfeasible for the City’s fleet. City staff are able to find opportunities to purchase new vehicles/equipment directly from dealerships, however a direct purchase of this nature would be considered a single source purchase and would not be in compliance with City code.
City staff also consider purchasing used vehicles to meet fleet inventory needs. These vehicles are of limited availability and high demand. This combination results in a very competitive market that best serves those agencies with the ability to quickly submit a purchase offer. At times, this may be within hours of an item becoming available. City staff may work quickly to purchase a used vehicle that is available, however any purchase of a used vehicle would be considered a single source purchase and would not meet current procurement requirements.
In order to meet the needs of the City, staff find it necessary to be able to respond quickly to fleet vehicle and equipment purchasing options which do not allow for the required time of formal solicitation. Additionally, fair pricing of new and used vehicles is generally known through the manufacturer’s suggested retail price (MSRP) or Kelley Blue Book (KBB), so understanding and obtaining a fair price can be done effectively without the formal solicitation process.
In order to facilitate effective purchases of new and used vehicles and equipment at fair pricing, staff requests approval for the purchase of fleet vehicles and equipment approved in the 2024 Budget by utilizing a direct buying approach and waiving the formal solicitation requirement. Direct buying may include purchase from a dealer or through an auction and will only be utilized when the purchase price is at or below MSRP for new vehicles or Kelley Blue Book value for used vehicles. This will significantly improve the City’s ability to respond to available vehicles and fulfill the City’s fleet needs.
CRITERIA BY WHICH COUNCIL MUST CONSIDER THE ITEM
Limited inventory availability and excessive lead time have proven to be problematic when purchasing fleet vehicles and equipment as it does not allow City staff to serve the City’s immediate needs. The City currently faces an insufficient fleet inventory that impedes the operational efficiency and capacity of staff. This request would provide staff with approval to bypass normal competitive procurement procedures (i.e. formal solicitation) and respond quickly to purchase new or used vehicles and equipment through other means such as direct purchasing.
FINANCIAL IMPACT
The funds to purchase fleet vehicles and equipment were approved by Council in the 2024 Budget and additional funds are not being requested.
Cooperative agreements for vehicle purchases generally result in pricing at MSRP, so this approach is not expected to result in higher purchasing costs.
STAFF RECOMMENDATION
Staff recommends approving a resolution for Council approval that provides a waiver of solicitation for vehicles and equipment purchased at or below MSRP or KBB.
Attachments:
Ø Resolution