Meeting Date: July 19, 2006

Subject: Purchase Of Brush Parts

Recommendation

It is recommended that the Commission authorize for inventory, additional authority in the amount of $390,000 to Sherwood Electromotion Incorporated for the additional supply of Brush parts for the period ending June 27, 2008 resulting in revised upset limit of $2,140,000.

Funding

Sufficient funds are available in the 2006 TTC Operating Budget and will be included in future Operating Budgets as required.  These inventory materials will be charged to the appropriate budget at the time of issuance from Stores.

Background

At its meeting of June 22, 2005, the Commission approved the awarding of a supply contract for the supply of various Brush parts for $1,750,000 for a three year inventory supply contract.

Subsequent to that award, staff identified another 14 part types as candidates to be added to this contract.  The subject parts are used to maintain the propulsion system on the Commission’s subway and streetcar vehicles.  Several examples include traction motors, line boxes and contactors.

Discussion

Sherwood Electromotion Incorporated submitted pricing on 14 pre-approved part types and did not state any exceptions or qualifications for the remaining term of the contract (24 months).  Sherwood Electromotion Incorporated are the exclusive Canadian distributor for the original equipment manufacturer (Brush who are located in England).

Sherwood Electromotion Incorporated’s original pricing represented an overall increase of 5.1% in pricing for these 14 parts compared to current pricing, and an increase of 3.0% in the following year of the contract.

Staff successfully negotiated price reductions with Sherwood Electromotion Incorporated for all 14 part types resulting in an overall increase of 2.6% over the last purchase price, and further overall increase of 2.6% in the following year.  Sherwood Electromotion Incorporated could not reduce their pricing any further on 3 part types which were therefore, removed from tender due to high price increases ranging from 32% to 675%.  Staff will review their requirements on these part types and will determine a more feasible way of obtaining a reduced price.

Upon removing the 3 part types, a further price comparison was conducted on the remaining 11 part types with the last purchase price which revealed an overall increase of 0.8% from current prices and an increase of 2.6% increase in the following year of the contract. 

The contract includes approximately 15% contingency for variance between forecasted and actual usage and new parts yet to be identified which may be added to the contract during the contract term.

Sherwood Electromotion Incorporated is recommended for the award of the 11 part types in the upset limit amount of $390,000.

Justification

The amendment to this inventory supply contract will result in having sufficient inventory for Operations’ rail maintenance needs to the end of the contract in June 2008.

June 29, 2006
9-118-63