Report to:  GENERAL COMMITTEE                     Date Report Authored:  October 13, 2009

 

 

SUBJECT:                          Extension of 092-S-04 Supply, Installation and Maintenance of Water Meters

PREPARED BY:               Ernie Ting, Manager Infrastructure, ext. 3650

                                            Patti Malone, Senior Buyer, ext. 2239

 

 

RECOMMENDATION:

1)                  THAT the report “Extension of 092-S-04 Supply, Installation and Maintenance of Water Meters be received”;

 

2)                  AND THAT contract 092-S-04 for Supply, Installation and Maintenance of Water Meters be extended to Neptune Technology Group (Canada) Ltd. for a 2-year term from November 1, 2009 to October 31, 2011, for an estimated annual contract amount of $1,000,000 exclusive of GST;

 

3)                  AND THAT the Director of Operations be authorized to extend the contract for Supply, Installation and Maintenance of Water Meters for one (1) additional year period, provided that it is in the best interest of the Town

 

4)                  AND THAT the tendering process be waived in accordance with Purchasing By-Law 2004-341, Part II, Section 7, Non Competitive Procurement, “ When the extension of an existing contract would prove more cost-effective or beneficial”;

 

5)                  AND THAT Staff be authorized to retain an external consultant during the contractual period to assess the best business model beyond this contractual term;

 

6)                  AND THAT the November to December 2009 costs, estimated at $257,795 shall be funded from the respective operating and capital accounts shown in the financial considerations section;

 

7)                  AND THAT this contract be funded annually from the Waterworks capital accounts for water meter replacement, and the Waterworks operating accounts for meter repair and maintenance as shown in the financial considerations section;

 

8)                  AND THAT the 2011 purchase order be adjusted for growth (number of water meters) based on the approved budget.

 

9)                  AND THAT pricing for the first and second year term in 2010 and 2011 be at the same 2009 itemized pricing.

 

10)              AND THAT the Mayor and the Clerk be authorized to execute the contract with Neptune Technology Group (Canada) Ltd. in a form acceptable to the Town Solicitor;

 

AND THAT staff be authorized and directed to do all things necessary to give effect to this resolution.

PURPOSE:

The purpose of this report is to obtain approval to extend the contract for the supply, installation and maintenance of water meters.

BACKGROUND:

For over 25 years, the Town has been using a single brand of water meter to standardize meters and for maintenance and operational efficiencies.  The manufacturer and supplier of water meters is Neptune Technology Group (Canada) Limited (“Neptune”).

 

In July 2001, Neptune was awarded the 3-year contract for water meter supply and services.  The contract was fixed price based on Neptune 1999 price of water meters plus additional incentives and value added services.

 

In June 2004, Contract 092-S-04 for supply, installation and maintenance of water meters was awarded to Neptune.  The contract was a 5-year term with guaranteed fixed prices, from August 1, 2004 to July 31, 2009 with enhanced incentives and value added services.

 

In June 2009, a 120-day extension of Neptune contract was requested and approved to allow for an extensive assessment and evaluation of the contract.  The extension allowed staff the time to determine the most appropriate process of procurement of the supplies and services that is most beneficial and meets the Town Purchasing By-Law and guidelines.  The extension period is from August 1, 2009 to November 30, 2009.

 

DISCUSSION:

Staff recommend to award a 2 year term contract to Neptune Technology Group (Canada) Limited for the supply, installation, replacement and maintenance from Dec. 1, 2009 to Oct 31, 2011. Staff also recommend an optional one year extension from November 1, 2011 to October 31, 2012, provided that it is in the best interests of the Town to do so.

 

Waterworks staff reviewed and defined the technical and administrative aspects and Purchasing have assessed and negotiated the pricing and cost benefits for this contract.

 

Summary of the work carried out on an annual basis:

Contract Term

# of Supply and Installation- New Development

# of Supply and Installation- Replacement

# of Repairs & Maintenance

2005, Jan 1 to Dec 31

2815 water meters

2907 water meters

1278 locations & meters

2006, Jan 1 to Dec 31

2744 water meters

2130 water meters

1607 locations & meters

2007, Jan 1 to Dec 31

1653 water meters

1610 water meters

1839 locations & meters

2008, Jan 1 to Dec 31

2115 water meters

1295 water meters

1761 locations & meters

2009, Jan 1 to Oct 31

1050 water meters

940 water meters

1800 locations & meters

Benefits

•   Accessories at no cost – meter reading probes and guns

 

•   Testing at no cost – 50 meters

 

•  Additional Services at no cost – proactive meter management plan and annual meter statistic accuracy evaluation (SEER) analysis

 

•   Just in time delivery of water meters and parts

 

•   Past Performance - Neptune has a 95% customer’s satisfaction rating

 

•   Provision of a call centre up to 8 p.m. daily including Saturdays and a website for online appointment bookings

 

•   Automated meter reading (AMR) technology hardware and services

 

•   Ability to provide reading and billing services

 

•   Industry Leader – Neptune is a market leader in water meter products in Canada and in North America, with a complete ranges of residential and ICI meters including automated reading and billing hardware/software and services.  Neptune is an integrated water meter manufacturer, direct supplier and services provider with no middle distributor, resulting in better services and costs

 

•   Integrated Contract – No other known Canadian supplier is able to offer such integrated multifaceted contract of supply, installation, repair and maintenance services of meters

 

•   Preferred Vendor By Other Municipalities – Neptune is the largest meter supplier in GTA and beyond, and sole supplier for Region of Peel, Region of Durham, Halifax Utilities, Toronto, and in a numerous other municipalities across Canada

 

•   ISO Certified – Neptune is ISO 9001 Certificate holder in water meters. Neptune is committed to Total Quality Management (TQM) resulting in stable, reliable and exceptional high quality meter products

 

•   Lead-Free Product – Neptune is the first water meter manufacturer to provide NSF-61 certificate (lead-free) to the industry, as a standard for environment-friendly water meters.

 

Price Comparisons

Neptune originally proposed a 15.5% increase over the 2004 – 2009 contractual pricing for a contract extension which has been reduced to 4.8% through negotiations.

In comparing Markham’s contractual pricing to Richmond Hill, who use a competitor water meter supplier, the Town of Markham costs are 1.2% lower, with the benefits noted on page 3.

 

Future Business Model

Staff is also proposing to retain an external consultant during the contract term to assess the best business model for the future. This work will involve, for example, an assessment of the use of automated meter reading (wireless) capability for water meters.  PowerStream has indicated that on-site meter reading for their electric meters will no longer be required by 2011, as PowerStream moves to “smart meters”.  This will have an impact on the Town’s cost of on-site water meter reading, as the cost will no longer be a shared cost with PowerStream.   A thorough review of options for the Town’s future water meter reading program will be included in the development of a business model. Another aspect of the work to be done is an evaluation of the current water meter supply and installation service provided.

FINANCIAL CONSIDERATIONS:

The following table is a summary of the financial considerations for this report:

Account

Account Name

 2009 Original Budget

 Current Budget Available

Estimated Costs  for Nov. to Dec. 2009

 2009 Budget Remaining

 2010 Proposed Budget

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Meter Supply

 

 

 

 

 

 

760 120 4530

New Development - Residential

 $        137,709

 $          49,779

 $            5,190

 $          44,589

 $          97,879

760 121 4530

New Development - ICI

 $        150,050

 $        105,488

 $          10,500

 $          94,988

 $          98,000

760 130 4530

Meter Maintenance - Residential

 $          85,871

 $          56,210

 $            5,600

 $          50,610

 $          90,165

760 131 4530

Meter Maintenance - ICI

 $          28,825

 $          27,928

 $            2,750

 $          25,178

 $          15,000

 

 

 $        402,455

 $        239,405

 $          24,040

 $        215,365

 $        301,044

 

 

 

 

 

 

 

Service Contract

 

 

 

 

 

 

760 120 5300

New Development - Residential

 $          78,650

 $          24,322

 $            2,500

 $          21,822

 $          55,902

760 130 5300

Meter Maintenance - Residential

 $        151,122

 $          98,290

 $            9,800

 $          88,490

 $          63,000

760 131 5300

Meter Maintenance - ICI

 $          33,084

 $          33,084

 $            3,100

 $          29,984

 $            6,638

 

 

 $        262,856

 $        155,696

 $          15,400

 $        140,296

 $        125,540

 

 

 

 

 

 

 

Total Operating Budget

 $        665,311

 $        395,101

 $          39,440

 $        355,661

 $        426,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL BUDGET

 

 

 

 

 

 

 

 

 

 

 

 

053  6150 8426 005

2008 Capital Meter Replacement Project

 $        284,981

 $          99,980

 $          99,980

 $                  -  

 $                  -  

053  6150 9284 005

2009 Capital Meter Replacement Project

 $        450,000

 $        342,375

 $        118,375

 $        224,000

 $        224,000  

 

2010 Capital Meter Replacement

Project (#10336)

 

 

 

 $        450,000

Total Capital Budget

 $        734,981

 $        442,355

 $        218,355

 $        224,000

 $        674,000

 

 

 

 

 

 

 

Grand Total

 

 $     1,400,292

 $        852,942

 $        257,795

 $        579,661

 $     1,100,584

HUMAN RESOURCES CONSIDERATIONS:

Not Applicable

ALIGNMENT WITH STRATEGIC PRIORITIES:

Not Applicable

BUSINESS UNITS CONSULTED AND AFFECTED:

Legal Services was consulted during the 120 day extension investigation.

 

RECOMMENDED

 

 

                            BY:    ________________________          ________________________

                                      Peter Loukes                                      Brenda Librecz

                                      Director, Operations                           Commissioner, Community & Fire Services