TITLE
Consider a memorandum/resolution authorizing the procurement of a Motor Grader for the Street Operations Division.
SUMMARY
DATE: June 5, 2018
TO: Ronald L. Olson, City Manager
FROM: Jonathan Locke, Executive Director of Finance
SUBJECT: Procurement of a Motor Grader for the Street Operations Division
BACKGROUND AND FINDINGS:
Since 2002, the City of Killeen has procured a motor grader and subsequent replacements with a three-year guaranteed buyback/repurchase price. The guaranteed buyback funds have then been applied towards the purchase of the replacement motor grader at the end of the three-year term. This heavy equipment is used by the Street Operations Division for many street, utility and maintenance programs.
THE ALTERNATIVES CONSIDERED:
1.) Renting is not practical because there must be a motor grader available most all of the time for periodic use. Rental cost for the motor grader would average $6,900/month plus delivery and pickup.
2.) Leasing of a comparable motor grader would cost $2,815.63 per month.
3.) Purchase the motor grader for $267,624.57 with the three-year guaranteed buyback/repurchase price of $209,700.00, resulting in a net cost of $57,924.57 or $1,609.02/month.
Which alternative is recommended? Why?
Staff recommends Option 3, because it offers the best value.
CONFORMITY TO CITY POLICY:
The City of Killeen is a member of several purchasing cooperatives that are in compliance with Texas Local Government Code section 271.102. Purchases made through a cooperative satisfy competitive bid requirements. Quotes were solicited from four cooperative participating vendors resulting in two complete quotes, one partial and one no-quote. RDO Equipment Co. supplied the quote representing the best value for the City considering price & serviceability.
FINANCIAL IMPACT:
Cooperative quotes received:
Vender Model Co-op Cost Buyback Net Cost
RDO...
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