Agenda Item Wording:
title
Award Contract for Visalia Transit Management, Operations and Maintenance - Authorize the City Manager to award a 5-year base contract to RATP Dev not to exceed $109,000,000, with the option to have five (5) single option years up to ten (10) years, appropriate an additional $6,000,000 from the Transit Operational fund balance, and hear the first reading of Ordinance 24-08 as is required by the City Charter for lease agreements with a duration of longer than five (5) years.
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Deadline for Action: 8/5/2024
Submitting Department: Administration - Transit Division
Contact Name and Phone Number:
Angelina DeRossett, Transit Manager, Angelina.DeRossett@Visalia.City (559) 713-4591, John Lollis, Assistant City Manager, John.Lollis@Visalia.City, (559) 713-4323
Department Recommendation:
Staff recommends that the City Council authorize the City Manager to award a 5-year base contract to RATP Dev not to exceed $109,000,000, with the option to have five (5) single option years up to ten (10) years, appropriate an additional $6,000,000 from the Transit Operational fund balance, and hear the first reading of Ordinance 24-08 as is required by the City Charter for lease agreements with a duration of longer than five (5) years.
Background Discussion:
In the Summer of 2023, the City’s Transit Division began preparing the Request for Proposals (RFP 23-24-14) for Transit Management, Operations and Maintenance in an effort to have a new contract implemented by October 1, 2024. Historically, the Transit Management, Operations and Maintenance Contract is effective October 1st to September 30th of each year.
The RFP was released at the beginning of April 2024. There was an extended questions and answers phase, and the close date of the RFP was also extended through four (4) addendums, to May 21, 2024. Staff received four (4) proposals, including Keolis, MV Transportation, RATP Dev, and WeDriveU. The City’s evaluation committee individually scored the four (4) proposals with Keolis, MV Transportation and RATP Dev being the top three (3) proposers. In-person evaluations were conducted of the top three (3) proposers and RATP Dev was the selected top vendor. RATP Dev was the top proposal for both the proposal evaluation and interview process.
The current Operations and Maintenance Contractor, Transdev (previously First Transit), did not submit a proposal on the RFP.
In accordance with the Federal Transit Administration (FTA) Best Practices Procurement Manual, this RFP process employed the “best value” approach which is defined as follows:
“Best Value describes a competitive, negotiated procurement process in which the recipient reserves the right to select the most advantageous offer by evaluating and comparing factors in addition to cost or price such that recipient may acquire technical superiority even if it must pay a premium price.”
During the RFP process, the proposers were evaluated and scored based on merit, but all price proposals remained sealed. Pricing proposals were not opened until a top proposer had been selected.
The City’s evaluation committee consisted of John Lollis, Assistant City Manager for the City of Visalia, Angelina DeRossett, Transit Manager for the City of Visalia, Caleb Bowman, Transit Management Analyst for the City of Visalia, Carmen Quevedo, Transit Financial Analyst for the City of Visalia, Rich Tree, Transportation Director for the City of Porterville and Giancarlo Bruno, Regional Planner for the Tulare County Association of Governments (TCAG).
The evaluation process began on May 22, 2024, and concluded on June 19, 2024, following in-person interviews with the three (3) top proposers. On Monday June 24th, Transit staff, along with John Lollis (Assistant City Manager) and Melody Murch (City Assistant Finance Director) began discussions with RATP Dev regarding their cost proposal. The official Best and Final Offer (BAFO) request was submitted to RATP Dev on Friday, July 12, 2024, with a deadline of Friday, July 19, 2024.
The pricing proposed by RATP Dev in their BAFO for the first five years of this contract is shown below in Table 1: RATP Dev Pricing and Visalia Transit Projections - Years 1-5, as follows:
Table 1: RATP Dev Pricing and Visalia Transit Projections - Years 1-5
The Table 1, shown above has three (3) line items that are over and above what’s included in the RATP cost proposal, which are discussed below.
Microtransit:
At the time of the RFP, Transit did not have a set microtransit implementation plan so proposers were asked to provide only an hourly and mile rate as part of the bid process, whereas all other services were calculated out in the yearly fees based on the miles and hours of the exiting routes. The microtransit service will start as a three-year pilot funded by the Tulare County Association of Governments (TCAG) through SB125 grant funding. This funding request goes before the TCAG Board of Governors at its scheduled meeting on August 19, 2024. TCAG has also budgeted $140,000 for Visalia Transit to hire a consultant to perform a reimagining study. The consultant will use data collected through the microtransit pilot to assist Visalia Transit in creating efficiencies within the existing Fixed Route services and replacing routes with microtransit where beneficial. This will allow staff to utilize existing operations funding to support microtransit where service efficiencies are created and underperforming Fixed Routes are eliminated. The microtransit item will be brought before the City Council later this fall for appropriation of microtransit funds to the operations budget after TCAG Board approval.
Since this is a three year pilot program, table 1 only includes costs for this program in years 1 thru 3. If this program continues beyond the three years, staff will return to Council to increase the annual contract not to exceed amount.
Major Components:
The major component replacement amount included is an assumption made by Transit staff based on a yearly average. Within this future contract, the current contract, and previous contracts for Transit operations and maintenance, the City is responsible for the replacement of major components (engines, transmissions, differentials etc.) on an as needed basis. Transit assumed $260,000 based on an average from previous years. These major component replacements are reviewed and approved by Transit staff, then paid directly to the contractor (in this case, RATP) and are therefore included in the costs above.
Incentives:
The proposed contract includes an allowance of 1.5% of the total Revenue Service Hour payments, in addition to the contract amount to provide for employee incentive programs for the purpose of improving performance and customer service. This incentive amount is included in the Table 1 Additional Services and Costs section above. This assumption is based upon the total incentives that the contractor could earn from the contract based on meeting specific goals that are outlined within the scope of work. The transit industry standard is to cap incentives at 1.5% as a “not to exceed”.
Facility Lease Information:
Additionally, RATP Dev will be required to lease the Transit-owned Maintenance and Operations facility located at 525 N. Cain Street in Visalia to perform the duties of this contract, and the lease of the facility is specifically included in the contract per Federal Transit regulations. The lease of the facility is include in the service cost and is not broken out separately.
Per the Visalia City Charter, any lease agreement with a duration longer than five (5) years requires the adoption of an Ordinance with two public readings. The second reading must be completed prior to execution of the contract. The first reading will take place on Monday, August 5, 2024, and the second reading will take place on Monday, August 12, 2024. Following the second reading, the contract documents will be ready for signature and execution.
Fiscal Impact:
The contract associated with this agenda item is an ongoing and budgeted annual expense in the 451 Transit Operations Fund. Based upon the $14,863,200 currently budgeted for this contract in the 2024/2025 Fiscal Year budget, Transit will have a shortfall of approximately $6,000,000 within the first contract year that needs to be appropriated from Transit’s fund balance.
The Transit Operational Fund (451) ended the 2023/2024 Fiscal Year with a fund balance of over $40,000,000. This is an estimated number and may change once the 2023/2024 Fiscal Year audit is completed. Many of the funding sources used for Transit operations are provided on a reimbursement basis, and the Transit Fund has built up this large balance to provide cash flow to operate from until annual reimbursements are received. It is estimated that half (up to $20 million) of this balance may be used to supplement funding for the RATP Dev contract award without affecting Transit cash flow. The use of fund balance will allow Transit staff time to evaluate and adjust service levels to bring the cost of this new operations and maintenance contract within the limits of the annual funding received on an ongoing basis.
Transit intends to evaluate the budget and service on a year-by-year basis and make adjustments to the operating budget by creating efficiencies within the bus route service. Service and Route changes require a public process to achieve, and it is estimated that Transit will require up to three (3) years of supplemental funding drawn from fund balance prior to completing these service adjustments. Table 2 below shows a depiction of Transit’s funding sources and uses for this contract, and Transit’s goal is to trim down operations costs within the first three (3) base contract years so that existing operations, along with an estimated $17.4 million of available fund balance dollars pay entirely for the contracted bus service. Beginning in year four (4) of the contract, service levels are expected to stay within the available annual funding limits with no additional use of fund balance. In the meantime, Transit will retain the remainder of the fund balance to be used for operational cash flow.
As shown in Table 2 above, the first contract year will require an additional $5.7 million from Transit fund balance. This amount has been rounded up to an estimate of $6.0 million. The $6,000,000 appropriation proposed in this item will be added to the Bus Services and Equipment Repairs budget line items as follows:
Contracts-Bus Service: 4551-55350, $5,929,000
Contract Equipment Repairs: 4551-55390, $71,000
Prior Council Action:
06/04/2018 City Council award of a 5-year base contract to First Transit for Management, Operations and Maintenance.
Other:
N/A
Alternatives:
none
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to authorize the City Manager to award a 5-year base contract to RATP Dev not to exceed $109,000,000, with the option to have five (5) single option years up to ten (10) years, appropriate $6,000,000 from the Transit fund balance to operational budget funds, and hear the first reading of Ordinance 24-08 as is required by the City Charter for lease agreements with a duration of longer than five (5) years.
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Environmental Assessment Status:
N/A
CEQA Review:
N/A
Attachments:
RATP Dev Proposal
Draft Agreement: Exhibit L - National Park Service Cooperative Agreement
Draft Agreement: Exhibit M - Liquidated Damages and Incentives
Public Notice - RATP Dev Contract Ordinance
Draft Ordinance 24-08
Attachment 3 - Scope of Word as Negotiated
Attachment 6 - RFP 23-24-14 Exhibit F as Negotiated
Contract Agreement
Contract Attachment 1 - City of Visalia RFP 23-24-14
Contract Attachment 4 - Contract Fees & Cost Information
24-0264 Transit Operations and Maintenance RFP 23-24-14 Slideshow