Item - 2020.GL14.16

The General Government and Licensing Committee recommends that:

1. City Council grant authority to the General Manager, Fleet Services to negotiate and enter into a non-competitive agreement with FCA Canada Inc., for the supply and delivery to the City Original Equipment Manufacturer (OEM) parts and services for Chrysler, Jeep, Dodge and Ram vehicles on the following terms and conditions:

a. The initial term of the contract will be for a period of five (5) years, commencing on September 1, 2020 to August 31, 2025 with the option to renew the contract for one (1) optional renewal term of five (5) years, subject to the exercise of the option term being at the sole discretion of the General Manager, Fleet Services and subject to the amounts payable under the contract being available under the current Fleet Services Division budget approval(s). The amount of this non-competitive agreement is $14,220,598 net of HST ($14,470,881 net of HST recoveries) for the entire duration of the contract, inclusive of all optional renewal terms;

b. Separate service level agreements will be negotiated with individual dealerships through Servicenet, the FCA authorized dealer network;

c. The contract will be based on the condition that FCA Canada Inc. continues to be the exclusive manufacturer and distributer for the proprietary OEM parts and services for Chrysler, Jeep, Dodge and Ram vehicles through a Servicenet National Maintenance Program inclusive of an authorized dealer network; and

d. On the terms and conditions satisfactory to the General Manager, Fleet Services and in a form satisfactory to the City Solicitor.

The purpose of this report is to seek Council authority for the General Manager, Fleet Services Division to negotiate and enter into a non-competitive contract with FCA Canada Inc. (Fiat, Chrysler Automobiles) for the supply and delivery to the City of Toronto (City), proprietary Original Equipment Manufacturer (OEM) parts and services for Chrysler, Jeep, Dodge and Ram vehicles.

The contract will be for a period of five (5) years commencing from September 1, 2020 to August 31, 2025 with the option to renew the contract for one (1) optional term of five (5) years from September 1, 2025 to August 31, 2030 at the sole discretion of the City, and subject to budget approvals for the total amount of $14,220,598 net of Harmonized Sales Tax (HST) ($14,470,881 net of HST recoveries), inclusive of all option renewal terms.

Fleet Services estimates that by adopting this manufacturer-direct service delivery model with FCA Canada Inc., savings in the amount of $723,544 can be realized over the ten (10) year period.  This does not include savings from manufacturer-direct procurement that is already in place, or internal process savings from the reduced procurement and payment efficiencies that will also be obtained. 

City Council approval is required in accordance with Municipal Code Chapter 195-Purchasing, where the current request exceeds the Chief Purchasing Official's authority of the cumulative five (5) year commitment for each vendor, under Article 7, Section 195-7.3 (D) of the Purchasing By-Law or exceeds the threshold of $500,000 net of HST allowed under staff authority as per the Toronto Municipal Code Chapter 71-Financial Control, Section 71-11A.