Item - 2020.GL15.10

The General Government and Licensing Committee recommends that:  

1. City Council authorize the General Manager, Fleet Services, the Chief, Toronto Paramedic Services and the Fire Chief and General Manager, Toronto Fire Services to standardize tire brands across the City-wide fleet.

2. City Council grant authority to the General Manager, Fleet Services, the Chief, Toronto Paramedic Services and the Fire Chief and General Manager,Toronto Fire Services to negotiate and enter into non-competitive agreements with Goodyear Canada Inc. and Michelin North America (Canada) Incorporated for the supply and delivery of tires on the following terms and conditions:

a. the initial term of the contract with Goodyear Canada Inc. will be for a period of five (5) years, commencing on November 1, 2020 to October 31, 2025 with the option to renew the contract for one (1) optional renewal term of five (5) years, at the sole discretion of the General Manager, Fleet Services; the amount of this agreement is $11,454,140 net of Harmonized Sales Tax ($11,655,732 net of Harmonized Sales Tax recoveries) for the duration of the contract, inclusive of the optional renewal term;

b.  the initial term of the contract with Michelin North America (Canada) will be for a period of five (5) years, commencing on November 1, 2020 to October 31, 2025 with the option to renew the contract for one (1) optional renewal term of five (5) years, at the sole discretion of the General Manager, Fleet Services; the amount of this agreement is $5,628,842 net of Harmonized Sales Tax ($5,727,909 net of Harmonized Sales Tax recoveries) for the duration of the contract, inclusive of the optional renewal term; and

c. 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 authority from City Council to enter into non-competitive, long-term tire purchasing agreements with Goodyear Canada Incorporated and Michelin North America (Canada) Inc. to standardize tire brands across the City's fleet.

The contract will be for a period of five (5) years, commencing on November 1, 2020 to October 31, 2025 with the option to renew the contract for one (1) additional five (5) year period at the sole discretion of the City, and subject to budget approvals for the total contract amount of $17,082,981 net of HST ($17,383,641 net of Harmonized Sales Tax (HST) recoveries, inclusive of all optional renewal years.

Fleet Services estimates that by adopting a manufacturer-direct service delivery model with Goodyear Canada Incorporated and Michelin North America (Canada) Incorporated savings in the amount of $1,494,920 can be realized over the ten (10) year period.

This agreement will also provide considerable efficiency improvements, with anticipated delivery times for in-stock tires expected to improve by eighty-four (84) percent, and delivery times for out of stock tires expected to improve by fifty (50) percent.  These added efficiencies will directly support the reduction of vehicle downtime. 

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 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.