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| ARF- 2303 |
Regular Agenda Item 3. C.
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| Regular BOS Meeting |
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| Information |
| Request/Subject |
| Empire CAT Customer Purchase Agreement for 2014 Motor Grader. |
| Background Information |
There is currently (1) motor grader in the Roads Department equipment fleet that is costing a lot of money in repairs. The Roads Department plans to trade it in for one new motor grader. Upgrading the machine will save in repairs on old, unreliable equipment.
Equipment No. J-9, Serial Number 72V08471, was purchased used in 1987, for $127,880.00. It is now 29 years old and has a total hour usage of 17,481 hours as of January 16, 2014. In the past ten years, the repair costs for this machine total $57,210.89. As part of the Customer Purchase Agreement for the 2014 motor grader, Empire CAT has assigned a trade-in value for Equipment No. J-9 of $40,000.
The total of the trade-in, $40,000, has been deducted from the $298,795 price for the new 2014 motor grader. |
| Evaluation |
On April 16, 2013, the Gila County Board of Supervisors ratified the Cooperative Purchasing Agreement between Gila County and the National IPA, a cooperative purchasing group. As a member of the National IPA, Gila County can benefit through an existing agreement that Caterpillar has between the City of Tucson and the National IPA to buy a new 2014 12M2 Caterpillar motor grader. The National IPA discount is thirty-five point five percent (35.5%) off the list price of $446,358. This results in a significant cost savings of $158,457 on the 2014, all wheel drive, motor grader.
The Customer Purchase Agreement with Empire CAT shows the sub-total price for the new motor grader to be $298,795 which includes $3,000 for a 5-year/5000 hour Governmental (total machine) Warranty and $7,894 for freight from the factory to Arizona. With a trade-in of one older motor grader, for a total trade-in value of $40,000, a down payment of $139,555, plus sales tax totaling $20,315.41, a balance of $139,555.41 will be due by July 15, 2014.
In the Transportation Excise Tax budget, there is $323,682 available in Capital Outlay Equipment. The Capital Equipment plan was to replace a motor grader this fiscal year. Due to our aging heavy equipment fleet, we are holding back half of the payment, $139,555.41 and may not pay it until July of next fiscal year, in case we have a major equipment breakdown. We will know by June 2014, if we can make the final payment and not have to carry it into the next fiscal year. Empire is not asking for any interest to make the two payments.
We will automatically be enrolled in the preventative maintenance program that provides filters and computer connectivity with Caterpillar for diagnostic "real time" information on the machine. A GPS is also installed as standard practice which provides location and operating status. The wheels, moldboard and rippers are the same size we buy for our other motor graders. Upgrading one piece of equipment will save us money in repairs on old, unreliable equipment.
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| Conclusion |
It would benefit Gila County to take advantage of a cooperative agreement that Caterpillar has with the City of Tucson and National IPA which results in a significant cost savings on this 2014 all wheel drive, motor grader. Gila County, as a member of National IPA, has been offered a savings of thirty-five point five percent (35.5%) off of the list price, which translates into a $158,457 savings. |
| Recommendation |
| Consolidated Roads recommends that the Board approve the Customer Purchase Agreement with Empire CAT for the purchase of one 2014 12M2 motor grader. |
| Suggested Motion |
| Information/Discussion/Action to approve a Customer Purchase Agreement between Gila County and Empire CAT for the purchase of one new 2014, 12M2 Caterpillar motor grader in the amount of $298,795 with a trade-in allowance of $40,000 that has been applied to the purchase price, resulting in a total amount due, which includes sales tax, warranty and freight to ship motor grader to Arizona, of $279,110.41. (Steve Stratton) |
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