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| ARF- 1751 |
Regular Agenda Item 3. B.
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| Regular BOS Meeting |
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| Information |
| Request/Subject |
| Empire CAT Customer Purchase Agreement for 2013 Motor Grader |
| Background Information |
There are currently three (3) motor graders in the Roads Department equipment fleet that are costing a lot of money in repairs. The Roads Department plans to trade in two (2) of them for one new motor grader. Upgrading one machine will save in repairs on old, unreliable equipment.
Equipment No. J-2, was purchased new in 1976, for $65,638.56. It is now 37 years old and has a total hour usage of 3,363 hours as of February 11, 2013. In the past ten years, the repair costs for this machine total $64,402.58. As part of the Customer Purchase Agreement for the 2013 motor grader, Empire CAT has assigned a trade-in value for Equipment No. J-2 of $35,000.
Equipment No. J-6, was purchased new in 1987, for $141,027.13. It is now 26 years old and has a total hours usage of 7,021 hours as of February 11, 2013. In the past ten years, the repair costs for this machine total $161,568.23. As part of the Customer Purchase Agreement for the 2013 motor grader, Empire CAT has assigned a trade-in value for Equipment No. J-6 of $76,000.
The total of these two trade-ins, $111,000 has been deducted from the $298,122 price for the new 2013 motor grader. |
| Evaluation |
Gila County is listed as a member of the National IPA, a cooperative purchasing group. It is unclear when or how Gila County joined this cooperative purchasing agreement, but 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 2013 12M2 Caterpillar Motor Grader. The National IPA discount is thirty-five point five percent (35.5%) off the list price of $445,534. This results in a significant cost savings of $158,306 on the 2013, All Wheel Drive, Motor Grader.
The Customer Purchase Agreement with Empire CAT shows the sub-total price for the new motor grader to be $298,122, 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 two older motor graders, for a total trade-in value of $111,000, a down payment of $120,000, plus sales tax totaling $16,560.30, a balance of $83,682.30 will be due by August 01, 2013.
In the Transportation Excise Tax budget, there is $160,000 available in Capital Outlay. The plan is to use $120,000 of it this fiscal year as the down payment, and pay the remaining balance of $83,682.30 by August 01, 2013. Empire will carry the $83,682.30 balance without charging any interest. Since it is such a short term agreement, financing is not available.
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. |
| Conclusion |
Gila County should ratify its determination to participate in the National IPA cooperative purchasing agreement and ratify the acceptance of its terms. This will enable 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 2013 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 $158,306 savings.
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| Recommendation |
| Consolidated Roads recommends that the Board ratify Gila County's determination to participate in the National IPA cooperative purchasing agreement, ratify the acceptance of its terms, and approve the Customer Purchase Agreement with Empire CAT for the purchase of one 2013 12M2 motor grader, serial number: R9P00120. |
| Suggested Motion |
| Information/Discussion/Action to ratify Gila County's determination to participate in the National IPA cooperative purchasing agreement, ratify the acceptance of its terms, and approve a Customer Purchase Agreement between Gila County and Empire CAT for the purchase of one new 2013 12M2 Caterpillar motor grader (serial number R9P00120) in the amount of $298,122 with a trade-in allowance of $111,000 that has been applied to the purchase price. (Steve Stratton) |
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