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Consent Agenda Item 4. B.

Regular BOS Meeting

Meeting Date:	09/15/2020
Submitted For:	Steve Sanders	Submitted By:	Betty Hurst, Contracts Administrator
Department:	Finance
Fiscal Year:	2021	Budgeted?:	Yes
Contract Dates Begin & End:	09-25-18 to 09-24-25	Grant?:	No
Matching Requirement?:	No	Fund?:	Renewal

Information

Request/Subject

Request for renewal of contract with Caterpillar for one new 120M2 AWD Blade from Empire Caterpillar.

Background Information

On August 7, 2018, the Board of Supervisors approved the use of the Sourcewell (NJPA) contract 032515-CAT which allows Gila County to purchase goods and services with discounts. The blade that will be replaced will be J-1 which is 32 years old. The frequent break-downs and extra expense is not a good business practice. After 32 years, the wear and tear of frequent heavy equipment use just costs more.

Consolidated Roads traded in a 1986 CAT 120G Motor Grader (J-1) that Gila County bought used in 1993 for $54,942. The life-to-date hours are 10,028 and we have spent $116,146 in maintenance and repairs, which includes everything except fuel. The repair costs have escalated and the reliability has decreased so was time to replace it.

Evaluation

In July 2020, the Sourcewell CAT Contract number was changed to 032119-CAT and was approved by the Board for use using the same type discounts. The discount of 34% from Caterpillar under the Sourcewell-NJPA Contract 032119-CAT when purchasing a new piece of equipment, combined with the discount from Empire Machinery is quite a savings. This purchase is for seven (7) years with an option to keep it or exercise the Client Guaranteed Buy Back at $90,240 and used less than 7,000 hours.

Public Works purchased the machine utilizing Caterpillar Financial. The breakdown of the for this September 2020 payment is:
$19,891.08 Principle Payment
$ 9,988.26 Interest
$ 2,360.46 Sales Tax 7.9%
_________
$32,239.80 Total Payment FY2021

The Board approved this transaction, and the first payment for J-021 was paid on September 26, 2018. The subsequent payment was made in September 2019.

Conclusion

According to A.R.S. § 11-651, the Board must reaffirm its position on the purchase contract each fiscal year. Public Works is requesting the Board of Supervisors to approve the 3rd budgeted payment for this machine in September 2020 to be paid from the Half-Cent Transportation Excise Tax Fund.

Recommendation

The Public Works Director and Finance Director recommend the Board approve the continued payments of the Caterpillar 120M2 AWD Blade with financing through Caterpillar Financial and approve payment of $32,239.80 in September 2020.

Suggested Motion

Approval for the continued use of the Sourcewell Contract No. 032119-CAT financing a 2018 Model 120M2 AWD Caterpillar Motor Grader serial number M9H00559 using Caterpillar Financial Services Corporation for the payment of $32,239.80 in September 2020.

Attachments
Signed CAT Finance Agreement for Motor Grader Sept 2018
Amortization Schedule 001-0939593-000
ARS 11-651