Title
Resolution to Amend Two Purchase Orders with Lunghamer Ford of Owosso LLC for City Vehicles ($48,531.00)
Memorandum
On November 15, 2021, City Council approved Resolution #21-410 approving the purchase of ten vehicles from Signature Ford (now Lunghamer Ford) in the amount of $360,892.00. On April 18, 2022, City Council approved Resolution #22-103 approving the purchase of six electric pickup trucks from Signature Ford in the amount of $240,585.00. Of the ten vehicles purchased under Resolution #21-410, nine were delivered leaving one Ford F-250 pickup truck (gasoline powered) outstanding. Of the six vehicles purchased under Resolution #22-103, only one has been delivered leaving five Ford F-150 Lightning (all-electric) pickup trucks outstanding. Each of these undelivered vehicles were 2022 model year (MY).
Ford Motor Company recently notified the City that they were unable to produce enough 2022 MY vehicles to address the orders they had received under the government contract program and each undelivered vehicle was being re-submitted as a 2023 MY. Additionally, they would be unable to protect the 2022 MY pricing for the new 2023 MY vehicles. The production issues and price increase are results of many factors including inflation related increases, raw material issues, etc. per the surcharge letter attached in Legistar.
The total increase for these six vehicles is in the amount of $48,531.00. The breakdown per vehicle is attached in Legistar. Staff reviewed the limited options available, but with Ford being the sole unionized, domestic automaker currently providing electric pickup trucks, staff is recommending that the City Council approve the price increase for these six vehicles. Cancelling the order would negatively impact City operations and sustainability efforts.
The price increase would increase PO #23-0588 in the amount of $18,305.00 and PO #23-0589 in the amount of $30,226.00. The funds for both PO’s would be available without regard to fiscal year.
Budget/Fiscal Impact: Funding for this price increase is available in the approved FY24 Fleet Services Fund Operations and Maintenance Budget.
Lunghamer Ford of Owosso LLC complies with the City’s Conflict of Interest and Non-Discrimination ordinance requirements.
Staff
Prepared by: Matthew J. Kulhanek, Fleet & Facilities Unit Manager
Reviewed by: John Fournier, Deputy City Administrator
Approved by: Milton Dohoney Jr., City Administrator
Body
Whereas, The City approved the purchase of vehicles on November 15, 2021 and additional electric City pickup trucks on April 18, 2022 from Signature Ford which is now Lunghamer Ford of Owosso LLC;
Whereas, Ford Motor Company has recently notified the City that six undelivered model year 2022 vehicles were unable to be built and will be supplied as model year 2023 vehicles at the higher model year 2023 prices because of inflationary impacts and raw material issues;
Whereas, Continuing with the purchase of these vehicles is consistent with the City’s sustainability efforts;
Whereas, An additional amount of $48,531.00 is needed to amend the purchase orders for these six vehicles;
Whereas, Lunghamer Ford of Owosso LLC complies with the City’s Conflict of Interest and Non-Discrimination ordinance requirements; and
Whereas, Adequate funding for the amended purchase orders is available in the approved FY24 Fleet Services Fund Operations and Maintenance Budget;
RESOLVED, That the City Council approve amendments to purchase order #23-0588, increasing the amount by $18,305.00, and purchase order #23-0589, increasing the amount by $30,226.00, both with Lunghamer Ford of Owosso LLC;
RESOLVED, That funding for these amendments in the amount of $48,531.00 comes from the approved FY24 Fleet Services Fund Operations and Maintenance Budget;
RESOLVED, That funding for the amended purchase orders be available without regard to fiscal year; and
RESOLVED, That the City Administrator be authorized to take all necessary actions to implement this resolution.