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CITY OF SAN 'JEft)lARDINO cr-
~~EMORANDUIO
To JOHN MATZER, JR.
City Administrator
From
RAYMOND D. SCHWEITZER
Deputy City Administrator
January 14, 1985
Subject
Analysis of Elevator Bids
Date
Approved
Date
At the City Council meeting of January 7, 1985, the City Administrator
was directed to make an independent analysis relating to bids for the
elevator maintenance service.
PROBLEM
In two letters from a potential bidder, Mr. Richard T. Encinas, Eastern
Division Manager of Oliver Williams Elevator Corporation, the following
allegations were made as their basis for not bidding:
1. "Due to the fact that public monies are involved, there should be
no less than two (2) or more bid participants."
2. "...City is not dealing with a local business but with Reliable
Elevator Company, a foreign-owned finn."
3. "...the parts inventory is ludicrous and leans heavily toward one
(1) company. "
4. "the company that was awarded the bid has only one (1) service/
mechanic in the San Bernardino;..."
ANALYSIS
In response to the above, I requested the Purchasing Agent to:
1. Contact the non-responsive bidders to detennine if:
a. The parts inventory was "ludicrous" and,
b. If the specs lean "heavily towards one company."
2. Contact the City of Riverside ( who has the identical elevator system)
to detennine what specifications they used and if they required
any parts inventory.
3. Contact Electronic Parts Supplier to detennine the availability of
parts required by our specs.
4. ' Contact Elevator Consultant, vendor or contractor in Los Angeles area
to detennine if inventory requirement is unreasonable.
Further, I requested Wayne Overstreet justify his reasons for requiring
an inventory on the specifications.
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JOHN MATZER, JR.
January 14, 1985
Page 2
CONCLUSIONS
#3 -- ANSWER
Parts Inventory
A. Five bids were solicited:
Received 1 bid.
Received 1 letter on why it ,did not bid.
1 bidder moved from Riverside to Upland.
1 bidder did not understand specs.
1 bidder preferred to negotiate rather than bid.
It is, therefore, concluded that the requirements of the parts inventory
was not the basic reasoning used by at least three potential bidders in
not submitting.
B. City of Riverside used our specification without going out to
bid and opted to pick up Reliable Elevator Company as a vendor
on an emergency repair status. Riverside did not require the
parts inventory; instead, they rely upon "perfonnance specs."
They ask the vendor for a one-hour response to repair in-lieu
of stocking parts.
It is again concluded that, by requiring a 1 hour response to repair an
elevator system would require an inventory of parts somewhere.
C. World Electronics Sales & Service (W.E.S.S.) of Westchester, PA
manufactured the parts required by our inventory. They stated
that they make circuit boards for Reliable Elevator Co. Reliable
designs the circuits.
They further stated that they attempt to supply all parts on
a (24) twenty-four hour delivery shelf stock situation, but that
it does not always occur. Sometimes there are required lead
times of 4 to 6, 8 to 12 and 26 weeks on certain critical items.
They considered the list required by our specs as "critical
spares." Each of them can fail without notice and that requiring
such an inventory is good management practice.
Conclusion here is that manufacturer cannot guarantee delivery of critical
items in a timely manner. If the City does not want an elevator out of
order for up to 28 weeks, critical spares should be inventoried either
through "perfonnMce specs" or required inventory. Reliable designed
their own complex circuitry in our system.
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"till' "
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JOHN MATZER, JR.
January 14, 1985
Page 3
D. Mr. Don Bools of Elevator Consulting Company very cooperatively
added:
1. The elevator industry is undergoing very rapid changes.
Elevator systems are being converted from the old mechanical
systems to the more modern electronic systems. The old
logic systems have given way to complex circuitry.
2. Vendors now build against competition by making themselves
a "single source" for their circuitry. When vendors such
as "Reliable" design their own systems, only their people
understand the design and circuits.
3. Very few vendors in the San Bernardino area have experience
in the new electronics. (Bools stated that out of approx-
imately 1700 elevator mechanics in Southern California, only
30 really understand the new integrated circuits.)
4. Mr. Bools felt that the inventory commitment was reasonable
and nonnal.
It is concluded from this conversation that:
1. Inventory is reasonable and normal.
2. Reliable placed their own patented circuitry system in our
elevators making them sole source.
3. Few vendors understand the new electronics and are being left
behind by the industry.
E. Wayne Overstreet stated:
1. U. S. Elevator contract was voided by the City Council upon
his recommendation.
2. Four companies were consulted on their proposed recommendations
to correct the elevator's operational system problems:
U. S. Elevators; Montgomery Elevator; Reliable Elevator Corp.;
Oliver & Williams.
3. U. S. Elevator suggested modernization at $225,000.
Montgomery suggested modernization at $239,444.
Reliable suggested a modified solid state (electronic)
control system at less than $20,000. .
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MR. JOHN MATZER. JR.
January 14, 1985
Page 4
Oliver & Williams did not propose any modifications.
4. Reliable was awarded the contract and through "hindsight".
the maintenance contract should also have been awarded.
5. The elevators. prior to Reliable Elevator, were inoperative
due to not leveling, sticking, doors not opening. The
majority of the complajnts and malfunctions were the direct
result of an inability to obtain parts in a timely manner.
(I have inserted an excerpt from Wayne's memo concerning
the inventory requirements).
6. Inventory requirements are nonnal and routine in the maintenance
trade. We nonnally require it for escalators. chiller,
heating and air-conditioning. etc...Proven over the long haul
to be cost effective.
7. Because there could be a long lead time in receiving critical
parts, an inventory is required.
8. The bids allowed for a vendor to bid and take any exceptions
he deemed appropriate.
9. When the elevators are "off line", it causes a loss of manhours
as well as,inconvenience.
The City Maintenance Division has inventory requirements in other specif-
ication. Parts required appear to be critical, high wear parts, with
long lead times required for ordering since they come from Pennsylvania.
#1 -- ANSWER
Should be more bid participants (due to the fact public monies are
involved) .
This allegation has no basis in law. Five bids were solicited ~nd
various reasons were given for not bidding.
#2 -- ANSWER
Foreign-owned finn.
This allegation again has no basis in law. There are no policies/
requirements to contract with only U. S. companies.
#4 -- ANSWER
One service mechanic in San Bernardino.
Again, the specifications have been met by the apparent lowest and
best bid.
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JOHN MATZER, JR.
January 14, 1985
Page 5
CONCLUSIONS
It appears that by granting the contract to Reliable Elevator Company for
installing the modified solid state electronic control system, Reliable
placed their own designed complex circuitry in our elevator system. They
have made themselves a "single source" for their circuitry.
The inventory requirement is nonnal in the trade and not unreasonable. It
, is good maintenance management.
Recommend that Reliable Elevator Company be awarded the annual maintenance
contract provided they give the circuitry plans of our elevators to
Wayne Overstreet in order that, in the future, he can receive more
competitive bids.
RDS/md
Attachment
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ATTACHMENT
These elevators malfunctioned for some of the following reasons, elevators not
leveling, elevators sticking, elevators parking and doors not opening. The
majority of these complaints were the result of their inability to obtain parts.
A majority of these were associated with the old type of control system we had
and their inability to obtain parts in sufficient number to repair them.
We recommended that the new contract specifications be written in such a manner
that the new company receiving our new maintenance contract be t-equired to
, maintain an inventory of parts on the job site that could be varified by the
city, that would eliminate a long down time for these critical, essential
elevators.
In contact with the suppliers of these parts, Electronic Sales and Service, Inc.
the lead time required for delivery of these parts are listed below:
(a) Three (3) generator field control II (GFC II) units..120
to 150 days lead time. (Needed for - Motor Response)
(b) Two 920 light emitting diode leveling vanes..,120 days, lead
time. (Needed for - leveling elevator)
(c) Three (3) W.E.S,S. (World Electronics SalEs & Service) Solid
State Leveling P.C. Boards.....six (6) weeks lead time:
(Leveling)
(d) Three (3) W.E.S.S. Solid State Stepper P.C. Boards...six' (6)
weeks lead time. (Response to service calls)
(e) Three (3) W.E.S.S. Solid State Door Operator P.C. Boards...Four
(4) weeks lead time. (Open doors)
(f) Six (6) light Emitting Diode Leveling Pods...Local area item.
(Level ing)
(g) Two (2) G.A.L. Safety Edges...Sixteen (16) weeks lead time.
(When door is hit - door reopens)
(h) One (1) G.A.L. Master Door Operator...Sixteen (16) weeks.
lead time. (Controls all functions of stopping, leveling
and opening of doors)
(i) Fifteen (15) G.A.L. Door Rollers...Local Area Item.
(Door opening)
(j) Twenty-five (25) G.A.L. Pick-up Rollers.. .Local Area Item.
(Rollers on door arms)
(k) Twelve (12) U.S. Square, Black Bezel.ed... Two (2) weeks lead time.
As you can see by these lead times, it is conceivable the stocking of only one
or two items could take one to two elevators out of service from two weeks to
five months to deliver these critical items.
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