City of Lawrence

Public Transit

TO:	Brandon McGuire
FROM:	Robert A. Nugent, Public Transit Administrator
Date:	December 1, 2017
RE:	Public Transit Service Contract Renegotiation

Background

The City received a request from MV Transportation (MV) for adjustments to our existing contract for service. The five-year contract pertains to the provision of public transportation services for the City and will sunset in December 2018. The basis of their request is the considerable increase in service since the beginning of the contract. The increases were not anticipated during the bid process, so the compensation formula does not address the increases.

Part A.5.2 of the contract states:

A.5.2 RATE ADJUSTMENTS. 

The City or Contractor may request immediate renegotiation of rates contained

in Section A.4.1 of this Agreement in the event of the following occurrences during the term of this Agreement or any extensions thereof:

A.5.2.1 An increase or decrease in the number of revenue vehicle service hours provided in the RFP of 10% or more.  

A summary of the changes in revenue hours since the beginning of this contract follows.

	Contracted Revenue Hours	% Increase Over Contract
2013	76,925
2014	84,468	9.81%	NightLine
2015	91,000	18.30%	Rock Chalk Park/Peaslee
2016	104,211	35.47%	30 minute service
2017	110,536	43.69%	30 minute service

The City agrees that, based on the data, service has been increased more than 10% and therefore entered discussions with MV about possible adjustments. As part of the discussion MV has presented several changes to the contract that they believe are necessary to continue to support a higher level of service than was included in the original contract.

Staff Analysis

In reviewing these proposals, the City evaluated each element based on whether the changes were due to the service level increase or due to other conditions that would exist with or without the service level increase. The following is the staff review of each element:

1. MV Requested the addition of one (1) Road Supervisor to support the increased number of daytime driving shifts on duty and add to their training capabilities.

The increases in service, teamed with the expansion of service from 14 hours a day to 24 hours a day, six days a week, has negatively impacted the ability of MV to monitor and maintain service on a daily basis. Road Supervisors are necessary to respond to accidents, passenger incidents, vehicle breakdowns, and service disruptions. Responding to these issues in a timely manner has become difficult, if not impossible, with less than adequate levels of road supervisors.

Staff agrees with adding one (1) Road Supervisor.

2. MV requested the addition of one (1) full-time Trainer position to work with their Safety & Training Manager and support the increased needs of the training/qualifications/safety department.

The Safety & Training Manager has a broad range of responsibilities.  Safety is foremost among them, requiring timely, in-depth investigation and analysis of incidents to identify root causes and determine the necessary corrective actions.  Additionally, the position has extensive administrative responsibilities including qualifications, DOT medical certifications, CDL licensing, as well as the management and, review and record keeping of training for all employees. With the additional service one person can no longer effectively manage the responsibilities of both training and safety. The addition of a full-time trainer will allow for a continuous and dedicated focus on safety at all levels.

Staff agrees with adding a full-time Trainer.

3. MV requested the addition of one (1) “A” Mechanic to support increased service.

The vehicles required to operate service has increased as a result of service changes. In response the City purchased additional vehicles to address these requirements. Maintaining an operable fleet is critical to meet our commitments to service and to fulfill the expectations of the passengers. With an ever-increasing fleet of highly technical vehicles it is extremely important to be able to address complex issues. “A” mechanics are the highest rated and most capable to address these complex issues.

Staff agrees with adding one (1) “A” Mechanic.

4. MV requested changing one (1) part-time “C” Mechanics to full-time.

As stated above, maintaining a fleet is critical to the ability to provide service. Our contractor is currently operating with three (3) full-time and one (1) part-time “C” Mechanics. Recruiting and retaining a part-time skilled position has proven to be extremely difficult. Changing this part-time position to full-time would not only address the recruitment and retention issue but would improve their ability to maintain vehicles for an increased level of service.

Staff agrees with changing one (1) part-time “C” Mechanic to full-time.

5. MV requested adding two (2) full-time Utility Mechanics and changing one (1) existing part-time to full-time.

At the end of every service day vehicles must be fueled and washed. Utility Mechanics perform these tasks on a daily basis. To address the increased service our contractor proposes adding two (2) full-time and changing one (1) part time Utility Mechanic to full-time.

Staff agrees that an additional 2.5 Utility Mechanics are needed to support the increased service.

6. MV requested incorporating billing for a second demand response Reservationist.

With the implementation of NightLine an additional Reservationist was required. This position has been included as a separate fee in the monthly billing. Our contractor has proposed incorporating this position as part of the regular billing and eliminating the separate bill.

Staff agrees that the additional Reservationist billing should be incorporated into the regular process.

7. MV requested increasing driver wages to improve their ability to recruit and retain drivers in an increasingly competitive marketplace.

As part of the original bid process, MV had ample opportunity to propose driver wages that were both competitive in the local job market and beneficial to MV’s business goals. The issues that MV is experiencing in recruiting and retaining drivers are directly associated with these original rates. Although increased service has brought additional attention to the issue staff does not agree that wages are the ultimate cause for these driver recruitment and retention issues.

Staff does not agree that the City should change the existing contract to assist MV with driver wage rate issues.

8. MV requested adjusting the contractual fixed rate to accommodate for increases in Kansas State Payroll taxes.

As presented, MV claims that payroll taxes have increased in each year of the current agreement and proposed adjusting the current fixed rate to accommodate for the increase. Upon investigation staff determined that the increases were actually in unemployment insurance which were directly related to the employment experience of MV. The rate imposed by the State directly relates to number and frequency of separations experienced during this period and could not be directly linked to any increase in service.

Staff does not agree that the City should change the existing fixed rate to address increases imposed by the State as the result of MV’s employment experience.

Since the variable rate is primarily associated with driver’s wages the City declines to renegotiate a new variable rate. However, the City is willing to adjust the fixed contract rates as presented in the attached spreadsheet. Any changes to the existing contract between MV Transportation and the City of Lawrence are subject to the approval by city Commission.

Staff Recommendation

Staff recommends that the City accept the following changes:

1. Adding one (1) Road Supervisor to support the increased number of daytime driving shifts on duty and add to their training capabilities.

2. Adding one (1) full-time Trainer position to work with their Safety & Training Manager and support the increased needs of the training/qualifications/safety department.

3. Add one (1) “A” Mechanic to support increased service.

4. Change one (1) part-time “C” Mechanics to full-time.

5. Add two (2) full-time Utility Mechanics and change one (1) existing part-time to full-time.

6. Incorporate billing for a second demand response Reservationist.

Staff also recommends that the additional costs associated with these changes will be experienced under the fixed rate portion of our contract. No changes will occur to the variable rate as a result. The changes to the fixed rate are as follows:

Year 5 (2018)
Current Monthly Rate *	Annual Total	New Monthly Rate	Annual Total	Annual Increase
74,786	897,432	93,742	1,124,904	227,472
*Current rate includes $3,635.55 additional fixed rate for NightLine service.