AGENDA ITEM 10-F
ACTION ITEM
TO:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
FROM:
DALE ZEHNER
DATE:
JUNE 18, 2010
RE:
AUTHORIZATION TO MODIFY THE CONTRACT FOR NEW
LOCOMOTIVE PURCHASE
RECOMMENDATION:
The VRE Operations Board is being asked to recommend that the Commissions
authorize the Chief Executive Officer to modify the contract with MotivePower,
Inc., for the purchase of locomotives so that the base order is increased from
fifteen to nineteen locomotives, increasing the contract value by $13,218,128, for
a total amount not to exceed $73,798,120.
BACKGROUND:
In January of 2008, the Operations Board authorized VRE staff to enter into a
contract with MotivePower, Inc. of Boise, Idaho for the manufacture of two new
locomotives in an amount not to exceed $9.6 million. Since that time, additional
approvals have been sought and received as follows:




October 2008 - three additional units (five total) for a contract total of
$20.3 million.
March 2009 - four additional units (nine total) for a contract total of $36.4
million.
June 2009 - three additional units (twelve total) for a contract total of $48.4
million.
October 2009 – three additional units (fifteen total) for a contract total of
$60.6 million.
Authorization is now being sought for up to four additional units. The first three
units will be purchased using federal formula funds for FY 2011 and prior years.
The fourth unit will be purchased by transferring federal formula funds from other
projects in FY 2011, reducing the contingency amount needed for the project,
based on costs to date, and using up to $1.5 million of VRE’s capital reserve of
$2.4 million. The capital program reallocation is described in detail in the FY
2012 budget item found earlier on the agenda.
MotivePower has offered a price of $3,604,532 per locomotive for all orders
placed by July 5, 2010. This price reflects the supplier discount they receive for
bulk purchasing, since the supplies for these locomotives will be combined with
some of VRE’s prior orders. Locomotives ordered after that date will cost
approximately $500,000 more per unit, in accordance with the contract
provisions. As such, VRE is making every effort to order as many units as
possible at the lower price, including using a portion of the capital reserve. In
addition, although the option contract extends until 2013, locomotives ordered
after December 31, 2010 will be a different model which requires additional
inventory and training, resulting in significantly higher lifecycle costs.
In January 2008, the Operations Board authorized up to $4,145,920, including
contingency, to STV, Inc. for construction engineering and inspection services for
the purchase of all twenty locomotives. Similar to the locomotive contract, this
contract was structured to allow incremental notices to proceed, such that
authorization will be issued concurrently and proportionately with locomotive
option orders. As such, no additional Board authorization is needed for the
oversight work.
FISCAL IMPACT:
Funding is available from the locomotive acquisition line item of the VRE capital
budget. The first three units will be purchased using federal formula funds for FY
2011 and prior years. The fourth unit will be purchased by transferring federal
formula funds from other projects in FY 2011, reducing the contingency amount
needed for the project based on costs to date, and using up to $1.5 million of
VRE’s capital reserve of $2.4 million.
TO:
FROM:
DATE:
RE:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
DALE ZEHNER
JUNE 18, 2010
AUTHORIZATION TO MODIFY THE CONTRACT FOR NEW
LOCOMOTIVE PURCHASE
RESOLUTION
10F-06-2010
OF THE
VIRGINIA RAILWAY EXPRESS
OPERATIONS BOARD
WHEREAS, in January of 2008, the Operations Board approved the award of a
contract to MotivePower, Inc. for the manufacture of two new locomotives; and,
WHEREAS, since that time, additional approvals have been granted allowing the
purchase of fifteen total units for a contract total of $60.6 million; and,
WHEREAS, authorization is now being sought for up to four additional units.
NOW, THEREFORE, BE IT RESOLVED THAT, the VRE Operations Board
recommends that the Commissions authorize the Chief Executive Officer to
modify the contract with MotivePower, Inc., for the purchase of locomotives so
that the base order is increased from fifteen to nineteen locomotives, increasing
the contract value by $13,218,128, for a total amount not to exceed $73,798,120.