AGENDA ITEM 10-B
INFORMATION ITEM
TO:
CHAIRMAN COVINGTON AND THE VRE OPERATIONS BOARD
FROM:
DOUG ALLEN
DATE:
NOVEMBER 16, 2012
RE:
KEOLIS MID-CONTRACT ASSESSMENT
At the September 21, 2012 Operations Board meeting, a request was made for an
analysis of the Keolis contract as the midpoint of the contract is approaching. For
the purpose of this effort, information is first provided on the 2009 proposal
process, followed by the history of the contract award and amendment. The
analysis then applies amendment costs to the Keolis and Amtrak base proposals
when appropriate to allow for comparison.
2009 Proposal
Element
Keolis
Base proposal for ongoing services (train $16,255,529
operations, management, etc)
Mobilization
$1,703,819
Costs Applied to All Contracts
Incentives (applied by VRE to all proposals)
$400,000
Off-site Materials (applied by VRE to all $100,000
proposals)
TOTAL $18,459,348
Amtrak
$17,225,284
$2,231,265
$400,000
$100,000
$19,956,549
Because the other proposers (Bombardier and Connex) submitted costs much
higher than both Keolis and Amtrak, detailed information is just provided for Keolis
and Amtrak.
Comparison of Keolis and Amtrak Proposals
$25,000,000
$20,000,000
Off-Site Materials
$15,000,000
Incentives
Mobilization
$10,000,000
Base Bid
$5,000,000
$Keolis
Amtrak
In October 2009, the Operations Board elected to award the contract to Keolis in
the amount of $18,459,348, without any contingency, allowance for items added
during original negotiations, or already planned service enhancements. The
Operations Board instead asked staff to prepare a separate amendment, detailed
below, that was acted on independently in December 2010.
Contract Award and Amendments
Following the original award, annual contract renewals for each year of service
were made in accordance with the contract in May 2011 and April 2012.
Date
10/16/09
12/17/10
05/20/11
04/20/12
Term
Contract Year 1- FY2011
December 2010 Amendment
Contract Year 2 - FY 2012
Contract Year 3 – FY 2013
Value
$18,459,348
$1,585,000
$17,154,527
$18,008,591
There has been only one contract amendment outside of the annual renewals
since the original contract award in 2009. This amendment was made in
December of 2010 and, as shown below, primarily addressed changes that came
out of the original negotiation and service enhancements that would have applied
to any contract operator. The changes that came out of the original negotiation
were discussed with the Operations Board in October 2009 but, at the Board’s
request, action was deferred until December 2010.
2
December 2010 Amendment
Scope Change
Cost
Reason
Keolis Specific Amendments
Crew layover facilities $160,000
Keolis proposed a layover facility that VRE
felt was too far from the coach yard, which
was a concern with DC traffic. VRE
requested another location and after
negotiations agreed to a price increase of
$160,000 to cover additional costs.
Additional mobilization $275,000
Based on industry standards, Keolis
costs
assumed that 70% of the previous contract
operator’s employees would move to the
new service. In reality, only one employee
moved, increasing mobilization costs
associated with training. This was a onetime cost.
VRE Requested Amendments
Express train
$675,000
Added an express train and turn back
train. Amtrak costs would have been
comparable, although not identical.
Liability premium
$325,000
FY 2011 saw higher than anticipated
costs
liability premium costs. Amtrak and Keolis
assumed the same estimated cost for
liability insurance. As such, it can be
assumed that this cost increase would
have impacted either operator. Note VRE pays the premium regardless of the
provider.
Locomotive repairs
$325,000
At the time, VRE was operating old
locomotives at the end of their useful life
and awaiting delivery of the 20 new
locomotives. Major failures began
occurring and additional mechanical teams
were brought in to maintain on-time
performance. Given the circumstances
and age of the equipment, it can be
assumed that this cost increase would
have impacted any operator
Incentive
($175,000)
VRE assumed $400,000 for incentives and
actuals were $225,000.
TOTAL $1,585,000
3
It is important to note that as part of the Board action on this amendment in
December 2010, an additional $500,000 was approved for contingency to cover
additional equipment maintenance capital needs such as warranty work or higher
than expected incentive payments. The contingency was not used in FY 2011,
allowing the contract year to be completed well under the Board authorized
amount.
Comparison of Adjusted Keolis and Amtrak Proposals – Post December 2010
Amendment
$25,000,000
December 2010 Amendment VRE
$20,000,000
December 2010 Amendment Keolis
$15,000,000
Off-Site Materials
$10,000,000
Incentives
Mobilization
$5,000,000
Base Bid
$Keolis
Amtrak
Several of the amendment components (i.e. additional service) would have been
applicable to any service provider. As such, these costs were added to both
proposals for comparison purposes. After adjusting for these amendments, the
Keolis contract was still approximately $1M less than the Amtrak proposal.
4
Proposal vs. Actuals
FY 2011
Actual costs for FY 2011 were $18,149,486, within the approved Board
authorization, and $1,893,957 more than the base proposal submitted by Keolis.
Note the comparison between the proposal and actuals is using the base
proposal for ongoing services.
Keolis Base Proposal
Actual FY 2011 Costs
Difference
$16,255,529
$18,149,486
$1,893,957
A summary of major variances is provided below. Note that many of the line items
are additions that were added through the December 2010 Amendment but are
ongoing annual costs.
Variance
Mobilization costs carried
over from FY 2011
Crew layover facilities
Cost
Keolis Specific
$86,373
$160,000
Applicable to Any Provider
Incentive
$224,918
Express Train
Notes
Capital purchases related
to mobilization.
See note in Amendment
#1
The contract includes
incentives related to train
service and OTP.
Incentive payments were
budgeted at $400,000 but
not included in the base
proposals, making this a
negative variance. While
payment of specific
incentives would differ by
operator, it can be
assumed that any
provider would receive
incentives.
New service - Amtrak
costs would have been
comparable, although not
identical.
$576,140
5
Equipment task order
work
Liability premiums
$516,060
See note in Amendment
#1
See note in Amendment
#1
$325,000
Total: $1,888,491
FY2011 Actuals Applied to Adjusted Base Proposals
$19,500,000
$19,000,000
$18,500,000
Liability Premium
$18,000,000
Equipment Task Order
$17,500,000
Additional Service
$17,000,000
Incentive
$16,500,000
Layover Facility
$16,000,000
Mobilization
$15,500,000
Base Bid
$15,000,000
$14,500,000
Keolis
Amtrak
Note – the Amtrak base proposal was adjusted for costs applicable to any provider using the same costs as
applied to Keolis
Several of the amendment components (i.e. additional service) would have been
applicable to any service provider. As such, these costs were added to both
proposals for comparison purposes. After adjusting for these amendments, the
Keolis contract was still approximately $725,000 less than the Amtrak proposal.
FY 2012
Actual costs for FY 2012 were $17,473,794, within the approved Board
authorization, and $1,218,265 more than the base proposal submitted by Keolis.
A summary of major variances is provided below. Note that many of the line items
are additions that were added through the Amendment but are ongoing annual
costs.
6
Variance
Insurance Claims
Services
Crew layover facilities
Cost
Keolis Specific
$22,574
$160,000
Notes
Payment made to Keolis
for subcontractor work
managing claims
attributed to VRE or
jointly between VRE and
Keolis
See note in Amendment
#1
Applicable to Any Provider
$722,047
The procurement
included incentives
related to train service
and OTP. Incentive
payments were budgeted
at $400,000 but not
included in the base
proposals. While
payment of specific
incentives would differ by
operator, it can be
assumed that any
provider would receive
incentives.
Service Additions from
$576,140
Additional service prior years
Amtrak costs would have
been comparable,
although not identical.
Service additions (full
$401,884
Additional service year of turnback train and
Amtrak costs would have
added cars)
been comparable,
although not identical.
Equipment task order
$35,000
Additional work on the
work
Legacy Gallery cars was
required beyond what
was expected in the
original scope.
Liability premiums
$(900,000)
Board action to remove
insurance coverage from
contract as expected cost
savings to VRE policies
were not realized
Incentive
7
Contractual increase –
would apply to any
operator.
CPI Adjustment of 1.2% $197,938
Total: $1,215,583
FY2011 Actuals Applied to Adjusted Base Proposals
$25,000,000
1.2% CPI
$20,000,000
Liability Premium
$15,000,000
Equipment Task Order
Additional Service
$10,000,000
Incentive
Layover Facility
$5,000,000
Insurance Claims Services
$-
Base Bid
Keolis
Amtrak
$(5,000,000)
Note – the Amtrak base proposal was adjusted for costs applicable to any provider using the same costs as
applied to Keolis.
Several of the amendment components (i.e. additional service) would have been
applicable to any service provider. As such, these costs were added to both
proposals for comparison purposes. After adjusting for these amendments, the
Keolis contract was still approximately $790,000 less than the Amtrak proposal.
Given the comprehensive nature of the contract, the addition of several service
enhancements that were not part of the base proposal, and the record-breaking
on-time performance, VRE staff has reviewed the information in detail and is
satisfied with the level of and reasons behind the variances.
Customer Service
In addition to the federal and state requirements for VRE to compete this contract,
VRE welcomed the opportunity to write a purchase of service contract that
focused on operations management and customer service. The scope of the
previous contract was drafted prior to VRE beginning service and renegotiated
with limited amendments for over 15 years. The scope of services governing the
contract with Keolis provided better crew oversight and management of
8
interaction with the customers. As shown below, every one of the train crew
performance measures increased with the new contract and Keolis operations.
Measure
(train crew
elements only)
Knowledgeable about VRE
Operations
Helpful
Courteous
Make regular station
announcements
Make timely delay
announcements
Check tickets regularly
Present a professional
appearance
Overall Crew Performance
Amtrak
Keolis
(2010 last year (2012 current
of contract)
year)
89%
90%
Up 1%
88%
86%
80%
90%
89%
82%
Up 2%
Up 3%
Up 2%
71%
76%
Up 5%
73%
91%
78%
93%
Up 5%
Up 2%
87%
90%
Up 3%
9
Difference