Approval is requested to increase expenditures under an existing contract with Reed and Graham, Inc., of San Jose and award three new one-year contracts for asphaltic materials to Reed and Graham, Inc., Raisch Products of Santa Clara, and Granite Rock Company of Redwood City.

Traditionally, multiple contracts have been awarded for asphaltic materials because there are few local sources and because finding a consistent source of supply has sometimes been difficult.

On August 7, 2001, Council awarded one-year contracts for asphaltic materials to Raisch Products, Reed and Graham and Tri-American of Milpitas (RTC 01-282). When the contracts were awarded, it was assumed that product would be consistently available from the low bidders; and staff recommended contract not-to-exceed amounts based upon this assumption and estimated purchase volumes.

However, since those contracts were awarded, local suppliers have been plagued with asphalt shortages and plant shutdowns. During this same period of time, the City's need for product has been greater than usual. Unusually severe weather last winter has resulted in excess pavement cracking, pot holes, etc. Street crews have been forced to purchase product wherever it was available, regardless of pricing. For that reason, purchases have exceeded the not-to-exceed amounts awarded by Council.

On June 25, 2002, Council authorized additional expenditures under the existing contract with Raisch Products (RTC 02-260). Staff now requests authorization for additional expenditures under the existing contract with Reed and Graham.

As occurs each year, bid specifications were prepared by Public Works and Purchasing staff. Suppliers were notified that Invitation for Bids No. F0206-86 via the DemandStar by Onvia public procurement network. Responsive bids were received from Granite Rock Company of Redwood City; Reed and Graham, Inc., of San Jose; Raisch Products of Santa Clara; and Tri-American of Milpitas.

Asphaltic products fall into nine categories:

1. Asphaltic Emulsion Oil (three types) - The lowest responsive and responsible bidder for all three types of emulsion oil is Granite Rock Company. Pricing achieved during this bidding process averages 35 percent less than last year's pricing.
2. Asphalt Concrete, Cold - Tie bids were received from Granite Rock Company and Reed and Graham. The price from both firms in the same as last year's pricing.
3. Asphalt Concrete, Hot - The lowest responsive and responsible bidder for all four types of hot asphalt concrete is Raisch Products. Pricing averages 10 percent less than last year.
4. Pavement Reinforcement Fabric - The lowest responsive and responsible bidder is Granite Rock Company. Pricing is 12 percent less than last year.
5. Crack Filler - The lowest responsive and responsible bidder is Reed and Graham. Pricing is 10 percent higher than last year.
6. Class III Aggregate Base - The lowest responsive and responsible bidder is Granite Rock Company. Pricing is 4 percent higher than last year.
7. Pavement Repair Membrane - The lowest responsive and responsible bidder is Reed and Graham. Pricing is identical to last year's pricing.
8. Asphalt Pavement Coating - The lowest responsive and responsible bidder is Reed and Graham. Pricing is 3 percent less than last year.
9. Hydro-Patch - The lowest responsive and responsible bidder is Granite Rock Company. Pricing is 19 percent less than last year.

Assuming that product is consistently available from the low bidders, total cost to the City will not exceed $680,500, based upon estimated requirements. This represents cost savings of more than $65,000 over last year's pricing.

Due to last year's experience with product shortages, however, staff recommends that Council not place specific dollar values on this year's contracts. This will give the street crew the flexibility to purchase product where it is available without exceeding Council awarded dollar amounts.

Funds are available in various accounts in Program 116 - Pavement Operations.

It is recommended that Council;

1. Approve increased expenditures in an amount not to exceed $160,000 under an existing contract with Reed and Graham; and
2. Award one-year contracts to Granite Rock Company, Raisch Products and Reed and Graham for asphaltic materials and authorize the Purchasing Officer to issue Purchase Orders to that effect.