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AWARD BID FOR PURCHASE OF ARTICULATED LOADER WITH SNOW PLOW AND WING By: Jessie Hart, Finance Officer Background: Council previously authorized requesting bids for a 4-wheel drive loader with snow plow and wing. We received two bids that were opened on Friday, March 15, 1996. St. Joseph's Equipment, Inc. [Shakopee] bid a CASE Model 721B. RDO Equipment Co. bid a John Deere Model 624G. Both bidders met all of the minimum requirements set out in the bid documents. We bid four options, all of which included provisions to trade in the current 1980 Fiat-Allis loader. The attributed trade-in value is $28,000 by the CASE dealer and $16,000 by the John Deere dealer. The various alternatives in the bids were net of trade value. Two of the four options were for five year leases of either a new piece of equipment or one which was slightly used. We wished to be able to evaluate whether there might be cost savings potential through the lease option. The annual cost of the lease by the CASE dealer would save use between $128 and $884/year in carrying costs. The John Deere lease option was actually more costly than the ownership options. A consideration in the lease option is the loss of flexibility and the lack of any equity in an asset. We do not believe the cost savings in the CASE machine warrants pursuing that option. The ownership options are: DEALER BRAND NEW MACHINE USED MACHINE RDO Equipment Co. St. Joseph's Equipment John Deere $123,575 $107,555 CASE $102,545 $ 91,980 In both cases [new and used] we requested a guaranteed buy-back option after we have owned the machine for five years. The buy-back guarantee is greater with the John Deere but it is not great enough to make up for the increased cost of their machine and the lower trade in value. With either purchase we will retain the option to consider exercising the opportunity to trade the machine after five years or keep it for the entire life of the machine. It appears at this point that the annual cost of ownership of either machine is slightly less exercising that option, but it is expected that the cost of new machines five years from now will eat up any potential savings. The Public Works Supervisor has looked at all four machines within the bid options. His recommendation is that the used machines [with about 200 hours on the meter] look and operate just like new and will meet our needs.