By Alan M. Petrillo
Depending on their specific needs, fire departments are saving money, time, and effort by tagging onto an existing apparatus purchase contract by another fire department. Most departments find there are a number of substantial advantages to be found in a tag-on purchase, heavily outweighing any drawbacks inherent in the process.
Strategies
Phil Gerace, director of sales and marketing for KME, says one of the reasons departments look to tag-on purchasing is that the traditional apparatus bidding process takes a long time to do. "While you're going through that process, there are high administrative costs going on-the operations and fleet management people have to take the time to write the bid, there are legal review costs, there's the high cost of publishing the bid through advertising and getting it into people's hands, and the cost of any salaries during that time," Gerace says. "It typically takes a year from the start of writing the apparatus spec to cutting a purchase order to buy it. And while that year is going on, the prices of components are usually going up too."
Still, the most frequent way departments buy apparatus is through their own bidding processes, Gerace says. The second most used method is through a scheduled contract, such as the Houston Galveston Area Contract (H-GAC), while the third most popular way to buy is through a tag-on contract, he says.
Gerace says the tag-on process (also known as an add-on) comprises two strategies-adding onto a department's own purchase (e.g., buying two vehicles on the same contract) or tagging onto someone else's purchase. "We offer both types of options for customers," he points out. "Usually there's a period of years where you can tag onto your own contract with pricing increases built into it. Typically it's only for the same vehicle, but you could conceivably do some small changes with a tag-on vehicle."
A more popular option than a tag-on contract, Gerace maintains, is a long-term purchasing agreement (LTPA). "With an LTPA, you can structure the purchases for multiple years, as long as the price structure reflects potential increases as the contract runs," he says. "LTPAs are a huge benefit to standardizing a fleet, which benefits training and maintenance. It also saves administrative costs on future purchases, the service and parts costs are lower, and training costs are lower. These agreements usually are for five years, but some run for as many as ten years."
Scott Oyen, Rosenbauer's vice president of sales, points out that LTPAs also are gaining traction with the economy still running on the slow side. "A department might sign an LTPA for a custom pumper, bid it for a set amount, set the term for a number of years, and use the consumer price index (CPI) as a guide for increases in pricing," Oyen says. "Also there usually is wording in there to account for any National Fire Protection Association (NFPA) standard changes or federal engine emission changes."
Rosenbauer works with the San Bernardino County (CA) Fire Department on an LTPA, Oyen notes, and has built apparatus for the Fort Worth (TX) Fire Department through H-GAC.
Tagging onto another department's contract usually comes about when a sales representative draws a bidding department's attention to a purchase similar to theirs, Gerace says. "Usually the purchase being tagged onto has been competitively bid with multiple bidders, and tag-on bidders will want to see the bid and purchase documents for the original purchase to see if it fits their needs for tagging on."
Gerace points out that KME had a large purchase several years ago by the Los Angeles County (CA) Fire Department where the department bought dozens of pumpers and aerials. "Surrounding departments were encouraged to tag onto the c