Applus Technologies Volume 2_Cost Response_Applus.pdf

Vehicle Inspection and Maintenance Program Massachusetts Department of Transportation/Registry of Motor Vehicles

Bid #: BD-16-1030-0R100-0R001-00000006553 - April 7, 2016

3.3 Cost Response

Table of Contents

3.3 Cost Response

3.3.1 Bidder Cost Response Elements: Program Costs (Attachment G)

3.3.2 Bidder Cost Response Elements: Inspection Station Costs (Attachment H)

3.3.3 Bidder Cost Response Elements: Breakdown of Bidder Costs in the Per Inspection Fee(s) and Workstation Unit Prices (Attachment I)

3.3.4 Bidder Cost Response Elements: Costs Associated with Outside Equipment Vendors

3.3.5 Bidder Cost Response Elements: Financial Plan (Attachment J)

3.3.6 Cost Response Element: Financial Qualifications

Massachusetts Department of Environmental Protection/Registry of Motor Vehicles April 7, 2016 - Bid #: BD-16-1030-0R100-0R001-00000006553

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3.3.1 Bidder Cost Response Elements: Program Costs (Attachment G)

Applus’ Program Costs (Attachment G), follows this page.

ATTACHMENT G: PROGRAM COSTS (RFR SECTION 3.3.1)

Per Inspection Fee Base Bids (RFR Section 3.3.1.1)

$costs

Per Inspection Fee = ————————————————————————

4,400,000 inspections per Program Year 5 years where: $costs = total program costs over the life of the initial 5 year Contract term

$costs shall include: costs for Workstation consumables, shipping, network management, database, inspector orientation, program communications work (except that specified in RFR Section 6.8.6; see next box), covert auditing, Workstations and auditing equipment for Agencies, field investigator tablets w/data plan, VMI (including repairer training), Motorist Assistance Centers, fee collection, and any other items that RFR Section 6 instructs Bidders to include in their costs

$costs shall NOT include: the capital cost, financing, installation or maintenance of the Workstations; specific public communications work specified in RFR Section 6.8.6, software revisions beyond 5,000 hours; Inspector training costs; VISITS application, field investigator printers/mobile printing solution, and any other items that RFR Section 6 instructs Bidders NOT to include in their costs

Base Bid Assumptions (as provided in RFR Section 3.3.1):

4,400,000 Initial Inspections per year 1,650 public stations 150 fleet stations 300 motorcycle stations

RFR

Section 3.3.1.1:

Base Bids: [Complete the Gray Boxes] NOTE to Bidders: Bidders may provide additional sheets, if necessary, to address RFR Section 3.3.1.1, item C, parts a. through d. provided that Bidders complete at least the information required for RFR Sections 3.3.1.1, items A. and B. here.

A

Base Bid for initial 4.4 million inspections per year

$costs = $26,400,000 Per Inspection Fee =

$1.200

B. Base Bid for additional inspections beyond 4.4 million per year

Additional Per Inspection Fee =

$0.430

C Increase(s) to Base Bid (if any) for each additional 100 Light-Duty Inspection Stations, up to 2,200 Inspection Stations. (If no increase, please enter $0.00.)

$costs increase =

$152,015 Per Inspection Fee increase

$0.010

Additional Per Inspection Fee increase =

$0.005

VISITS and Field Investigator Equipment Costs (RFR Section 3.3.1.2)

Bidders shall present, at a minimum, the following costs:

A. Tablet Computers for Field Investigators (as described in RFR Section 6.6.3)as:

1. Price for 50 tablets (including any batteries and/or chargers):

$54,315

2. Cost to replace a single tablet (including any battery and/or charger)

$1,065

3. Battery Replacement cost $533

B. Cost for Unlimited Data Plan for Tablet Computers for up to 40 Field Investigators (as described in RFR Section 6.6.3) $144,000

C. Mobile Printers for Field Investigators (as described in RFR Section 6.6.4) as:

1. Price for 35 printers, and $16,450

2. Cost to replace a single printer $470

D. The cost for Bidders’ proposed VISITS application (separate from the TABLETS and PRINTERS).

Costs shall include initial migration of data from the existing VISITS system and any other requirements found in RFR Section 6.6. $319,127

Additional Program Costs – Per Hour Rates (RFR Section 3.3.1.3)

Specify the per hour rates for each contractor/subcontractor proposed.

A. For developing specific communications services (identified in RFR Section 6.8.6)on an “as needed” or contingency basis

Contractor/Subcontractor(s): Rate(s)

Applus Technologies $120/hour

B. For additional software programming after the allotted 5,000 hours have been expended (identified in RFR Section 6.3.6)

Contractor/Subcontractor(s): Rate(s)

Applus Technologies $120/hour

3.3.2 Bidder Cost Response Elements: Inspection Station Costs (Attachment H)

Applus’ Inspection Station Costs (Attachment H), follows this page.

ATTACHMENT H: INSPECTION STATION COSTS (RFR SECTION 3.3.2)

Workstation Costs (RFR Section 3.3.2.1)

NOTE to Bidders: Bidders may provide additional sheets or a different type of table, if necessary, to address RFR Section 3.3.2.1 requirements, provided that the Bidders’ Response includes at least the information required here. (See RFR Section 6.3)

A. Workstation Costs for:

1. Light-Duty Workstation $5,861

2.a. Heavy-Duty Workstation (with Opacity Meter) $9,804

2.b. Heavy-Duty Workstation (without Opacity Meter) $6,861

B. Optional Workstation Equipment Costs for:

1. Wireless OBD Scan Tool $200

2. Wireless OBD Scan Tool – Battery Replacement $90

3. Wireless Bar-Code Reader $653

4. Wireless Bar-Code Reader – Battery Replacement $67

Workstation Monthly Fees (RFR Section 3.3.2.2)

NOTE to Bidders: Bidders may provide additional sheets or a different type of table, if necessary, to address RFR Section 3.3.2.2 provided that the Bidder’s Response includes at least the information required here. (See RFR Section 6.3 )

A. Monthly Maintenance Fees for:

1. Light-Duty Workstation $50/month

2. Heavy-Duty Workstation $140/month

3. Wireless Equipment, by item (if any fees are proposed)

Wireless OBD Scan Tool Wireless OBD Scan Tool – Battery Replacement$ Wireless Bar-Code Reader Wireless Bar-Code Reader – Battery Replacement

$2.00/month $0 $7.00/month $0

B. Installment Fee to be charged to provide a 24-month financing option to the Inspection Stations.

Light-Duty Workstation- $279.00/month

Heavy-Duty Workst. (w/Opacity Meter)- $452.00/month Heavy-Duty Workst. (w/o Opactiy Meter)- $316.00/month

Inspector Training Costs (RFR Section 3.3.2.3)

NOTE to Bidders: Bidders may provide additional sheet s or a different type of table, if necessary, to address RFR Section 3.3.2.3 provided that the Bidder’s Response includes at least the information required here.

Bidders should also note that NO fees may be charged for Orientation Training. (See RFR Section 6.7)

A. Inspector Initial Certification Training Cost for each of the following classes of Inspector:

1. Non-Commercial Inspector; $157.50

2. Commercial Inspector; $105.00

3. 7D Inspector; and $105.00

4. Motorcycle Inspector. $ 84.00

B. Inspector Recertification Training Cost for each of the following classes of Inspector:

1. Non-Commercial Inspector; $60.00

2. Commercial Inspector; $97.00

3. 7D Inspector; and $10.00

4. Motorcycle Inspector. $25.00

3.3.3 Bidder Cost Response Elements: Breakdown of Bidder Costs in the Per Inspection Fee(s) and Workstation Unit Prices (Attachment I)

Applus’ Breakdown of Bidder Costs in the Per Inspection Fee(s) and Workstation Unit Prices

(Attachment I), follows this page.

Base Bid

Total Contractor Cost (over initial term of contract with 4.4 million Inspection per Program Year)

58,665,442

Total Cost Breakdown (below are the major headings; Bidders shall add further levels of sub-headings to provide additional detail)

Inspection Station Network & Workstations 1,257,592

Capital and Financing 844,299

Installation and Maintenance 7,849,276

Consumables cost (itemized) 15,458,832

Network and Sticker Management 173,777

Database and Software 842,116

Inspection Database 2,666,284

Server Licensing 223,366

ALARS Modernization 157,487

Software ATP 5,818

Management, Motorcycle & Other Apps 2,226,888

Field Inspector Tablets with Data Plan 142,526

Inspector Training 4,899,918

Inspector Orientation for Startup 1,565,632

Motorist and Industry Communications 862,110

Help Desk 2,315,622

Communications Materials 142,526

Auditing

Covert Vehicle Auditing 2,328,064

Covert Visual (Video) Auditing 812,560

Vehicle Maintenance Initiative 720,541

Training of Registered Repairers 142,526

Dues and Subscriptions 111,608

Repair Shop Listing and Rating System 142,526

Motorist Assistance Centers 758,571

Buildings and Equipment 3,986,755

MAC Telecom 1,006,334

MAC Staff 6,489,473

Fee Collection 142,526

Total Expenses (without VISITS or Printers or Mobile Printing Solution) 58,275,550

VISITS Application 373,442

Field Inspector Printers and/or Mobile Printing Solution 16,450

Total Expenses (with VISITS and Printers or Mobile Printing Solution) 58,665,442

Attachment I – Breakdown of Bidder’s Costs for Base Bid (see RFR Section

3.3.3 For Bidder’s Instructions)

3.3.4 Bidder Cost Response Elements: Costs Associated with Outside Equipment Vendors

Allowing Inspection Stations to acquire Workstations from other suppliers would result in an increase to the inspection fee. If the Agencies approve outside equipment vendors to provide Workstations to

Stations, Applus would need to first enter into a contract with them to protect the interest of the

Agencies and Applus, and ensure that workstation, consumables and service meets service level agreements of the RFR.

In scenario one (1) of the RFR “Making the Contractor the exclusive vendor supplying and maintaining Workstations” the Agencies would realize a lower inspection fee than they would if they allow Inspection Stations to acquire Workstations from other supplier’s, for the following reasons:

Workstations would be produced in larger known quantities, creating an economy of scale. If an undetermined number of units are to be provided by other vendor(s), Applus would be at risk by either under or over estimating the number of workstation that need to be produced.

This unknown amount directly impacts the cost to the Agencies that cannot be quantified at this time because exact quantities are unknown. Any vendor faced with this situation would necessarily plan for increased costs and have to pass them on to the Agencies;

Greater efficiency during the implementation phase of the program. If Applus is the sole source provider, the number of meetings, acceptance testing, review and approval periods, and other associated tasks for both Applus and the Agencies are fewer than with multiple suppliers;

Lower costs for program literature and website development. The Agencies and Applus would expend less time reviewing material that describes the Applus Workstation to Station owners;

and

Reduced effort for both the Agencies and Applus during seminars and Workstation orientation. Only one workstation would be displayed and demonstrated. This would also reduce the burden placed on Station owners who may potentially go to two or more seminars and orientations provided by multiple vendors, before making a purchasing decision on the

Workstation they prefer.

In scenario two (2) of the RFR “Allowing other vendors to supply and maintain Workstations”, Applus and the Agencies would experience additional costs for the following reasons:

Applus’ costs for components to assemble the Workstations would rise and be passed on to the Agencies. As the sole supplier, Applus can place an order of 1800 pieces for each

Workstation component in the early lifecycle of the implementation phase and receive a discount for the larger quantity. With multiple suppliers, Applus would be forced to place smaller discreet purchases for components as orders from Inspection Stations are received, since Program quantities are unknown. Component suppliers would not offer Applus the same discounts and terms as they normally would for large orders placed all at once. We estimate the increase in cost would be in the range of 10-20%;

Since we will not know how many Inspection Stations will purchase or lease Applus equipment, Applus will not be able to place orders to its suppliers for Workstation components until the Inspection Stations place their order with Applus. As a result, Applus would not be able to operate its manufacturing and assembly operations efficiently. Instead of manufacturing and assembling all 1800 units at once early in the implementation lifecycle efficiently, we would be forced to manufacture as orders are placed which is inefficient.

Furthermore, expectations are such that Inspection Stations will wait until the last minute to order so Applus would then have to mobilize more resources at the end of the implementation period causing an increase in our cost for labor and overtime. Trying to predict the number of units to manufacture is inefficient. We estimate the increase in cost would be in the range of 10-20%;

Applus’ costs for consumables would increase for the reasons noted above. Applus would lose discounts expected on larger quantities of toner, paper, inspection stickers, etc. These costs would be passed on in the inspection fee;

Applus would have to invest more time and expense developing material to add other vendor material and information to inform Stations of the alternatives;

Applus would have to procure multiple Workstations at each MAC, one to cover each supplier’s equipment;

Startup risks would impact costs and potentially place the Program at jeopardy if the other vendor(s) cannot complete the acceptance process, deliver, and install equipment prior to the start-up date. Applus would have to increase resources for these tasks causing inspection fees to rise;

Overhead costs would increase for challenge tests since Applus would have to add steps to ensure motorists go to an Inspection Station using a Workstation provided by the same supplier as where the initial inspection was performed;

Applus would have to increase resources to participate in supporting the ATP efforts of other vendor(s) by reviewing data transmitted to the VID. The Agencies’ staff would also require time to review the data to ensure it meets specifications, and that the date from two or more vendors is identical;

Applus would have to add resources to accommodate modification and maintenance of the

Program website to include information relevant to other vendor(s) and the alternate

Workstation(s) offered by them;

The Help Desk staff would have to undergo additional training on the operation of the alternate Workstation(s) to provide proper support;

The CRM application would need to be modified to add the alternate Workstation(s) information to dropdown fields and other data elements;

Service Level Agreement violations and associated Liquidated Damages that may be caused by the alternate vendor(s) would be borne by Applus as the prime contractor, and would be passed onto the alternative vendor. This could lead to disagreements and potential legal actions;

There may be an increase in reoccurring costs and legal expenses if a software escrow account is necessary to secure alternative vendor(s) software to protect the Agencies and Applus’ interests;

Additional programing resources would be spent to incorporate software features such as the automatic test interruption provided by the Applus OBDFlex software;

Online viewing of the inspection lane cameras and hosting them via the dashboard will be more complex or impossible to integrate if the other vendor(s) use a different brand and model camera than the one used by Applus; and

Resources would need to be added to modify the Inspector Training Program include all

Workstation designs so an Inspector would be proficient performing inspections regardless of what brand and model of Workstation the Station purchases.

Alternate Supplier Workstations ISAs: In the event that the Agencies choose to allow Inspection

Stations to obtain equipment, maintenance and consumables from suppliers other than Applus, we will work with the Agencies and the other vendors to develop one standard ISA applicable to all

Stations. Additionally, Applus would require that companies wishing to offer alternative equipment to

Stations be subject to a non-disclosure agreement to prevent the unauthorized disclosure of the VID

Communications specifications.

3.3.5 Bidder Cost Response Elements: Financial Plan (Attachment J)

Applus’ Financial Plan (Attachment J), follows this page.

Attachment J - Bidder’s Financial Plan for the Base Bid (see RFR Section 3.3. 5)

4.4 million inspection fees per year Startup Year 1 Year 2 Year 3 Year 4 Year 5 Total

Revenue

Per inspection fees 0 5,280,000 5,280,000 5,280,000 5,280,000 5,280,000 26,400,000

Monthly fees (if any) 0 5,082,000 5,082,000 5,082,000 5,082,000 5,082,000 25,410,000

Inspector Training fees 0 1,293,110 1,293,110 1,293,110 1,293,110 1,293,110 6,465,550

Total Revenue 0 11,655,110 11,655,110 11,655,110 11,655,110 11,655,110 58,275,550

Expenses

Inspection Station Network & Workstations 500,691 156,033 146,756 149,033 151,356 153,722 1,257,592

Capital and Financing 87,398 156,033 146,756 149,033 151,356 153,722 844,299

Installation and Maintenance 866,536 1,357,303 1,369,584 1,393,806 1,418,469 1,443,578 7,849,276

Consumables 1,431,342 2,800,177 2,795,799 2,803,061 2,810,460 2,817,993 15,458,832

Network and Sticker Management 46,006 26,340 24,774 25,158 25,550 25,950 173,777

Database and Software 232,104 165,948 108,242 110,069 111,929 113,824 842,116

Inspection Database 448,125 444,329 442,806 443,235 443,672 444,117 2,666,284

Server Licensing 72,312 29,143 29,667 30,201 30,745 31,298 223,366

ALARS Modernization 29,715 26,340 24,774 25,158 25,550 25,950 157,487

Software ATP 5,818 0 0 0 0 0 5,818

Management, Motorcycle & Other Apps 14,754 443,167 441,623 442,030 442,446 442,869 2,226,888

Field Inspector Tablets with Data Plan 14,754 26,340 24,774 25,158 25,550 25,950 142,526

Inspector Training 1,303,359 712,431 702,845 714,821 727,020 739,442 4,899,918

Inspector Orientation for Startup 162,068 289,340 272,139 276,361 280,668 285,056 1,565,632

Motorist and Industry Communications 40,312 254,911 141,137 141,522 141,914 142,313 862,110

Help Desk 187,781 412,252 417,611 425,045 432,614 440,319 2,315,622

Communications Materials 14,754 26,340 24,774 25,158 25,550 25,950 142,526

Auditing 0

Covert Vehicle Auditing 80,530 440,219 444,113 450,055 456,105 457,042 2,328,064

Covert Visual (Video) Auditing 68,104 145,329 145,898 148,456 151,061 153,713 812,560

Vehicle Maintenance Initiative 105,742 121,410 120,991 122,543 124,123 125,732 720,541

Training of Registered Repairers 14,754 26,340 24,774 25,158 25,550 25,950 142,526

Dues and Subscriptions 0 21,532 21,920 22,314 22,716 23,125 111,608

Repair Shop Listing and Rating System 14,754 26,340 24,774 25,158 25,550 25,950 142,526

Motorist Assistance Centers 26,141 146,953 139,588 148,235 144,459 153,196 758,571

Buildings and Equipment 909,828 595,316 603,991 614,802 625,807 637,011 3,986,755

MAC Telecom 0 194,150 197,645 201,203 204,824 208,511 1,006,334

MAC Staff 523,520 1,154,500 1,171,140 1,192,036 1,213,310 1,234,968 6,489,473

Fee Collection 14,754 26,340 24,774 25,158 25,550 25,950 142,526

Total Expenses (without VISITS or Printers or Mobile Printing Solution)

7,215,953 10,224,854 10,033,668 10,153,969 10,263,905 10,383,201 58,275,550

4.4 million inspection fees per year Startup Year 1 Year 2 Year 3 Year 4 Year 5 Total

VISITS Application 373,442 0 0 0 0 0 373,442

Field Inspector Printers and/or Mobile Printing Solution 16,450 0 0 0 0 0 16,450

Total Expenses (with VISITS and Printers or Mobile Printing Solution)

7,605,844 10,224,854 10,033,668 10,153,969 10,263,905 10,383,201 58,665,442

3.3.6 Cost Response Element: Financial Qualifications

Applus has the financial and organizational strength to successfully complete the work described in its proposal over the course of the Contract, including, but not limited to, equipment procurement and the ongoing oversight of Inspection Stations. To substantiate this, we provide the following information:

1. Applus has not been in bankruptcy in the last three (3) calendar years and has no present intent to file for bankruptcy;

2. Applus’ financial capability and its resources will not be adversely affected by any other existing or potential inspection and maintenance contracts they hold or by any other major business commitment(s) including senior liens and other financial pledges.

3. Applus Technologies does not have any financial interest in any subsidiary or affiliated companies.

4. As a member of a global company with a presence in over 70 countries, Applus Technologies has a number of affiliates worldwide. However, Applus Technologies will perform the

Contract work without the assistance of any such affiliates or parent organizations. An organization chart showing our various affiliates has been attached below.

5. Applus has no direct and indirect business activities or contractual obligations that would pose a potential conflict or otherwise affect or influence our ability to fulfill the Contract in full accordance with the requirements of this RFR.

6. A Dun and Bradstreet report dated February 24, 2016, has been attached below.

7. Attached below are audited financial statements for the past three (3) fiscal years (2013, 2014, and 2015).

8. Applus Technologies, Inc. is not a publicly traded corporation.