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HomeMy WebLinkAboutItem 2f: Contract Extension for Purchase of Motor Vehicle Fuel from Southern Counties Oil (SC Fuels, Inc.) : i l ki ' one.. r -� Oil t " �A=%' STAFF REPORT Administrative Services Department Date: July 19, 2011 To: Mayor and City Council From: Hue Quach, Administrative Services pr for 1-)Ik By: Jan Steese, Purchasing Office Subject: Extension to the contract for Motor ehicle Fuel Recommendation: Authorize the City Manager to approve a three (3) month contract extension in an amount not to exceed $75,000.00 through October 1, 2011 for the purchase of motor vehicle fuel from Southern Counties Oil dba: SC Fuels, Inc. SUMMARY On June 21, 2008, the Council approved the award of a one (1) year contract with two (2) additional one (1) year options to Southern Counties Oil dba: SC Fuels, Inc. for a not to exceed amount of $470,000.00 per year for the purchase of motor vehicle fuel to allow the City to take advantage of larger entities pricing. The City's current purchase order contract with SC Fuels Inc. expired on June 30, 2011. Due to the fluctuation in fuel costs, the volatility of the commodity, and the amount of fuel the City of Arcadia purchases it would be in the best interest of the City to piggyback on another agency's contract. . During the 2006 -2007 fiscal year, the City had the opportunity to cooperatively use another agency's bid, known as piggybacking. Staff determined it would be in the best interest of the City to piggyback on the City of Inglewood contract with Southern Counties Oil dba: SC Fuels, Inc. which was valid through January 16, 2008 with the option to renew for two (2) additional years valid through January 16, 2012. The purchase of fuel is a volatile commodity and prices fluctuate daily. Due to the size of the City of Arcadia and based on our annual estimated usage, it would not be in the best interest of the City to seek bids on our own. The City of Inglewood entered into a three (3) year contract with SC Fuels, Inc. in January, 2008 and was extended for an additional two (2) years through January 16, 2012. SC Fuels, Inc. has been providing the City's fuel service needs satisfactorily since 2005 and they were the lowest, responsive, responsible bidder on the City of Inglewood contract. SC Fuels, Inc. has agreed to extend the same prices, terms and conditions to the City of Arcadia through January 16, 2012 just as they do for the City of Inglewood. This extension is being Mayor and City Council July 19, 2011 Page 2 of 3 requested for a three (3) month period to allow staff to review the City's current support services and fuel costs to perhaps obtain better pricing and services. Staff is recommending the City Council approve a three (3) month contract extension in the amount of $75,000.00 through October 1, 2011 with Southern Counties Oil dba: SC Fuels, Inc. BACKGROUND The City of Arcadia utilized the City of Inglewood pricing which expired on June 30, 2011. Staff feels that it would be in the best interest of the City at this time to extend the existing contract with SC Fuels utilizing the City of Inglewood contract for our fuel needs through October 1, 2011. The City of Inglewood contract was a three (3) year contract with the option to renew for two (2) additional years thereafter expiring on January 16, 2012. SC Fuels Inc. has been providing fuel to the City of Arcadia since 2005 and they have provided satisfactory service. SC Fuels, Inc. offered the City of Arcadia the same prices, terms and conditions as the City of Inglewood. DISCUSSION The City of Arcadia's annual usage is approximately 130,000 gallons per year. The pricing mechanism used to price motor fuel is the Oil Price Information Services (OPIS) weekly newsletter. This newsletter is an industry standard for reporting average fuel prices on a per gallon basis nationally. Prices quoted were an add -on to the weekly OPIS average. The OPIS report has indicated significant increases in the cost of fuel in the past couple of years due to the economic changes this country is experiencing. As a result, the cost of fuel continues to fluctuate and any increases /decreases are passed on to the consumers, including all governmental agencies. Although there has been little change in the number of gallons estimated annually, the cost of fuel continues to be volatile and fluctuate. Staff has discovered that there are other agencies contracts that not only provide fuel, but they also provide fuel management support and services including ensuring that the City complies with all local, state, and federal compliance laws for storing and dispensing fuel. This extension will allow staff additional time to investigate and review other fuel contracts including support and services available that may be more cost effective. Mayor and City Council July 19, 2011 Page 3 of 3 Staff recommends the City Council authorize the City Manager to extend the contract for an amount not to exceed $75,000.00 through October 1, 2011 with Southern Counties OiI dba: SC Fuels Inc. FISCAL IMPACT Sufficient funds are appropriated each year in the operating budget and fuel purchases are not anticipated to exceed $75,000.00 through October 1, 2011. RECOMMENDATION Authorize the City Manager to extend the contract with Southern Counties OiI dba: SC Fuels in the amount not to exceed $75,000.00 through October 1, 2011. Approved: Donald Penman, City Manager