HomeMy WebLinkAboutItem 2f: Contract Extension for Purchase of Motor Vehicle Fuel from Southern Counties Oil (SC Fuels, Inc.) : i l ki
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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