200 S. Anaheim Blvd.
Suite #620
Anaheim, CA 92805
Tel: (714) 765-5110
Fax: (714) 765-5288
www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
FINANCE DEPARTMENT
DATE: AUGUST 23, 2022
FROM: FINANCE DEPARTMENT
SUBJECT: AUTHORIZE INCREASE TO ANNUAL AGREEMENT FOR
AUTOMOTIVE FUEL
ATTACHMENT (Y/N): NO ITEM # 03
RECOMMENDATION:
That the City Council, by Motion, authorize an increase of $1,078,000 in the value of the current Master Agreement with AAA Oil, Inc. for the purchase of automotive fuel during the 2022-23 term, from a not to exceed amount of $2,161,626.36 to $3,239,626.36, to account for the increases in petroleum prices, and authorize the Purchasing Agent to adjust the maximum amount of the agreement as needed to cover costs in subsequent years, should the agreement be renewed.
DISCUSSION:
The agreement for petroleum fuel purchases was competitively bid and awarded in February of 2019. The initial award amount was $2,161,626.36 based on historical usage, prevailing oil prices, and a 25% contingency to cover various government fees as well as changes in volume and pricing. Subsequently, the agreement has been renewed three times under the renewal provisions, with no change in the amount of the annual agreement. However, during the current term of the agreement, due to increases in petroleum prices, the original maximum amount of the agreement will not cover the City’s projected annual expense.
The per gallon purchase price for fuel is based on the weekly Oil Price Information Service (OPIS) price at the time of each fuel delivery. Additional costs, such as transportation and the vendor markup are applied to each gallon of fuel. Although fuel consumption has not increased over the past year, significant increases in the price of oil have necessitated an increase to the value of the agreement in order to cover projected annual costs. Based on the current average usage per month, Public Works staff estimates that another $1,078,000 will be needed to meet the City’s fuel requirements through the end of the current agreement on January 31, 2023. Staff requests for City Council to authorize the increase of the annual AAA Oil agreement to $3,239,626.36 for the current agreement period.
Authorize Increase to Annual Agreement for Automotive Fuel August 23, 2022
IMPACT ON BUDGET:
Sufficient funds are available in the Public Works Department Fiscal Year 2022/23 Motorized Equipment Fund Budget.
Respectfully submitted, Concurred by,
Barrick L. Bartlett Rudy Emami
Purchasing Agent Public Works Director