200 S. Anaheim Blvd.
Suite #620
Anaheim, CA 92805
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www.anaheim.
CITY COUNCIL AGENDA REPORT
City of Anaheim
FINANCE DEPARTMENT
DATE: FEBRUARY 27, 2024
FROM: FINANCE DEPARTMENT
SUBJECT: RATIFY AGREEMENT AND AWARD NEW AGREEMENT FOR
AUTOMOTIVE FUEL
ATTACHMENT (Y/N): NO ITEM # 08
GOVERNMENT CODE § 84308 APPLIES: NO
RECOMMENDATION:
That the City Council, by Motion:
1) Award a one-year agreement with Merrimac Energy Group, in an amount not to exceed $2,458,149.40 plus applicable tax and a 25% contingency, for the purchase of automotive fuel;
2) Authorize the Purchasing Agent, or their designee, to exercise agreement renewals for up to four additional one-year periods, subject to available budget appropriations;
3) Ratify a one-month extension of the agreement with AAA Oil, Inc., in an amount not to exceed $120,000 plus a 20% contingency, for the purchase of automotive fuel; and
4) Authorize the Purchasing Agent, or their designee, to execute documents, as necessary, related to the agreements.
DISCUSSION:
The Purchasing Division posted Request for Bids #9760 for the purchase of automotive fuel on the city’s bid portal on December 14, 2023. Three responsive bids were received by the January 17, 2024 due date from the following vendors:
Bidder Total Bid
Merrimac Energy Group $ 2,458,149.40
Long Beach, CA
Pinnacle Petroleum Inc. $ 2,476,148.00
Huntington Beach, CA
Ratify Master Agreement and Accept Bid for a New Master Agreement for Automotive Fuel February 27, 2024
AAA Oil, Inc. $ 2,570,808.80
Garden Grove, CA
AAA Oil, Inc. provides the city with automotive fuel. The agreement was in the final year of a five-year agreement. The one-month extension allows for the uninterrupted continuation of fuel delivery services while the city goes through the process of establishing a new agreement with a new fuel provider.
The bids were based on providing the estimated annual requirement of 813,000 gallons of fuel comprised of 134,000 gallons of ultra-low sulfur #2 diesel fuel used for fire trucks and large equipment, 9,000 gallons of red-dye #2 diesel fuel used for generators, and 670,000 gallons of unleaded 87-octane fuel for pickup trucks, automobiles, and other passenger vehicles. Additionally, per the State of California’s Off-Road Regulation, aimed at reducing emissions from off-road diesel vehicles, pricing was also requested for renewable diesel to address the new fuel requirement for heavy equipment vehicles.
The term of the agreement will be for a one-year base period with up to four one-year optional renewal periods. Due to the constant fluctuation in oil prices, the per gallon purchase price will be based on the weekly Oil Price Information Service (OPIS) index at the time of each fuel delivery. The solicitation allowed the bidder to indicate a markup or discount, and transportation costs on each gallon of fuel. The vendor’s markup is fixed and is not subject to change for the duration of the agreement. However, the per- gallon transportation costs are subject to change once every quarter based on the percentage of change in the U.S. Department of Energy’s Weekly Retail On-Highway Diesel Prices for California.
The 25% contingency is recommended to cover various government taxes and fees as well as changes in volume and pricing. In the event that OPIS index rises, the Purchasing Agent requests the authority to issue change notices to accommodate spikes in price that may occur without returning to Council. Funding will be subject to Public Works Dept. budget appropriations.
IMPACT ON BUDGET:
Sufficient funds are available in the Public Works Department’s Fiscal Year 2023/24 Motorized Equipment Fund budget. Funding for subsequent years will be subject to Council’s approval of budget appropriations.
Respectfully submitted, Concurred by,
Jered Rakosky Rudy Emami
Purchasing Agent Public Works Director