City of Corona
Staff Report
400 S. Vicentia Ave.
Corona, CA 92882
File #: 22-0293
REQUEST FOR CITY COUNCIL ACTION
DATE: 04/20/2022
TO: Honorable Mayor and City Council Members
FROM: Public Works Department
SUBJECT:
Approval of a purchase order with Downs Energy and SC Commercial, LLC for the purchase of petroleum products.
EXECUTIVE SUMMARY:
The City Council previously approved purchase orders using a competitively bid process conducted by Riverside County for fuel purchases through Downs Energy and SC Commercial, LLC. Before the agreements expired, the County issued a request for bids for fuel purchases. Through this competitive process, the purchase contracts were awarded to Downs Energy and SC Commercial, LLC as the preferred vendors. The County agreements with the Downs Energy and SC Commercial, LLC have been finalized by the County and received by the City. Staff is recommending piggybacking on the County led competitive purchase process and approval of purchase orders with both vendors to benefit from the program costs savings and allowing the City to purchase fuel.
RECOMMENDED ACTION:
That the City Council:
a. Authorize the Purchasing Manager to issue purchase orders to both Downs Energy and SC Commercial, LLC, each in the amount of $600,000 for the remaining Fiscal Year 2022, and $1,750,000 annually for each company for Fiscal Years 2023 through 2027. b. Authorize the City Manager, or his designee, to negotiate and execute non-substantive extensions, amendments, and change orders up to 10% or $175,000 as authorized by Corona Municipal Code Section 3.08.080(I).
c. Make a determination under Corona Municipal Code Section 3.08.140(C) that competitive bidding has been satisfied based upon the reasons provided in this staff report.
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File #: 22-0293
BACKGROUND & HISTORY:
The City’s Fleet Services Division under the Public Works Department is responsible for maintaining adequate fuel levels for the four fuel tanks located throughout the City. At the City’s Corporation Yard, there is one (1) 20,000-gallon unleaded fuel tank and two (2) 10,000-gallon diesel fuel tanks.
At Fire Station #1, there is one (1) 1,000-gallon diesel fuel tank. The tank levels at the Corporation Yard are monitored daily by the Fleet Services Division staff, with field deliveries coordinated for each location on an as-needed basis. For the Corporation Yard, unleaded fuel orders are requested every two to three weeks, while diesel deliveries occur every few months. Downs Energy monitors the diesel fuel tanks at Fire Station #1 on behalf of the City. Deliveries generally occur every other week.
The previous agreement between the fuel providers and the County of Riverside expired on September 30, 2021. The County extended the agreement to provide more time to issue a new Request for Proposal (RFP) for fuel purchase. On October 6, 2021, the City Council approved a staff report to reflect the new expiration date of March 31, 2022, and increased the purchase order for estimated fuel purchase up to the new expiration date.
The County recently completed its RFP process, and the established and negotiated pricing structure between the County of Riverside and the fuel vendors is based upon the Oil Price Information Service (OPIS) rack average, the County’s fuel usage, plus a predetermined differential before taxes. The differential amount is a fixed amount based upon freight, and the margins are subject to cost-ofliving adjustments.
ANALYSIS:
On Friday, April 1, 2022, the County of Riverside provided the City with a fully executed agreement with Downs Energy, and on Monday, April 4, 2022, the City was provided with a fully executed agreement with SC Commercial, LLC.
The use of the fuel agreements with the County of Riverside will benefit the City by reducing staff time in the solicitation of multiple fuel vendors for the purchase of fuel. Effective April 1, 2022, the County awarded two contracts by way of formal bid (Contract ID: PSA-0004074 and PSA-0004078), which were approved via a competitive procurement process to issue a five-year agreement set to expire March 31, 2027.
Additionally, Downs Energy, being located in Corona, allows for card-lock/fuel cards, which are used by various departments when they cannot fuel their vehicle at one of the county fuel sites. Using these services allows City departments to take advantage of negotiated fuel rates. Downs Energy also has the ability to monitor the City’s fuel levels remotely, allowing for the City’s tanks to consistently maintain sufficient fuel levels in the event of increased usage or emergencies. This service to be offered comes at no additional cost to the City. In the event of an emergency, Downs’ close proximity would allow for fuel delivery within two hours. The overall fuel cost is based on the daily Oil Price Information Service (OPIS) average, which is used for wholesale fuel pricing. Having a secondary source, SC Commercial, LLC, will allow for uninterrupted fuel deliveries in the event that Downs Energy cannot deliver for unforeseen circumstances.
Therefore, the Public Works Department requests authorization to use the County of Riverside Bidding processes pursuant to CMC 3.08.140(C) and awarded contracts to Downs Energy and SC City of Corona Page 2 of 4 Printed on 4/14/2022
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File #: 22-0293
Bidding processes pursuant to CMC 3.08.140(C) and awarded contracts to Downs Energy and SC Fuels, and issue purchase orders in the amount of $600,000 for the remaining fiscal year 2022 and $1,750,000 for the next 5-years to cover fiscal years 2023-2027. The increased amounts were derived from an analysis based upon recent fuel price increases and projections that these high fuel prices will remain.
BASIS FOR DETERMINATION OF COMPETITIVE BIDDING
Staff believes that Competitive Bidding has been accomplished for these purchases pursuant to Corona Municipal Code (CMC) Section 3.08.140(C), which states as follows:
“Competitive bidding already completed. When the purchasing agent and the authorized contracting party, with the approval of the City Manager, determines that:
(1) A competitive bid procedure has been conducted by another public agency including, but not limited to, another local agency, the state through the California Multiple Award Schedule (CMAS), the federal government through the General Services Administration (GSA), the U.S.
Communities Government Purchasing Alliance, or the Western States Contracting Alliance (WSCA); and
(2) The price to the City is equal to or better than the price to that public agency.” The use of the fuel agreement with the County of Riverside is of great benefit to the City. Utilizing the agreement eliminates the need for spot bidding, which is a time-intensive task and allows the City to leverage the work done by partner agencies. Partnering on the contract with Riverside County, the City is able to purchase fuel directly from the vendors. If one vendor is not able to deliver fuel, fuel can still be ordered from the other. This will ensure that there is uninterrupted fuel service for the City, and City departments that utilize fuel are able to provide important and essential services, such as public safety. Downs Energy also actively monitors the tank located at Fire Station #1 at no additional cost to the City. Downs Energy will reload the tank when levels are low. Downs Energy services are not limited to fuel deliveries to the City’s facilities. The City also partners with Downs Energy for the use of card-lock and fuel cards. These services allow City vehicles, including fire apparatus, to purchase fuel directly from Downs Energy sites.
FINANCIAL IMPACT:
Funding for the recommended actions are included in fiscal year 2022 Fleet Operations Fund 682 for vehicles in the motor pool program and in the specific operating department’s operating budgets for on-account vehicles. The operating budget within the Public Works Department has also been included in the Proposed Fiscal Year 2023 Budget and will be included in future fiscal years.
ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the common sense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action merely approves Purchase Orders for the purchase of fuel, and there is no possibility that adopting this resolution will have a significant effect on the City of Corona Page 3 of 4 Printed on 4/14/2022 powered by Legistar™
File #: 22-0293
fuel, and there is no possibility that adopting this resolution will have a significant effect on the environment. Therefore, no environmental analysis is required.
PREPARED BY: JASON MARCIA, FLEET SERVICES SUPERINTENDENT REVIEWED BY: SAVAT KHAMPHOU, PUBLIC WORKS DIRECTOR
Attachments:
1. Exhibit 1 - Professional Service Agreement between County of Riverside and Downs Energy - Contract ID # PSA-0004074
2. Exhibit 2 - Professional Service Agreement between County of Riverside and SC Commercial, LCC - Contract ID # PSA-0004078
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