Fremont City Council Meeting: 05/20/25 07:00 PM
3300 Capitol Avenue Div/Dept: Maintenance Operations
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5440) DOC ID: 5440
Updated: 5/15/2025 12:29 PM by Dina Lewis Page 1
FUEL SUPPLY CONTRACT - Authorization to Execute Purchase Order Contract in the amount of $1.463M with Merrimac Petroleum, Inc., DBA Merrimac Energy Group, for the Purchase and Delivery of Gasoline and Renewable Diesel Fuel with Fixed Price Adjustments for One Year Term and Options for Three One-Year Extensions
Contact Persons:
Name: Sean Gosen Kelly King
Title: Fleet Maintenance Manager Maintenance Operations Director Div/Dept: Maintenance Operations Maintenance Operations Phone: (510) 979-5739 510-979-5753
E-Mail: [email protected] [email protected]
Executive Summary: The purpose of this report is to authorize the City Manager, or designee, to execute a purchase order contract in the amount of $1.463M for the purchase and delivery of fuel supplies to support City of Fremont (“City”) operations.
BACKGROUND: The City’s fleet consumes approximately 300,000 gallons of diesel and unleaded fuel annually (225,000 gallons of unleaded gasoline and 75,000 gallons of diesel fuel) to support its fleet of more than 600 vehicles and equipment that include fire engines, police vehicles, general service vehicles, maintenance vehicles, heavy equipment, solid waste-related vehicles/equipment (street sweepers, storm drain cleaners) and generators.
Fuel is distributed from four main City-owned and operated fueling sites throughout the City: 1) Maintenance Center, 42551 Osgood Road; 2) Fueling Station, 1970 Stevenson Boulevard; 3) Fire Station 1, 4200 Mowry Avenue; and 4) Fire Station 9, 39609 Stevenson Place. In addition to these fueling sites, the City also has 17 emergency standby generators with large tanks that periodically require refueling.
Fuel is routinely purchased throughout the year when existing fuel supplies run low.
The current fuel purchasing and delivery contract with Mansfield Oil Company of Gainesville, Inc., will expire on June 30, 2025.
To align with the City’s Climate Action Plan to substantially reduce greenhouse emissions, particulate matter, and other harmful tailpipe emissions such as NOx, CO, and HC, the City will continue to use Renewable Diesel that is refined from 100% renewable sources such as cooking oils, vegetable oils, and animal fats and that is refined to the same molecular structure as petroleum diesel. The Renewable Diesel is compatible with current fuel storage and distribution infrastructure and suitable for all diesel engines requiring no additional investment.
DISCUSSION/ANALYSIS: To continue uninterrupted fuel service for City operations, a competitive procurement process was conducted in March 2025 to obtain fair and competitive pricing for the purchase and delivery of unleaded and Renewable Diesel fuel.
The fuel provider that is awarded the fuel contract will provide unleaded gasoline and Renewable Diesel to City fueling sites. The fuel contract will be for a one-year term with Council Staff Report (ID # 5440) Meeting of May 20, 2025 Updated: 5/15/2025 12:29 PM by Dina Lewis Page 2
options for three additional one-year terms with fixed price adjustments for each fuel category for the entirety of the contract.
The City advertised the invitations for bid (Bid #25-024) for the purchase and delivery of fuel using BidNet Direct and by posting bid invitations on the City’s website. Each vendor’s bid totals were determined by applying the bidder’s unleaded and renewable diesel fuel discount per gallon for each fuel category and freight cost per gallon for each location by the estimated annual fuel consumption of 225,000 gallons of unleaded and 75,000 gallons of diesel. For tabulation purposes, an arbitrary value of $1.00 was used for the price per gallon of fuel for both unleaded and renewable diesel to determine bid totals. Of the two responsive bids that were received: Merrimac Petroleum, Inc., DBA Merrimac Energy Group submitted a bid of $298,429.50 and Pinnacle Petroleum, Inc., submitted a bid of $310,587.80. Staff analyzed the bids and determined that Merrimac is the lowest, most responsive, and responsible bidder. Therefore, staff is recommending the City Council authorize the City Manager or designee to execute a contract with Merrimac Petroleum, Inc., DBA Merrimac Energy Group, to be the City’s provider for the purchase and delivery of fuel.
Fuel prices are subject to market fluctuations due to geopolitical events, seasonal demand, and supply chain factors. Staff anticipates continued volatility in fuel pricing throughout the fiscal year. Based on current usage trends and market projections, staff estimates that the annual cost of fuel for City operations will be $1.463M.
FISCAL IMPACT: Funds for the purchase and delivery of gasoline and diesel fuel are included in the Fiscal Year 2025/26 Proposed Operating Budget.
ENVIRONMENTAL REVIEW: Approval of the fuel supply contract is not a project subject to review under the California Environmental Quality Act (CEQA), as purchase of supplies is a continuing administrative activity which is excluded from the definition of project pursuant to CEQA Guidelines Section 15378 (b)(2).
ATTACHMENTS: None.
RECOMMENDATION: Authorize the City Manager, or designee, to execute a purchase order contract with Merrimac Petroleum, Inc., DBA Merrimac Energy Group, for the purchase and delivery of unleaded gasoline and renewable diesel fuel for a one-year term in the amount of $1.463M with option to renew the contract for up to three one-year terms with fixed price adjustments for the entire contract term.