CITY OF SAN MATEO
CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 8 Section Name: {{section.name}} Account Number: 82-4683 File ID: {{item.tracking_number}} TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Public Works Department
MEETING DATE: June 2, 2025
SUBJECT:
Diesel Fuel Procurement and Delivery — Agreement
RECOMMENDATION:
Award a two-year agreement to Bosco Oil, Inc. DBA Valley Oil Company for diesel fuel procurement and delivery in the amount of $400,000; and authorize the Public Works Director to execute the contract in substantially the form presented.
BACKGROUND:
The City currently operates a fleet of over 300 vehicles and pieces of equipment, including sedans, trucks, street sweepers, tractors, police patrol vehicles, aerial lifts, motorcycles, turf mowers, and sewer trucks (Fleet). The Fleet incorporates various propulsion technologies, such as conventional internal combustion engines (ICE), hybrid electric (HEV), plug-in hybrid electric (PHEV), battery electric (EV), and compressed natural gas (CNG) vehicles. In support of these vehicles the City owns and operates a fueling station at the Corporation Yard. The City has realized cost savings through bulk diesel fuel procurement and maintaining an onsite fuel storage and dispensing system for exclusive use of City vehicles and equipment. The City procures renewable diesel, which is primarily produced from renewable, plant-based sources. The current agreement for Diesel Fuel Procurement and Delivery will expire on June 30, 2025.
In April 2025, Fleet staff issued a Request for Proposals (RFP) for a two-year term for Diesel Fuel Procurement and Delivery Services, with three optional one-year extensions. If the service provider's initial two-year term performance warrants staff to recommend pursuing any of the optional term extensions, staff will return to Council to request an amendment for the term extension and associated increase in fee. Fleet staff contacted several known vendors in addition to advertising the RFP in the local newspaper and on the City’s website. The RFP attracted inquiries from several qualified participants, and the City received the following proposals:
Vendor Markup/Gallon Clear
Diesel
Markup/Gallon Red Dyed
(OFF Road) Diesel
Estimated Two-Year Contract Fuel
Cost Over OPIS Daily Rack Average
Bosco Oil, Inc. DBA Valley Oil
Company $0.059 $0.059 $6,136.00
Merrimac Energy $0.1723 $0.1823 $18,359.20
Staff evaluated proposals and created a cost comparison based on estimated delivered diesel fuel quantities for the agreement term. Due to the frequent fluctuation in price of diesel fuel, proposers quoted a differential (+/- price) to the OPIS (Oil Price Information Service) daily rack average for the San Jose, California area. The differential price is the vendor’s mark up/mark down per gallon of delivered fuel and does not include taxes or Superfund fees. Based on the cost comparison, Bosco Oil, Inc. DBA Valley Oil Company’s proposal offers the greatest value at an estimated total mark up of $6,136.00 for the two-year term.
CITY OF SAN MATEO
Staff calculated the agreement value based on contract term estimated at a total of 60,000 gallons of road diesel and 44,000 gallons of red dyed (off-road) diesel, at a loaded future cost estimate of $3.85 per delivered gallon of diesel fuel, which is inclusive of the vendor’s markup as well as taxes and Superfund fees. Staff based future diesel fuel cost on expected inflation and adjusted for the two-year term. The estimated cost for 104,000 gallons delivered to the Corporation Yard, over the two-year contract term should be $675,000. However, the available budget can only accommodate establishing an agreement for $400,000. Staff will monitor the contract balance throughout the two-year term and may return to Council for an additional appropriation and amendment to increase the contract. Additionally, staff expects a reduction in diesel consumption as additional electric vehicles are added to and replace existing diesel-powered vehicles within the City’s fleet, such as the forthcoming electric street sweeper.
Staff reviewed and assessed each submitted proposal based on the Rate Schedule Proposal. Based on this evaluation, staff recommends awarding an agreement to Bosco Oil, Inc. DBA Valley Oil Company for a two-year term, valued at $400,000.
BUDGET IMPACT:
Funding for fuel procurement and delivery is budgeted annually in the Vehicle and Equipment Maintenance Fund (Fund 820). As indicated, the 2025-26 budget accommodates a $400,000 agreement over the two-year timeframe and staff will request Council approval of additional budget appropriations, as needed, if realized costs exceed available budget.
ENVIRONMENTAL DETERMINATION:
This Contract is not a project subject to CEQA, because it can be seen with certainty that awarding an agreement for Diesel Fuel Procurement and Delivery Services will not cause a physical change in the environment. (Public Resources Code Section 21065.)
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 – Agreement
STAFF CONTACT
Daniel Heffelfinger, Fleet Services Supervisor
[email protected]
650-522-7366
Steve Wu, Facilities and Fleet Manager
[email protected]
650-522-7345
Deryk Daquigan, Deputy Director Public Works
[email protected]
650-522-7287