CITY OF SAN MATEO
5 5
6 9
CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 7 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:
Gasoline Fuel Procurement and Delivery — Agreement
RECOMMENDATION:
Award a two-year agreement to Pinnacle Petroleum, Inc. in the amount of $1,030,000 for gasoline fuel procurement and delivery; and authorize the Public Works Director to execute the agreement 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 procurement of fuel and maintaining an onsite fuel storage and dispensing system for exclusive use of City vehicles and equipment. The current agreement for gasoline 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 gasoline 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 Proposals Discount per Gallon (OPIS Daily Rack Average) Under Ground Tank Delivery Above Ground Tank Delivery
Pinnacle Petroleum - $0.1628 -$0.1401
Valley Oil -$0.085 -$0.085
Merrimac Energy
(Disqualified proposal) -$0.1793 -$0.1185
As identified in the RFP, the City will be transitioning from below ground gasoline storage to above ground gasoline storage with the project expected to be completed in January 2026, several vendors supplied Rate Schedules for each delivery type, below ground and above ground. One proposer, Valley Oil, did not differentiate between delivery types and offered a single Rate Schedule.
CITY OF SAN MATEO
5 5
6 9
Upon initial bid opening, Merrimac Energy was identified as the winning proposer as their proposal package only included a Rate Schedule Form indicating -0.1793 reduction on OPIS Daily Rack Average Gasoline Price per Gallon. However, upon review, the cover letter identified multiple rates which Merrimac Energy failed to identify on the official Rate Schedule Form. The RFP clearly identifies the Rate Schedule Form as the official documentation for the RFP. Merrimac Energy’s proposal was determined to be disqualified due to the incongruency between the submitted Rate Schedule form and the proposal cover letter. For transparency, staff included Merrimac Energy’s disqualified proposal in the cost comparison process, which would score a rank #2 if not for the disqualification.
Staff evaluated proposals and created a cost comparison based on estimated delivered quantities for each type of fuel storage. Due to the frequent fluctuation in price of fuel, proposers quoted a differential (+/- price) to the OPIS (Oil Price Information Service) daily rack average for the San Jose, California area for the type of fuel requested. The differential price is the vendor’s mark up/down per gallon of delivered fuel and does not include taxes or Superfund fees. Based on the Cost Comparison, Pinnacle Petroleum’s proposal offers the greatest cost savings at an estimated $29,155 for the two-year term, as shown in the table below.
Vendor
Above
Ground
Savings
per gallon
Anticipated
Above
Ground
Gallons
Anticipated
Savings
Above
Ground
Below
Ground
Savings per
Gallon
Anticipated
Below
Ground
Gallons
Anticipated
Savings
Below
Ground
Estimated
Contract
Savings
Rank
Pinnacle
Petroleum -$0.1401 150,000 -$21,015.00 -$0.1628 50,000 -$8,140.00 -$29,155.00 1 Valley Oil -$0.085 150,000 -$12,750.00 -$0.085 50,000 -$4,250.00 -$17,000.00 3 Merrimac
Energy -$0.1185 150,000 -$17,775.00 -$0.1793 50,000 -$8,965.00 -$26,740.00 2 (Disqualified)
Staff calculated an agreement value based on a total of 200,000 gallons, at a loaded future cost estimate of $5.15 per delivered gallon of gasoline, inclusive of vendor mark downs, taxes, and Superfund fees. Staff based future gasoline fuel cost on expected inflation and adjusted for the two-year term. Based on the 200,000-gallon estimate and unit prices of fuel over a two-year term, the agreement amount should be $1,100,000. However, the available budget can only accommodate establishing an agreement for $1,030,000. 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. Staff expects a reduction in gasoline fuel consumption as additional Electric Vehicles replace existing gasoline powered vehicles within the City’s fleet.
Staff recommends awarding an agreement to Pinnacle Petroleum, Inc. for a two-year term, valued at $1,030,000.
BUDGET IMPACT:
Funding for fuel procurement is budgeted annually in the Vehicle and Equipment Maintenance Fund (Fund 820).
ENVIRONMENTAL DETERMINATION:
This agreement is not a project subject to CEQA, because it can be seen with certainty that awarding an agreement for Gasoline 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
CITY OF SAN MATEO
5 5
6 9
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