Agenda Item: 12
CITY OF SANTA CLARITA
AGENDA REPORT
CONSENT CALENDAR
CITY MANAGER APPROVAL:
DATE: August 23, 2022
SUBJECT: CONTRACT AMENDMENT WITH TACENERGY, LLC, FOR THE
PURCHASE AND DELIVERY OF RENEWABLE DIESEL FUEL
DEPARTMENT: Economic Development
PRESENTER: Adrian Aguilar
RECOMMENDED ACTION
City Council:
1. Increase the expenditure authority for the purchase and delivery of renewable diesel fuel with TACenergy, LLC (formerly Truman Arnold Companies), by an amount of $140,000, for a total contract amount not to exceed $465,000.
2. Authorize the City Manager or designee to execute all contracts and associated documents, or modify the award in the event that issues of impossibility of performance arise, subject to City Attorney approval.
BACKGROUND
On August 28, 2018, the City Council awarded a contract to IPC (USA), Inc., for the purchase and delivery of diesel fuel for Santa Clarita Transit's (SCT) fleet of diesel buses. The City Council's award of this contract was approved following a 2018 competitive procurement process facilitated by the City of Santa Ana. This is known as cooperative procurement, or "piggybacking," and allows SCT to place orders against a competitively awarded, existing public agency contract. On June 22, 2021, the City Council renewed its "piggyback" authorization and awarded a contract to Truman Arnold Company (TAC), who acquired IPC (USA), Inc, for a term expiring December 31, 2022.
Santa Clarita Transit is in the process of converting its commuter bus fleet to compressed natural gas (CNG). As the remaining diesel-powered buses reach the end of their useful life, they are being replaced with CNG powered buses. Currently, the City of Santa Clarita (City) has eight (8) diesel buses remaining in the fleet and the full conversion is expected to be completed by 2027.
As the remaining diesel-powered vehicles are retired, the use of diesel fuel will decline but will
not be completely eliminated. The emergency generator installed at the Transit Maintenance Facility is diesel powered and allows the City to continue critical operations during emergencies.
The contract awarded in June 2021 was set at a not-to-exceed amount of $325,000, which staff felt was sufficient based on pricing trends at the time. Shortly after, there was a global spike in fuel prices that caused the City to reach the not-to-exceed amount approved by the City Council four months earlier than projected. For reference, from July 2021 to July 2022, the cost of renewable diesel increased from $2.57 to $4.56 per gallon, a 77 percent increase. Despite this increase, staff has found that the rates charged by the existing contractor continue to be competitive compared to other purchasing options available.
If approved by the City Council, this request would increase the not-to-exceed amount of the contract with TACenergy, LCC (formerly TAC) by $140,000, with a revised not-to-exceed amount of $465,000.
ALTERNATIVE ACTION
Other action as determined by the City Council.
FISCAL IMPACT
This request will not impact the General Fund. Adequate funding is currently available in Transit Division's operating budget to cover the amended contract amount.
ATTACHMENTS
Renewable Diesel Fact Sheet
Truman Arnold Companies - First Amendment (available in the City Clerk's Reading File)