COUNCIL AGENDA REPORT
TO: Mayor and City Council
FROM: Brett Fulgoni, Director of Public Works
DATE: October 21, 2025
SUBJECT: Adoption of a Resolution Authorizing Final Payment and Reaffirmation of Santa Maria Regional Transit Electric Bus Purchase Through State Contracts
Description:
The City Council will consider authorizing final payment and reaffirming to utilize State of California and State of Washington Electric Bus Consortium Contracts to complete the purchase of electric buses for Santa Maria Regional Transit.
Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
RECOMMENDATION:
1. Adopt a Resolution authorizing execution of the final payment and reaffirmation to New Flyer and Gillig for the purchase of electric buses procured under the State of California and State of Washington Electric Bus Consortium Contracts that were active at the time of the original orders; and
2. Authorize the City Manager, or designee, to execute the final payment.
BACKGROUND:
In compliance with State mandates requiring the transition to a 100 percent zero-emission bus (ZEB) fleet, the City's Transit Division ordered electric buses from New Flyer, Proterra and Gillig using valid cooperative purchasing contracts issued by the State of California Department of General Services (DGS) and the State of Wash ington. While most buses have already been delivered and paid for under the City’s 2018 Purchasing Policy, final payment on one New Flyer has been delayed due to subsequent technicalities and changes in the City’s 2025 Financial Policies. This delay has cr eated a procedural issue because the DGS contract has since expired, and the City's new 2025 Purchasing Policy includes language that seems to contradict staff's ability to "grandfather -in" the original Purchase Order (PO). As a result, staff's authority t o process the final payment for the bus could be called into question. This matter is being brought to the City Council to ensure a resolution that the City can undoubtedly and lawfully issue the final payment.
2 DISCUSSION:
History: Transition to Zero Emission Buses
On December 17, 2018, the California Air Resources Board (CARB) adopted the Innovative Clean Transit (ICT) Rule, which requires all public transit agencies in California to convert to a ZEB fleet by 2040. A "Zero -Emission Bus" is defined as a bus with zero tailpipe emissions. Consequently, vehicles that run on diesel, compressed natural gas, propane, or any other fossil or nonrenewable fuel, including hybrids, do not qualify as ZEBs due to their tailpipe emissions.
In conformity with the ICT requirements, the Santa Maria City Council adopted the recommended Santa Maria ICT Rollout Plan (Resolution No. 2023 -82) at the May 16, 2023, meeting. This plan outlines the methods by which the City’s Transit Division will comply and fully transition to a ZEB fleet. Since the plan's adoption, the Transit Division has begun the transition by ordering electric vehicles in line with adopted budgets and purchasing policies.
2018 Purchasing Policy
Within the City’s 2018 adopted Purchasing Policy, under which t he original electric bus purchases were made, it states the following:
Cooperative purchasing is used by municipalities in the purchase of goods and services.
This arrangement offers the participants significant economies of scale. Although one municipality may issue specifications and receive bids, each entity independently executes its own contract, administers the procurement function, and finances the purchase. This is an acceptable practice that allows municipal agencies to “piggy -back” on contracts for services and supplies, issued by a wide range of other governmental agencies. Cooperative purchasing agreements may be entered into with federal, state, city governments, public or quasi-public entities, and non-profit entities. The Purchasing Agent may buy directly from a vendor under the cooperative purchasing program if the public interest and convenience would be best served by utilizing another entity’s contract for competitive pricing of goods and/or services
Similar language is found in the City’s adopted 2025 Purchasing Policy.
ICT Plan, Cooperative Purchase, California DGS and State of Washington Section 13.4 of the City’s adopted ICT plan echoes the value of using a cooperative agreement for the purchase of ZEB’s, by which it reads:
13.4 STATE OF CALIFORNIA’S DEPARTMENT OF GOODS AND SERVICES (DGS) The State of California’s Department of Goods and Services (DGS) has just completed an extensive Request for Proposals for ZEBs. All public transit agencies will be able to participate from this RFP. Given that this streamlines the acquisition process, helps ensure a vetted product and secures competitive pricing, this will be the likeliest source from which ZEBs are selected for purchase. The CA DGS contract is likely to provide multiple vehicle options for purchase from today’s leading ZEB manufacturers. While the City remains agnostic to brands and allows for an open, fair and competitive purchasing 3 processes, early indications show that qualifying participating ZEB manufacturers possibly include: BYD, Gillig, New Flyer and Proterra vehicles. Pricing for these vehicles will be dependent on the State of California’s Department of Goods and Service contract.
Most vehicle procurements are expected to take anywhere from 14 to 18 months from the Notice to Proceed to until delivery of the vehicle.
Since 2022, all Transit Division bus purchases have 1) been pursued in compliance of ICT Rules by focusing on ordering ZEBs, 2) daylighted and memorialized in the recommendation to purchase electric buses throughout its various adopted 2 -Year Budget cycles, and 3) purchased by leveraging California and Washington issued consortium contracts, as recommended in the ICT Plan, in order to award the purchase to best possible price, a vetted electric vehic le and in conformity with provisions of the City’s piggy-backing Purchasing Policies.
Ambiguity and New Conflict
Within the same 2018 Purchasing Policy, under which the original ZEB purchases were originally made, it reads:
When City Council approves the two-year budget, the schedule of authorized equipment will also be considered approved. This City Council approval allows the departments to follow administrative purchasing procedures (three quotes, etc.) and purchase said equipment without obtaining specific City Council approval for each piece of equipment.
One interpretation of this language is that by virtue of the electric buses being adopted in the Transit Enterprise Funds Budget, no other City Council action is needed as long as the purchasing age nt (i.e. Transit Division) follows the Purchasing Policy. In this case, leveraging a State-issued Cooperative Purchase contract with bus manufacturers for the Transit Division to procure the City’s electric buses, as approved in the 2-year budget. No other City Council action was sought under this interpretation after the buses were adopted in the Transit two-year budget.
The Standing Issue
Specifically, the California DGS Cooperative Purchasing contract, which was used to purchase New Flyer electric bus p urchases, was issued on December 16, 2019, and expired on December 15, 2024. Although all electric bus orders were originally placed with approved Purchase Order(s) almost two years ago while the DGS contract was active, a new replacement PO must now be issued in the City's new Enterprise Resource Planning (ERP) system, Workday, which went live on July 2, 2025, concurrently with a new 2025 Purchasing Policy.
However, the DGS contract expired before the City could issue payment for the third and final New Flyer electric bus, which was delivered in May 2025. Payment for this bus had been temporarily withheld until the manufacturer resolved outstanding issues, which has since been resolved. The current Purchasing Policy is unclear on whether staff have the authority to "grandfather -in" the original PO to allow for payment now that the DGS contract has expired. This situation could also affect six other electric Gillig buses 4 procured using a similar method of using a state consortium contract before new purchasing policies were put into place.
Further, Resolution 2004-31 in Purchasing Guidelines states:
The Purchasing Agent finds that the public interest and convenience would be best served by utilizing another entity's contract for competitive pricing of goods and services, the Purchasing Agent may buy directly from a vendor if the contract was awarded within the last twelve months and the contract was for identical or for nearly identical goods and/or services.
The existence of this language in the newly adopted 2025 Purchasing Policy, which requires that the cooperative agreement must have been awarded within the last twelve months, adds an additional level of ambiguity for what staff’s delegated authority is able to pursue without additional City Council action.
Conclusion
The Transit Division ordered buses in good faith, following the direction of the City Council's adopted ICT Plan and leveraging an approved, valid and in effect cooperative purchasing method. However, a combination of delayed payment, changes in the ERP system, the introduction of a new 2025 Purchasing Policy, the expiration of the DGS contract, and new/ambiguous language has created a situation where staff’s delegated authority to issue the final payment could be called into question.
Alternative(s)
This issue requires City Council ratification because the payment for the electric bus is still necessary, but now subject to conflicting purchasing policies. Although the bus was ordered under a valid cooperative agreement, that contract expired before payment could be finalized. For the City to legally complete the transaction and avoid potential scrutiny, the City Council must formally approve the consortium contracts to issue payment, essentially "ratifying" the original commitment despi te the new procedural inconsistencies. This action will provide clear authorization for staff to proceed and ensure that the City remains compliant with both ICT regulations, financial regulations and obligations.
Fiscal Considerations
The City of Santa Maria’s Transit Division is an Enterprise Fund with its own sources of financial support that have no impact on the City’s General Fund. Specifically, buses are bought with a combination of Federal and State funding appropriated specifically for the purchase of electric transit vehicles. As a Federal Transit Administration (FTA) funding recipient, the Transit Division is also subject to their rules. Although prior electric bus purchases have been given a clean bill of health by the FTA’s subsequent trienn ial reviews, this additional City Council action gives greater conformity to purchasing rules for both organizations, regardless of the interpretation of what is or is not actually required in order to exercise a piggy-back purchase option.
5 Impact on the Community
There is no impact on the community. This is only an administrative action to add greater conformity with both federal and local purchasing requirements and to insulate the City for alternative interpretations of the Purchasing Policy.
ATTACHMENT(S)
A. Resolution
B. Gillig Contract
C. New Flyer Contract