City Council Agenda Report
Meeting Date: June 20, 2023
From: Daniel S. Wall, P.E., Director of Public Works
Department: Public Works
Submitted by: Cynthia Cano, Administrative Secretary
Subject
Purchase Contract with Merrimac Energy Group to Procure Fuel Recommendation
Approve and authorize the issuance of a Purchase Contract with Merrimac Energy Group in an amount not-to-exceed $600,000 to procure fuel for Citywide fleet for Fiscal Year 2023-2024.
Background
The Public Works Department (Public Works) purchases the fuel for the City's entire fleet of vehicles. ln order to avoid the higher cost of retail purchases at the pump, it is most advantageous for the City to contract for the delivery of bulk fuel from a licensed vendor that can supply fuel to the City's fuel tank locations.
Staff is recommending that the City Council award a Purchase Contract to Merrimac Energy Group (Merrimac) for fuel in an amount not-to-exceed $600,000. For the proposed purchase, the City intends to piggyback on the current contract between Merrimac and the City of San Buenaventura (Ventura). The agreement expires June 30, 2023, but allows for optional extension for up to four years, which the City of Ventura is currently executing.(Attachment 1). Per Vernon Municipal Code 3.32.110 (A)(5), the purchase with Merrimac is exempt from competitive bidding, as piggybacking allows the City to leverage the same prices and terms and conditions for supplies, equipment, or services as in a previous award negotiated by another public agency.
The Finance Director has determined that piggybacking for this purchase is advantageous for the City.
Under the contract with Merrimac, the price of red dye diesel, renewable diesel, gasoline fuel, and diesel exhaust fluid and lubricants are determined daily by the Oil Price lnformation Service (OPIS) Early Day "Los Angeles Average," as published weekly by the United Communications Group. Merrimac shall monitor the daily pricing and advise the City of potential price increases and/or decreases, enabling the City to secure the most optimal pricing for its fuel purchases.
On average, the City spends about $35,000 per month on fuel. With fuel costs escalating over the past year, the requested not-to-exceed Purchase Contract amount will ensure that Public Works is able to procure the amount of fuel necessary to operate the City's fleet for Fiscal Year 2023-2024.
Fiscal Impact
The fiscal impact is not-to-exceed $600,000. Sufficient funds for the purchase of fuel are included in the Vehicle Expense Account for each City Department.
Attachments
1. City of Ventura – Merrimac Agreement