City Council Agenda Report
Meeting Date: July 16, 2024
From: Daniel S. Wall, P.E., Director of Public Works
Department: Public Works
Submitted by: Cynthia Cano, Administrative Secretary
Subject
Purchase Order with Merrimac Energy Group to Procure Fuel Recommendation
Approve and authorize the issuance of a Purchase Order with Merrimac Energy Group in an amount not-to-exceed $600,000 to procure fuel for Citywide fleet for Fiscal Year 2024-2025.
Background
The Public Works Department (Public Works) manages fuel procurement for the City’s entire vehicle fleet. To mitigate the higher costs associated with retail pump purchases, the City opts for bulk fuel delivery from licensed vendors who can supply fuel directly to designated tank locations.
Staff recommends that the City Council award a Purchase Order (PO) to Merrimac Energy Group (Merrimac) for fuel, in the not-to-exceed amount of $600,000. The proposed purchase leverages the existing General Services Agreement No. PW22-1064 between Merrimac and the City of San Buenaventura (Ventura). The agreement with Ventura was awarded to Merrimac in 2022 following a Request for Proposals (RFP) process and was for an initial term of one year with an option to extend for up to four years. Ventura recently executed a Second Amendment to the agreement extending the term through June 30, 2025 (Attachment 1). Pursuant to Vernon Municipal Code (VMC) Section 3.32.110 (A)(5), the proposed PO with Merrimac is exempt from competitive bidding as piggybacking on the Ventura agreement allows the City to receive the same prices and terms negotiated by another public agency, and it is the opinion of the Financial Services Administrator that it is to the advantage of the City to do so.
Under the Merrimac agreement, prices for red dye diesel, renewable diesel, gasoline fuel, diesel exhaust fluid, and lubricants are determined daily based on the Oil Price Information Service (OPIS) Early Day “Los Angeles Average,” as published weekly by the United Communications Group. Merrimac closely monitors daily pricing and informs the City of potential price fluctuations, enabling the City to secure optimal fuel prices.
On average, the City spends approximately $35,000 per month on fuel. Given the recent escalation in fuel costs, the proposed not-to-exceed Purchase Order ensures that Public Works can procure the necessary fuel for operating the City’s fleet during Fiscal Year 2024-2025.
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. Amendment No. 2 to City of Ventura – Merrimac Agreement