City Council Agenda Report
Meeting Date: August 19, 2025
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 for Fuel Procurement Recommendation
A. Approve and authorize issuance of a Purchase Order with Merrimac Petroleum, Inc. dba Merrimac Energy Group in an amount not-to-exceed $600,000 to procure fuel for the Citywide fleet for Fiscal Year 2025-2026; and
B. Approve and authorize payment of an outstanding invoice in an amount not-to-exceed $29,143.29.
Background
The Public Works Department is responsible for procuring fuel for the City’s entire vehicle fleet.
To reduce costs associated with retail fuel purchases, the City utilizes bulk fuel deliveries from licensed vendors that supply directly to designated storage tanks.
Staff recommends that the City Council authorize a Purchase Order (PO) with Merrimac Energy Group in an amount not to exceed $600,000 for the purchase of fuel. This procurement is based on the existing General Services Agreement No. PW22-1064 between Merrimac and the City of San Buenaventura (Ventura), which was awarded through a competitive Request for Proposals (RFP) process in 2022 (Attachment 1). The agreement initially covered a one-year term with up to four one-year extension options. Ventura recently executed a third amendment extending the agreement through June 30, 2026 (Attachment 2). In accordance with Vernon Municipal Code (VMC) Section 3.32.110(A)(5), the proposed PO is exempt from competitive bidding, as it qualifies under the cooperative purchasing provision. This "piggyback" arrangement allows the City to procure goods under the same terms and pricing secured by another public agency, and it is the opinion of the Finance Director that it is to the advantage of the City to do so.
Under the Ventura agreement, pricing for red dye diesel, renewable diesel, gasoline, diesel exhaust fluid, and lubricants is determined daily based on the Oil Price Information Service (OPIS) Early Day “Los Angeles Average,” as published weekly by the United Communications Group. Merrimac monitors daily market fluctuations and provides the City with pricing updates, helping staff secure fuel at the most competitive rates. The City currently spends approximately $35,000 per month on fuel. Given the volatility of fuel prices, the recommended not-to-exceed PO amount will ensure the City can meet its fuel needs throughout Fiscal Year 2025–2026.
Pursuant to VMC Section 3.32.030(A), City Council approval is required, as the total value of the requested Purchase Order exceeds $100,000.00 over the lifetime of the contract.
While staff awaited the updated piggyback agreement from the City of Ventura to prepare the City’s contract and Purchase Order, fuel was delivered on July 29, 2025, to avoid any disruption in supply. As a result, there is an outstanding invoice totaling $29,143.29 for the July fuel delivery (Attachment 3). Payment of this invoice requires City Council approval pursuant to VMC Section
3.32.030(B), as the City has previously paid or awarded the vendor more than $100,000.
Fiscal Impact
The fiscal impact is not-to-exceed $629,143.29, covering both the blanket Purchase Order and outstanding invoice. Sufficient funds for the purchase of fuel for Fiscal Year 2025-26 are included in the Vehicle Expense Account for each City Department.
Attachments
1. Agreement No. PW22-1064
2. Amendment No. 4 to Agreement No. PW22-1064
3. Invoice No. 2240983