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SR-120208-1FCity Council Meeting: December 2, 2008_ Agenda Item: To: Mayor and City Council From: Carol Swindell, Director of Finance Subject: Purchase of Biodiesel Fuel Recommended Action Staff recommends that City Council award Bid #2956 to General Petroleum Corporation to supply and deliver B20, B50 and B99 biodiesel fuel blends to the Big Blue Bus Department and the Fleet Management Division in an estimated amount of $3,140,520 annually. Executive Summary The purchase of biodiesel fuel supports the City's Sustainable City Plan for reduced emissions and sustainability. Staff received authorization from Council on July 23, 2008 to purchase biodiesel fuel fora period of six months from General Petroleum Corporation following a formal bid process. In August 2008, another bid solicitation for the purchase of biodiesel fuel was issued based on the responses from the most recent formal bid process. The Office of sustainability and the Environment approved this specification which is consistent with the goals of the City's Sustainable policy of reducing. the consumption of non-renewable, non-recyclable and non-recycled fuels. General Petroleum Corporation was recommended as the best bidder following this formal bid process. This bid award is for the period January 24, 2009 through June 30; 2009 with one additional one-year renewal option, subject to annual budget approval. The estimated expenditure for the balance of this fiscal year is $'1,570,260, and funds are available in the Big Blue Bus Department and Fleet Management Division budgets. The total estimated expenditure for the year and one half term is $4,710,780. Background Reducing diesel .use and switching to less harmful reduced-emission fuels was mentioned in the Information Item that was submitted to City Council on January 15, 2008 which can. be found at the following link: htto://www01.smaov.net/cityclerk/council/ information items/2008/ReducedEmissionsFuelsPolicy.odf. In accordance with its commitment to sustainability, the City continues a policy of using less harmful and renewable fuel sources. With the support of the Council, City staff and the community, Santa Monica has become one of the world's leaders in successfully incorporating. alternative fuel vehicles into its daily operations. On July 23, 2008, Council awarded Bid #2922 to General Petroleum Corporation to supply and deliver biodiesel fuel blends as required by the Big Blue Bus Department and Fleet Management Division for a six month period, through January 23, 2009. Hence, another formal bid solicitation to supply and deliver biodiesel fuel at these locations was issued in August 2008. This formal bid closed on September 17., 2008. Discussion The City currently has many vehicles, generators and small engine equipment that operate on diesel fuel. These vehicles include 102 buses, over 70 vehicles, large trucks and tractors, compressors, pressure washers, stationary compactors and other pieces of miscellaneous equipment. Biodiesel affords numerous advantages over conventional diesel, including domestic renewable production, clean burning properties and compatibility with existing diesel engines, storage tanks and distribution equipment. Fueling vehicles and buses with biodiesel fuel reduces emissions and the health risks associated with petroleum diesel. Biodiesel contains no sulfur or aromatics, and the use of biodiesel in a conventional diesel engine results in substantial reduction of unburned hydrocarbons, carbon monoxide and particulate matter. A U.S. Department of Energy study showed that the production and use of biodiesel, compared to petroleum diesel, resulted in a 78.5% reduction in carbon dioxide emissions. Biodiesel is registered as a fuel and fuel additive with the EPA and meets clean diesel standards established by the California Air Resources Board (GARB). Because biodiesel fuel is a non-toxic, domestically produced renewable resource that is biodegradable and sustainable, the purchase of biodiesel fuel supports the standards set forth by the City's Sustainable City Plan for reduced emissions. 2 The Fleet Management Division and the Big Blue Bus maintain fuel storage tanks at their respective locations where biodiesel fuel is available. Although bibdiesel fuel has always been available and delivered when ordered, should biodiesel fuel not be available, ultra low sulfur diesel #2 (ULSD #2) will be purchased instead. Vendor Selection The City published Notices Inviting Bids to supply and deliver biodiesel fuel in accordance with City specifications. Bid forms were mailed to forty-seven vendors and notices were advertised in accordance with City Charter and Municipal Code provisions. Four bids were received and publicly opened per Attachment A. Bids were evaluated based on competitive pricing, bid response, and additional available options. Based on these criteria, General Petroleum Corporation is recommended as the best bidder. Financial Impacts & Budget Actions Fiscal Year 2008/2009 budget authority in the amount of .$1,570,260 is available as follows: Fleet: $192,504 in account 54554.522910, "Vehicles-Fuels/Lubrication" • BBB: $1,375,002 in account 41.111008, "Fuel-Revenue Vehicles" (initially recorded as inventory and periodically expensed as fuel is dispensed) • BBB: $2,754 in account 41654.522840, 60W, "Fuel & Oil Taxes" Budget authority for subsequent years will be included in each annual proposed City budget. 3 Prepared by: Kimberlie Nimori, Senior Buyer Approved: Forwarde~to Council: windell P. amont well Director of Finance C y Manager Attachments: Attachment A -Pricing 4 ATTACHMENT A BID #: 2956 BID CLOSE DATE: 09/17/08 TITLE: SUPPLY AND DELIVER BIODIESEL FUEL AS REQUIRED BY THE CITY OF SANTA MONICA 1550 Pacific Coast Highway B50 Biodiesel Blend Fuel Bid Item/Vendor Falcon Fuels General Petroleum Corporation. Imperial Western Products, Inc. SC Fuels Line Description Floating price per gallon, no rice rotection Floating price per gallon, no rice rotection Floating price per gallon, with rice rotection* Floating price per gallon, no rice rotection Floating price per gallon, no rice rotection ' 1 BioDiesel-B99 per the OPIS indexX 50% (taxable) $ 4.750000 $ 4.750000 $ 4.750000 $ 4.750000 $ 4.750000 2 Carb #2 ULSD per the OPIS index X50% (taxable) $ 3.184200 $ ~ 3.184200 $ 3.184200 $ 3.184200 $ 3.184200 3 Mark up (taxable) $ 0.107900 $ 0.069000 $ 0.089000 $ 0.210000 $ 0.205000 4 L. U.S.T. tax (taxable) $ 0.001000 $ 0.001000 $ 0.001000 $ 0.001000 $ 0.001000 5 Federal oil spill fee (taxable) $ 0.001190 $ 0.001190 $ 0.001190 $ .0.001190 $ 0.001190 6 CA oil spill surcharge (taxable) $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 7 Subtotal of above taxable items $ 4.078380 $ 4.039480 $ 4.059480 $ 4.180480 $ 4.175480 8 Sales tax (8.25%) $ 0.336466 $ 0.333257 $ 0.334907 $ 0.344890 $ 0.344477 9 State excise tax (non taxable) $ 0.180000 $ 0.180000 $ 0.180000 $ 0.180000 $ 0.180000 10 Total for (1) gallon $ 4.594846 $ 4.552737 $ 4.574387 $ 4.705370 $ 4.699957 11 Estimated annual gallons 18,000 18,000 18,000 18,000 .18,000 12 Total for 12 months $ 82,707.23 '$ 81,949.27 $ 82,338.97 $ 84,696.65 $ 84,599.23 13 Regulatory compliance fee per delivery (non taxable) tJ/A $ 6.95 $ 6.95 $ - $ - 14 Fuel surcharge per delivery (non taxable) .0313 (29%) per gallon $ 9.92 $ 9.92 $ - $ - Estimated annual total (12 deliveries): $ 83,270.63 $ 82,151.71 $ 82,541.41 $ 84,696.65 $ 84,599.23 'Floating price per gallgn, with price protection Maximum amount ihatthe City will pay for th BioDiesel index portion N/A N/A $ 5.25 N/A N/A *Floating price per gallon, with price protection Maximum amount that the City will pay for th ULSD portio N/A N/A $ 5.250 N/A N/A 1 of 6 ATTACHMENT A BID #: 2956 BID CLOSE DATE: 09/17/08 TITLE: SUPPLY AND DELIVER BIODIESEL FUEL AS REQUIRED BY THE CITY OF SANTA MONICA 2500 Michigan Ave. B50 Biodiesel Blend Fuel . Bid Item/Vendor Falcon Fuels General Petroleum Corporation Imperial Western Products, Inc. SC Fuels Line D0SC1'IptlOn Floating price per gallon, no rice rotection Floating price per gallon, no rice rotection Floating price per gallon, with rice rotection* Floating price per gallon, no rice rotection Floating price per gallon, no rice rotection 1 BioDiesel-B99 perthe OPIS intlexX 50% (taxable) $ 4.750000 $ 4.750000 $ 4.750000 $ 4.750000. $ 4.750000 2 Carh #2 ULSD per the OPTS index X50% (taxable) $ 3.184200 $ 3.184200 $ 3.184200 $ 3.184200 $ 3.184200 3 Mark up (taxable) $ 0.032300 $ 0.029000 $ 0.049000 $ 0.020000 $ 0.086200 4 L.U.S.T. tax (taxable) $ 0.007000 $ 0.001000 $ 0.001000 $ ~ 0.001000 $ 0.001000 5 Federal oil spill fee (taxable) $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 6 CA oil spill surcharge (taxable) $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 7 Subtotal of above taxable items $ 4.002780 $ 3.999480 $ 4.019480 $ 3.990480 $ 4.056680 8 Sales tax (8.25%) $ ~ 0.330229 $. .0.329957 $ 0.331607 $ ~ 0.329215 $ 0.334676 9 State excise tax (non taxable) $ 0.180000 $ 0.180000 $ 0.180000 $ 0.180000 $ 0.180000 10 Total for (1) gallon $ 4.513009 $ 4.509437 $ 4.531087 $ 4.499695 $ 4.571356 11 Estimated annual gallons 60,000 60,000 60,000 60,000 60,000 12 Total for 12 months $ 270,780.56 $ .270,566.23 $ 271,865.23 $ 269,981.68 $ 274,281.37 13 Regulatory compliance fee per tlelivery (non taxable) N/A $ 6.95 $ 6.95 $ - $ - 14 Fuel surcharge per tlelivery (non taxable) .0094 (29%) $ 9.92 $ 9.92 $ - $ - Estimated annual total (12 deliveries): $ 271,344.56 $ .270,768.67 $. 272,067.67 $ 269,981.68 $ 274,281.37 "Floating price pergallon, with price protection Maximum amount that the City will pay for th BioDiesel index portion N/A N/A $ 5.25 N/A N/A *Floating price per gallon, with price protection Maximum amount that the City will pay forth ULSD portio N/A N/A $ 5.25 N/A N/A 2 of6 ATTACHMENT A BID #: 2956 BID CLOSE DATE: 09/17/08 TITLE: SUPPLY AND DELIVER BIODIESEL FUEL AS REQUIRED BY THE CITY OF SANTA MONICA 1550 Pacific Coast Highway B99 Biodiesel Blend Fuel Bid Item/Vendor Falcon Fuels General Petroleum Corporation Imperial Western Products, lnc. SC Fuels Line DQSRI'IptlOn Floating price per gallon, no rice rotection Floating price per gallon, no rice rotection Floating price per gallon, with rice rotection* Floating price per gallon, no rice rotection Floating price per gallon, no rice rotection 1 BioDiesel-899.per the OPIS index (taxable) $ 4.750000 $ 4.750000 $ 4.750000 $ 4.750000 $ 4.750000 2 Carb #2 ULSD per the OPIS index (taxable) N/A N/A N/A N/A N/A 3 Mark up (taxable) $ 0.107900 $ 0.069000 $ 0.089000 $ 0.080000 $ 0.215000 4 L. U.S.T. tax (taxable) $ 0.00100 $ 0.00100 $ 0.00100 $ 0.00100 $ 0.00100 5 Federal oil spill fee.(taxable) $ 0.00119 $ 0.00119 $ 0.00119 $ 0.00119 $ 0.00119 6 CA. oil spill surcharge (taxable) $ 0.00119 $ 0.00119 $ 0.00119 $ 0.00119 $ 0.00119 7 Subtotal of above taxable items $ 4.861280. $ 4.822380 $ 4.842380 $ 4.833380 $ 4.968380 8 Sales tax (8.25%) $ 0.401056 $ 0.397846 $ 0.399496 $ 0.398754 $ 0.409891 9 State excise tax (non taxable) $ 0.180000 $ 0.180000 $ 0.180000 $ 0.180000 $ 0.180000 10 Total for (1) gallon $ 5.442336 $ 5.400226 $ 5.421876 $ 5.412134 $ 5.558271 11 Estimated annual gallons 18,000 18,000 18,000 18,000 18,000 12 Total for 12 months $ 97,962.04 $ 97,204.07 $ 97,593.77 $ 97,418;41 $ 100,048.88 13 Regulatory compliance fee per delivery (non taxable) N/A $ 6.95 $ 6.95 $ - - $ - 14 Fuel surcharge per delivery (non taxable) .0313. (29%) $ 9.92 $ 9.92 - $ - . $ - Estimated annual total (12 deliveries) $ 98,525.44 $ 97,406.51 $ 97,796.21 $ 97,418.41 $ 100,048.88 *Floating price per gallon, with price protection Maximum amount that the City will pay for th BioDiesel index portion N/A N/A $ 5.25 N/A. N/A *Floating price per gallon, with price protection Maximum amount [hat the City will pay forth ULSD portio N/A N/A $ 5.25 N/A N/A 3 of6 ATTACHMENT A BID #: 2956 BID CLOSE DATE: 09/17/08 TITLE: SUPPLY AND DELIVER BIODIESEL FUEL AS REQUIRED BY THE CITY OF SANTA MONICA 2500 Michigan Ave. B99 Biodiesel Blend Fuel Bid ItemNendor Falcon Fuels General Petroleum Corporation Imperial Western Products, Inc. SC Fuels Line Description Floating price per gallon, no rice rotection Floating price per gallon, no rice rotection Floating price per gallon, with rice rotection* Floating price per gallon, no rice rotection Floating price per gallon, ho rice rotection 1 BioDiesel-699 per the OPIS index (taxable) $ 4.7500 $ 4.7500 $ 4.7500 $ 4.7500 $ 4.7500 2 Carb #2 ULSD per the OPIS index (taxable) N/A - N/A N/A N/A N/A 3 Mark up (taxable) $ 0.022300 $ 0.029000 $ 0.049000 $ (0.050000) $ 0.075000 4 L.U.S.T. tax (taxable) ~ $ 0.001000 $ 0.001000 $ .0.001000 $ 0.001000 $ 0.001000 5 Federal oil spill fee (taxable) $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 6 CA oil spill surcharge (taxable) $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 7 Subtotal of above taxable items $ 4.775680 $ 4.782380 $ 4.802380 $ 4.703380 $ 4.828380 8 Sales tax (8.25%) $ 0.393994 $ 0.394546 $ 0.396196 $ 0.388029 $ 0.398341 9 State excise tax (non taxable) $ 0.180000 $ - 0.180000 $ 0.180000 $ 0.180000 $ 0.180000 10 Total for (1) gallon $ 5.349674 $ 5.356926 $ 5.378576 $ 5.271409 $ 5.406721 11 Estimated annual gallons 60,000 60,000 60,000 60,000 60,000 12 Total for 12 months $ 320,980.42 $ 321,415.58 $ - 322,714.58 $ ~ 316,284.53 $ 324,403.28 13 Regulatory compliance fee per delivery (non taxable) N/A $ 6.95 $ 6.95 $ - $ - 14 Fuel surcharge per delivery (non taxable) 0094 (29%) $ 9.92 $ 9.92 $ - $ - Estimated annual total (12 deliveries): $ 321,544.42 $ 321,618.02 $ 322,917.02 $ 316,284.53 $ 324,403.28 *Floating price per gallon, with price protection Maximum amount that the City will pay forth BioDiesel index portion N/A N/A $ 5.25 N/A N/A *Floating price per gallon, with price protection Maximum amount that the City will pay forth ULSD.portio N/A N/A $ 5.25 N/A N/A 4 of6 ATTACHMENT A BID #: 2956 BID CLOSE DATE: 09/17/08 TITLE: SUPPLY AND DELIVER BIODIESEL FUEL AS REQUIRED BY THE CITY OF SANTA MONICA .1620 6th Street B20 Biodiesel Blend Fuel Bid Item/Vendor Falcon Fuels General Petroleum Corporation Imperial Western Products, Inc. SC Fuels Line Description Floating price per gallon, no rice rotection Floating price per gallon,. no rice rotection Floating price per gallon, with rice rotection` Floating price per gallon, no rice rotedion Floating price per gallon, no rice roteclion 1 BioDiesel-698 per the P index X 20% (taxable) $ 4.750000 $ 4.750000 $ 4.750000 $ 4.750000 $ 4.750000 2 Carb #2 ULSD per the OPTS index X 89 % (taxable) $ ~ 3.184200 $ 3.184200 $ 3.184200 $ 3.184200 $ 3.184200 3 Mark up (taxable) $ 0.029300 $ 0.013000 $ 0.033000 $ 0.016000 $ 0.038000 4 L.U.S.T. tax (taxable) $ 0.001000 $ 0.001000 $ 0.001000 $ 0.001000 $ 0.001000 5 Federal oil spill fee (taxable) $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 6 CA oil spill surcharge (taxable) $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 $ 0.001190 7 Subtotal of above taxable items $ 3.530040 $ 3.513740 $ 3.533740 $ 3.516740 $ 3.538740 8 Sales tax (8.25%) $ 0.291228 $ 0.289884 $ 0.291534 $ ~ 0.290131 $ -0.291946 9 State excise tax (non taxable) N/A N/A N/A N/A 10 Total for (1) gallon $ 3.8212683 $ 3.8036236 $ 3.8252736 $ 3.8068711 $ 3.8306861 11 Estimated annual gallons 720,000 720,000 720,000 720,000 720,000 12 Total for 12 months $ 2,751,313.18 $ 2,738,608.96 $ 2,754,196.96 $ 2,740,947.16 $ 2,758,093.96 13 Regulatory compliance fee per delivery (non taxable) N/A $ 6.95 $ 6.95 $ - $ - 14 Fuel surcharge per delivery (non taxable) .0061 (29%) $ 9.92 $ ~ 9.92 $ - $ - Estimated annual total (104 deliveries) $ 2,755,705.18 $ 2,740,363.44 $ 2,755,951.44 $ 2,740,947.16 $ 2;758,093.96 *Floating price per gallon, with price protection Maximum amount that the City will pay for [h BioDiesel index portion N/A N/A $ 5.25 N/A *Floating price per gallon, with price protection Maximum amount that the Ciry will pay forth ULSD portio N/A N/A $ 5.25 N/A 5 of6 -BID #: 2956 BID CLOSE DATE: 09/17/08 ATTACHMENT A TITLE: SUPPLY AND DELIVER BIODIESEL FUEL AS REQUIRED BY THE CITY OF SANTA MONICA Imperial Western Bid Item/Vendor Falcon Fuels Generaf Petroleum Corporation Products, Inc. SC Fuels Imperial Western, BQ 9000 Future Fuels-Agra Blend, BQ 9000 accredited accredited Paseo Cargill-Soy, BQ 9000 accredited. SOUrCBS Of bI0d10Se General Petroleum, not Bq 9000 accredited Minnesota Soy Proo-Soy LW.P-Recycled Agra Blend Imperial Western Products, Inc., BQ 9000 accredited REG, BQ 9000 accredited Compliance With Specification Can Comply Can Comply Can Comply Can Comply 2004 Biodiesel Handling and Us Guideline Can Comply Can Comply Can Comply Can Comply Compliance with Section 5. Additives Can Comply Can Comply Can Comply Can Comply Compliance with Section 6.0 (Othe Re uirements Can Comply Can Comply Can Comply Can Comply Compliance with Section 7.2 DeIIVe for the Bi BIUe BUS Can Comply Can Comply Can Comply Pa ment Terms Net 30 Net 30 Net 30 Net 30 Delive Within 1 da 1-2 days Renewal O tions Year 2 No, to be reviewed at the extension Same price, terms and conditions/ $6.25 for bio/ULS diesels No bid/renewal No, upon mutual agreement 30 days prior to expiration Renewal O tions Year 3 No, to be reviewed at the extension No Extension - No bid/renewal No, upon mutual agreement 30 days prior to expiration Renewal Options Year 4 No, to be reviewed at the extension - No Extension No bid/renewal No, upon mutual agreement 30 days prior to expiration 6 of6