sr-051011-3iCity Council Meeting: May 10, 2011
Agenda Item: ~ T
To: Mayor and City Council
From: Stephanie Negriff, Director of Transit Services
Subject: Increase Purchase Order for Biodiesel Fuel
Recommended Action
Staff recommends that City Council authorize an increase to the purchase orders issued .
to General Petroleum Corporation, aCalifornia-based company, to supply and deliver
biodiesel fuel blends in the amount of $600,000 for a new total of $2,650,131.
Executive Summary
On June 8, 2010, City Council authorized the City Manager to exercise the first one-
year renewal option offered by General Petroleum Corporation to supply and deliver
biodiesel fuel blends to the Big Blue Bus and Public Works Fleet Management Division,
during the period July 1; 2010 through June 30, 2011 in the amount of $2,050,131.
Biodiesel fuel costs have increased due to higher. crude oil prices andstaff recommends
that the City Council authorize an increase of $600,000 to purchase order numbers
17795-OF (Fleet. Management) and 17796-OF (Big Blue Bus) to supply and deliver
biodiesel fuel blends through June 30, 2011 for a new total of $2,650,131.
Background
On January 19, 2010, City .Council considered the award of Bid No. 2984 to General
Petroleum Corporation for the purchase of biodiesel fuel through June 30, 2010 with
four additional one-year renewal options. At that. meeting, City Council awarded Bid No.
2984 to General Petroleum Corporation for the purchase of biodiesel fuel through June
30, 2010 and requested that staff return to Council annually before exercising renewal
options to ensure that the selected firm is reflective of the City's sustainability goal.
On June 8. 2010, City Council authorized staff to exercise the first year renewal option
offered by General Petroleum Corporation to supply and deliver biodiesel fuel blends to
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the Big Blue Bus and the Fleet Management Division during the period July 1, 2010
through June 30, 2011 in an estimated amount of $2,050,131.
Discussion
Market rates for biodiesel fuel are rising significantly. In the past ten months the cost of
a gallon of biodiesel fuel has risen by 43%. As the biodiesel market continues to evolve,
additional suppliers or producers of large amounts of biodiesel have become available.
In April 2011, staff solicited bids for the purchase of biodiesel fuel. This bid is scheduled
to close on April 27, 2011 and staff will return to Council in June 2011 to recommend
award of bid to the best bidder.
Financial Impacts & Budget Actions
An increase of $600,000 to the purchase orders issued to General Petroleum brings the
total purchase order amounts to $2,650,131. Funds are available in the adopted budget
FY 2010-11 in the following line items:
• Fleet: $100,000 in account 54554.522910, "Vehicles-Fuels/Lubrication."
• BBB: $490,000 in account 41654.522911,."Fuel-Revenue Vehicles."
• BBB: $10,000 in account 41654.522840, 60W, "Fuel & Oil Taxes."
Prepared by: Ralph Merced, Transit Maintenance Manager
Approved:
t p anie Negriff
Di for of Transit Services
Forwarded to Council:
Rod Gould
City Manager
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