SR 04-24-2018 3I
City Council
Report
City Council Meeting: April 24, 2018
Agenda Item: 3.I
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To: Mayor and City Council
From: Susan Cline, Director, Public Works, Street & Fleet Services
Bill Walker, Fire Chief, Fire Department, Edward F. King, Director, Big Blue
Bus, Transit Services Department
Subject: Award Bid for Unleaded Fuel
Recommended Action
Staff recommends that the City Council:
1. Award Bid #4296 to Pinnacle Petroleum, Inc., a California -based company,
for the purchase and delivery of Top-Tier unleaded gasoline;
2. Authorize the Purchasing Services Manager to issue purchase orders with
Pinnacle Petroleum, Inc. for the purchase and delivery of Top -Tier unleaded
gasoline in the amount not to exceed $864,946 (includes a 20% contingency)
for one full year, with five-additional one-year renewal options to extend on
the same terms and conditions for a total amount not to exceed $5,189,676
with future year funding contingent on Council budget approval.
Executive Summary
The City utilizes unleaded gasoline for emergency response vehicles in the Fire and
Police departments, as well as hybrid vehicles in the Big Blue Bus (BBB) Department.
The use of Top-Tier unleaded gasoline supports the City’s Sustainable City Plan goals
for reduced emissions and sustainability by increasing engine performance, which
enhances the ability of vehicles to maintain the Environmental Protection Agency’s Tier
2 emission standards. Staff recommends issuing purchase orders with Pinnacle
Petroleum, Inc. for the purchase and delivery of Top-Tier unleaded gasoline for a total
amount not exceed $5,189,676 (includes a 20% contingency) over a six-year period.
Background
On April 24, 2012, the City Council awarded bid #3087 to IPC, Inc. to supply and deliver
unleaded fuel for a period of five years and two months, through June 30, 2017
(Attachment A). The City has continued to purchase unleaded fuel through IPC, Inc. on
interim purchase orders until a formal bid for unleaded fuel could be completed. The
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vendor agreed to extend the price, terms, and conditions for an additional nine months.
The City currently has emergency response and hybrid vehicles that operate on
unleaded gasoline. These vehicles include Police motorcycles, patrol and detective
cars, Big Blue Bus gas/electric hybrid vehicles, and various Fire emergency response
vehicles. The City’s reduced emissions fuel policy currently allows an exception for the
use of unleaded gasoline for the operation of emergency response vehicles, and for
hybrid vehicles still in service. The Big Blue Bus, Fire, and Public Works departments
maintain fuel storage tanks at their locations, including the Big Blue Bus corporate yard,
Fire Stations 1, 3, and 5, and the City Yards facilities, where these vehicles obtain fuel.
Discussion
City vehicles use approximately 263,500 gallons of fuel annually and the bid was based
on this amount. In this bid, staff provided the Oil Price Information Service (OPIS) rate
from January 29, 2018 as the baseline for vendors to bid a percentage above or below
(+/-) the OPIS rate provided, and the City required Top-Tier detergent unleaded
gasoline in an effort to improve engine performance in those vehicles that use unleaded
fuel. The Top-Tier detergent fuel additive helps to control and minimize deposits on
engine components, which helps to increase engine performance. As a result, the
ability of a vehicle to maintain the Environmental Protection Agency’s Tier 2 emission
standards is enhanced.
Vendor Selection
On January 29, 2018, the City published Notices Inviting Bids to furnish and deliver
263,500 gallons of Top-Tier unleaded fuel in accordance with City specifications. The
bid was posted on the City’s on-line bidding site, and notices were advertised in the
Santa Monica Daily Press in accordance with City Charter and Municipal Code
provisions. Twenty-one vendors downloaded the bid. Six bids were received and
publicly opened on February 15, 2018.
Total Price Per Gallon Price
Pinnacle Petroleum, Inc. $720,788.44 $2.73554
Falcon Fuels, Inc. $725,067.68 $2.75168
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Merrimac Petroleum, Inc. $745,705.00 $2.83000
IPC (USA) - $747,681.25 $2.83750
Southern Counties Oil Co. $751,735.20 $2.85289
Petroleum Traders Corporation $760,250.20 $2.88520
Bids were evaluated based on the criteria in SMMC 2.24.072, including price, previous
experience, ability to deliver, quality of product, and compliance with City specifications.
Pinnacle Petroleum, Inc. offered a product consistent with City specifications, as well as
a lower fixed price adjustment and fixed freight charges over the life of the agreement,
providing a level of price security in the outer years of the agreement. Based on these
criteria, staff recommends that the City Council award bid #4296 to Pinnacle Petroleum,
Inc., as required by the Street and Fleet Services Division, Fire Department, and Big
Blue Bus, in an amount of $864,946, including $223,229 for the remainder of FY 2017-
18, for a total amount not to exceed $5,189,676.
The annual costs are based on the estimated usage of 263,500 gallons of fuel annually.
The total price noted in the table above is the price per gallon based on the January 29,
2018 OPIS price. The price per gallon will vary throughout the agreement term , based
on the percent discount on the OPIS price, which fluctuates. As this award would run
from April 24, 2018 through April 23, 2024, funding of $223,229 is being requested for
the remainder of FY 2017-18, from April 24, 2018 to June 30, 2018 for the initial
purchase order, as noted in the Financial impacts section. The not to exceed amount
includes a 20% contingency for anticipated fluctuations in unleaded gasoline prices. Per
market research, it is anticipated that an annualized average of 3.1% increase in
gasoline prices will occur over the next three years, as well as possible changes in
consumption over the next six years.
Financial Impacts and Budget Actions
The purchase orders to be awarded to Pinnacle Petroleum, Inc. are for an amount not
to exceed $5,189,676. Funds of $223,229 are included in the FY 2017-18 budget in the
Big Blue Bus, Fire, and Public Works departments. The purchase orders will be charged
to the following accounts:
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54459.522910 “Vehicles-Fuels/Lubrication” $ 83,710
01312.522910 “Vehicles-Fuels/Lubrication” $ 13,951
41654.522961 “Fuel - Service Vehicles” $125,568
Total $223,229
Future year funding is contingent on Council budget approval.
Prepared By: Ryan Kraemer, Senior Administrative Analyst
Approved
Forwarded to Council
Attachments:
A. April 24, 2012 Staff Report
B. Pinnacle Petroleum Oaks Form