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Item 1.A.2.
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| City Council Regular | |
| Date: | 10/14/2024 |
| Title: | Award of bids for Gasoline and Diesel Fuel Products |
| Presented by: | Nick Westburg |
| Department: | City Hall Administration |
| Presentation: | No |
| Legal Review: | Template Contract |
| Project Number: | N/A |
RECOMMENDATION
Staff recommends that City Council award the Gasoline and Diesel Fuel products contract to Town and Country Supply Association for two years, with 5 one-year options to renew by mutual agreement.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
The Fleet Services Division administers the annual contracts for all Gasoline and Diesel Fuel products for City equipment. The present contract expires next month, so staff requested bids for Gasoline and Diesel Fuel products. Staff advertised for sealed bids for Gasoline and Diesel Fuel Products on August 30 and September 6, 2024, with a bid opening on September 17, 2024.
The prices for Gasoline and Diesel Fuel products are based on the OPIS (Oil Pricing Information Service) pricing index. OPIS is a nationwide information system which monitors and reports fuel prices per gallon and fluctuations at each terminal location on a daily basis. Daily fuel pricing will match the OPIS Daily Average Gross Rack price for each product. Since the OPIS/Rack price and Taxes are pre-established, only the "Vendor Markup" figure is used to establish the bid award recommendation. The Vendor Markup includes: cost of transportation; vendor overhead costs; blending and additive fees; and the vendor's margin of profit. The total amount listed is the Vendor Markup per gallon times the estimated annual usage. The City uses about 260,000 gallons of gasoline and 600,000 gallons of diesel fuel per year.
The vendor markup bid is calculated as a plus or minus number in respect to the posted OPIS Daily Average Rack price. Fuel vendors have submitted negative numbers for the vendor markup bids. The negative numbers are the amount per gallon the vendor will discount or subtract from the OPIS Daily Average Rack Price. The negative bid number is made possible by refineries offering "Terminal Discounts" to distributors who in turn can pass the discounts on to their large volume customers with good payment histories.
The bid award will be for two years, with five one-year options to renew. Renewals of the contract, by mutual agreement of both parties, may be made at one-year intervals, or any interval that is advantageous to the City, not to exceed a total of seven years.
The prices for Gasoline and Diesel Fuel products are based on the OPIS (Oil Pricing Information Service) pricing index. OPIS is a nationwide information system which monitors and reports fuel prices per gallon and fluctuations at each terminal location on a daily basis. Daily fuel pricing will match the OPIS Daily Average Gross Rack price for each product. Since the OPIS/Rack price and Taxes are pre-established, only the "Vendor Markup" figure is used to establish the bid award recommendation. The Vendor Markup includes: cost of transportation; vendor overhead costs; blending and additive fees; and the vendor's margin of profit. The total amount listed is the Vendor Markup per gallon times the estimated annual usage. The City uses about 260,000 gallons of gasoline and 600,000 gallons of diesel fuel per year.
The vendor markup bid is calculated as a plus or minus number in respect to the posted OPIS Daily Average Rack price. Fuel vendors have submitted negative numbers for the vendor markup bids. The negative numbers are the amount per gallon the vendor will discount or subtract from the OPIS Daily Average Rack Price. The negative bid number is made possible by refineries offering "Terminal Discounts" to distributors who in turn can pass the discounts on to their large volume customers with good payment histories.
The bid award will be for two years, with five one-year options to renew. Renewals of the contract, by mutual agreement of both parties, may be made at one-year intervals, or any interval that is advantageous to the City, not to exceed a total of seven years.
ALTERNATIVES
City Council may:
- Approve the bid award for Gasoline and Diesel Fuel Products or;
- Not Approve the bid award and reject all bids.
FISCAL EFFECTS
All departments with City equipment budget for fuel expenses. Five bids were received September 17, 2024, as outlined below. One bidder did not include extended dollar amounts as instructed, resulting in no total bid submitted.
| NAME OF BIDDER | CityServiceValcon | Farstad Oil | Town and Country Supply Assoc. | Sunoco LP | Valley Farmers Supply | |
| STATE | ||||||
| Type of Security | N/A | N/A | N/A | N/A | N/A | |
| Addendum(s) | 2 | No | 1 | 2 | No | |
| Total Gasoline | $252.00 | ($5,285.00) | $13,000.00 | $189,800.00 | ||
| Total Diesel Fuel | ($24,120.00) | ($22,240.00) | $18,000.00 | $456,000.00 | ||
| Total Gasoline & Diesel Fuel | ($23,110.50) | ($27,525.00) | $31,000.00 | $645,800.00 | ||
SUMMARY
In summary, staff recommends that City Council award the two-year Gasoline and Diesel Fuel products contract to the lowest bidder, Town and Country Supply Association, who bid the greatest discounted amount from the OPIS/Rack fuel prices. The two-year contract includes five one-year options to renew by mutual agreement.