That the City Council:
A. Waive formal bid requirements per La Habra Municipal Code Section 4.20.070 (C) and authorize staff to issue a fuel Purchase Order to Merrimac Energy Group of Long Beach for $476,500 for Fiscal Year 2024-2025; and,

B. Waive formal bid requirements per La Habra Municipal Code Section 4.20.070 (D) and authorize staff to obtain quotes, as needed, for the purchase of fuel through various fuel supply vendors. In the event a vendor's fuel purchase price is found to be lower than the Merrimac cooperative bid contract, authorize staff to purchase fuel from other, lower cost, fuel suppliers in an amount not to exceed $476,500 for Fiscal Year 2024-2025.

The City reviews market pricing and contracts for the purchase of fuel for City-owned vehicles on an annual basis. The cost of fuel fluctuates daily, and the City utilizes approximately 100,000 gallons of fuel each year. Recent market rates for unleaded fuel is averaging approximately $3.90 per gallon. Staff has reviewed various competatively bid fuel purchase agreements currently in place at surrounding agencies for possible participation in their existing agreements. The majority of the agencies surveyed currently “piggyback” their purchases onto the local Los Angeles County fuel purchase contract, which is priced based on the current daily Oil Price Information Service (OPIS) Market Fuel Rack rate.  Los Angeles County’s supplier provides unleaded fuel at the OPIS rate minus (-) $0.15690/gallon and diesel fuel at the OPIS rate plus (+) $0.01000/gallon.

The City has purchased fuel through Merrimac Energy group for more than ten years by utilizing their most competitively awarded bids with other local public agencies and/or school districts. Merrimac has consistently provided competitive fuel prices compared to other suppliers, and their customer service has been excellent. Therefore, staff recommends utilizing fuel pricing from an existing competitively bid contract between Merrimac Energy and the Las Virgenes Municipal Water District for fuel purchases (Attachment 1). The contract term is for one year with four (4) additional one-year options to renew. Merrimac Energy Group has agreed to maintain the same pricing, terms, and conditions for both the first year of the contract term, as well as the four optional renewal years. If approved by Council, this contract will provide a lower per gallon fuel cost and processing/delivery fees than the current Los Angeles County contract or the existing City of Torrance fuel contract that the City has utilized during the past fiscal year.

Staff recommends that the City Council approve a purchase order to be issued to Merrimac Energy Group to secure cost-effective fuel purchases, and further recommends that City Council authorize staff to monitor the daily cost of fuel and make purchases through other fuel supply vendors in the event their fuel pricing and costs are at levels below the Merrimac fuel purchase terms. 

The proposed FY 2024-2025 Fleet Maintenance Fund budget includes a fuel purchase budget of $506,500.  If approved, $476,500 of this budget will be encumbered for Merrimac Energy Group for the purchase of unleaded and diesel fuel. The remaining $30,000 will be used for smaller fuel purchases made through fuel credit cards (Chevron Company) and for natural gas purchases to fuel the City's Compressed Natural Gas (CNG) powered vehicles.