HomeMy WebLinkAbout27 - CC-11 - Fuel Services Agreements - 6/16/2015CITY COUNCIL AGENDA REPORT
MEETING DATE: June 16, 2015
SUBJECT: FUEL SERVICE AGREEMENTS
DATE: JUNE 16, 2015
ITEM NUMBER: CC -1 1
FROM: PUBLIC SERVICES DEPARTMENT — MAINTENANCE SERVICES DIVISION
PRESENTATION BY: ERNESTO MUNOZ, PUBLIC SERVICES DIRECTOR
FOR FURTHER INFORMATION CONTACT: BRUCE HARTLEY (714) 754-5123
BRUCE LINDEMANN (714) 327-7470
RECOMMENDATION
1. Approve and authorize the Chief Executive Officer to execute the service agreement for
delivery of unleaded fuel through the County of Orange Regional Cooperative
Agreement No. MA -017-11012276 with Mobil Delivery Service Inc. (dba: Diamond Oil
Service), effective June 16, 2015 through June 15, 2016, in an amount not to exceed
$300,000 annually.
2. Approve and authorize the Chief Executive Officer to execute the service agreement for
delivery of diesel fuel through the County of Orange Regional Cooperative Agreement
No. MA -017-13010843 with Mobil Delivery Service Inc. (dba: Diamond Oil Service),
effective June 16, 2015 through June 15, 2016, in an amount not to exceed $200,000
annually.
3. Authorize the Chief Executive Officer to renew the agreements for three (3) additional one
year terms, upon mutual agreement of both parties.
BACKGROUND
The City's Fleet Services Section operates vehicle fuel tanks at six (6) City facilities and
emergency generators with self-contained tanks at four (4) locations. The tank levels are
monitored by Fleet staff with fuel deliveries coordinated for each location as needed.
In the prior year, the City purchased approximately 108,000 gallons of unleaded fuel and
48,000 gallons of diesel fuel. Based on current prices this equates to approximately
$482,000 per year. In the past, fuel purchasing was provided for through a multi-year
purchasing agreement. With the expiration of that agreement, Fleet Services staff have
been obtaining competitive cost quotes for each individual fuel purchase, a time- consuming
process for both Fleet Services and the Purchasing Division. Typically, the lowest cost fuel
vendors would subcontract the hauling of the fuel through independent fuel carriers. This
resulted in problems such as contaminated fuel, missed deliveries and unacceptable
insurance documents.
On April 15, 2015, the Finance Department issued an interim Purchase Order pursuant to
the County of Orange Cooperative Agreements MA -017-11012276 and MA-017-
13010843 for fuel purchases from Mobil Delivery Service Inc. (dba: Diamond Oil Service).
This was necessary to insure that critical municipal services would continue and was
intended to be an initial test period to evaluate how well the vendor and the cooperative
agreements would work for the City of Costa Mesa.
ANALYSIS
Utilizing these cooperative agreements for the procurement of unleaded and diesel fuel
meets all requirements set forth in the City of Costa Mesa purchasing policy manual and all
requirements set forth by the County of Orange in regards to regional cooperative
agreements and subordinate contracts. These agreements are competitively bid by the
County of Orange through a formal bid process, assuring the lowest prices are obtained.
Staff evaluated the services provided by the vendor through the cooperative agreements
with County of Orange for various quantities of fuel delivered to City facilities through the
initial test phase from April to June of this year. The vendor was determined to be safe,
efficient and cost effective. Staff received no complaints from any location serviced by the
vendor during the test period. Other local agencies currently served by this contract include
John Wayne Airport, O.C. Fire Authority, O.C. Sheriff's Department and O.C. Public Works.
ALTERNATIVES CONSIDERED
Council could direct staff to conduct an independent formal bid to acquire fuel procurement
and delivery services. However, this process is unlikely to obtain pricing below that of the
County agreement due to the lower volume of fuel purchased by the City.
FISCAL REVIEW
In Fiscal Year 2014-15 the total cost to purchase unleaded and diesel fuel is projected to be
approximately $420,000. Using OPIS (Oil Price Information Service; a service that monitors
and sets the daily prices of wholesale fuel) rates for current fuel pricing and fleet forecasting,
it is estimated that fuel costs for Fiscal Year 2015-16 will increase due to price increases for
fuel and increased consumption by re -staffed public safety fleet. It is estimated that the total
cost for fuel under the proposed agreement would not exceed $500,000 annually. Funding
for fuel purchasing and delivery is included in the Public Services Department annual
budget. No increase in funds is required.
LEGAL REVIEW
The City Attorney's Office has approved the attached service agreement (manual purchase
order) as to form.
CONCLUSION
Council authorization to execute the service agreement between the City of Costa Mesa
and Mobil Delivery Service Inc. (dba: Diamond Fuel Service) using the County of Orange
Cooperative Agreements, as a cost effective method of procuring fuel and delivery from an
established fuel vendor that will secure the City's ability to purchase fuel while meeting all
procurement provisions set forth by the State of California and the City of Costa Mesa
Procurement Policies. Using the existing cooperative agreements ensures all competitive
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bid and purchasing requirements have been met and that the vendor has already
established proof of insurances and capabilities.
Staff recommends approving the service agreement (manual purchase order) for a one (1)
year period, effective June 16, 2015 through June 15, 2016, and authorizing the Chief
Executive Officer to renew the agreement for three (3) additional one year terms, upon
mutual agreement of both parties.
ERNESTO MUNOZ
Public Services Director
STEVE DUNIVENT
Interim Finance Director
BRUCE HARTLEY
Maintenance Services Manager
Attachments: 1. Professional Services Agreements (2)
2. County of Orange Agreements (MA -017-13010843 & MA -
017 -11012276)
C: MOBIL DELIVERY SERVICE, INC
DBA: DIAMOND OIL SERVICE
1553 S Bluff Road
Montebello, CA 90640
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