HomeMy WebLinkAbout2004-11-22 City Council (4)City of Palo Alto
City Manager’s Report
TO:
FROM:
DATE:
SUBJECT:
HONORABLE CITY COUNCIL
CITY MANAGER
NOVEMBER 22, 2004
DEPARTMENT: PUBLIC WORKS
CMR:479:04
APPROVAL OF A PURCHASE ORDER WITH VALLEY OIL COMPANY
IN AN AMOUNT NOT TO EXCEED $750,000 FOR AUTOMOTIVE FUEL
SERVICES
RECOMMENDATION
Staff recommends that Council:
Approve and authorize the City Manager to execute a purchase order with Valley Oil
Company in the amount of $750,000 for Automotive Fuel Services.
Authorize the City Manager or his designee to negotiate and execute one or more changes
to the purchase order with Valley Oil Company to cover increases in the price of fuel that
may occur, the total value of which shall not exceed $75,000 for each contract period.
Authorize the City Manager or his designee to exercise the option to renew the purchase
order in the amount of $750,000 for the second and third year, provided the contractor is
responsive to the City’s needs, and the quality of the contractor’s products and service is
acceptable during the first year of the contract.
DISCUSSION
Valley Oil Company will furnish unleaded gasoline, diesel, and biodiesel fuel, in accordance
with City specifications, and at the Oil Price Information Service (OPIS) San Jose "rack
average" price in effect on the date of delivery. Fuel will be delivered into tanks located at the
Municipal Services Center, Landfill, Golf Course, Fire Stations One, Two, and Four, Water
Quality Control Plant, Foothills Park, Civic Center, and several standby generator sites.
Summary of Bid Process
Bid Name/Number Automotive Fuel Services - RFQ 109500
Proposed Length of Purchase Order 12 months with option to renew
Number of Bids Mailed to Contractors 7
Total Days to Respond to Bid 20
Pre-Bid Meeting?No
Number of Bids Received:2*
Bid Price Range From a low of $673,035 to a high of $676,583"*
* Bid summary provided in Attachment A.
** First year cost only, based on OPIS October 24, 2004 San Jose Rack Average fuel pricing.
CMR:479:04 Page 1 of 3
Staff has reviewed all bids submitted and recommends that the bid of $673,035 submitted by
Valley Oil Company be accepted and that Valley Oil be declared the lowest responsible bidder.
The change order amount of $75,000, which equals 10 percent of the total purchase order value,
is requested to insure against the volatility of fuel prices, which are expected to increase during
the term of the purchase order.
The Request for Quotation (RFQ) required that contractors bid their "margin cost" only. They
were-also required to provide net fuel pricing for each product (explained in the next paragraph).
The margin cost is added to the price of each gallon of delivered fuel, and reflects the delivery
cost, markup, and other fixed costs: The margin cost varies by site, depending on the product,
and the size and location of the delivery. The cost per gallon for full "truck and trailer"
deliveries (typically 7,000 gallons or more) is much less than for "tank wagon" deliveries of less
than 1,000 gallons.
Net (rack average) fuel pricing is established by the OPIS index, which changes on a daily basis.
Given this price volatility, it is not possible to enter into a fixed-price contract for fuel. The RFQ
required that contractors provide rack average fuel pricing from the October 24,. 2004 OPIS
index; however, this pricing was used only to determine the total bid price and the estimated
value of the purchase order. It will not be part of the contract.
Total bid pricing was determined by multiplying the delivered cost of the fuel (OPIS rack
average plus margin cost) by the estimated quantity required at each site. Each vendor provided
the same net fuel pricing, therefore, the low bidder, Valley Oil, bid the lowest overall margin
cost. The purchase order value has been set above the bid price of $673,035 to allow for an
expected increase in fuel prices over the next 12 months. The actual cost may be higher or lower
than the estimate of $750,000, subject to fuel market trends.
RESOURCE IMPACT
Funds have been budgeted for this contract in the FY 2004-05 Public
Equipment Management Operations and Maintenance budget.
Works Department
POLICY IMPLICATIONS
Authorization of the contract does not represent any change to the existing policy.
ENVIRONMENTAL REVIEW
Contractor is required to comply with all federal, state and local environmental laws and
regulations applicable to the transportation and delivery of automotive fuels.
ATTACHMENTS
Attachment A: Bid Summary
Attachment B: Certification of Non-Discrimination
PREPARED BY:
KEITH LAHAIE
Fleet Manager
CMR:479:04 Page 2 of 3
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
GLE~N ROBERTS
Director of Public
EMI~ NON - --
Assistant City Manager
CMR:479:04 Page 3 of 3
ATTACHMENT A
CERTIFICATION OF NON-DlSCRIMATION
ATTACHMENT B
SECTION 410
Certification of Nondiscrimination:
As suppliers of goods or services to the City of Palo Alto, the firm and individuals listed below certify
that they do not discriminate in employment with regards to age, race, color, religion, sex, national
origin, ancestry, disability, or sexual preference; that they are in compliance with all Federal, State,
and local directives and executive orders regarding nondiscrimination in employment.
THE INFORMATION HEREIN IS CERTIFIED CORRECT BY SIGNATURE BELOW.
Firm:
Signature:
Name:
(PRINT OR TYPE NAME)
Signature:
Name:
(PRINT OR TYPE NAME)
Note:The City of Palo Alto, pursuant to California Corporations Code Section 313 requires
two corporate officers to execute contracts.
*The signature of First Officer* must be one of the following: Chairman of the Board;
President; or Vice President.
**The signature of the Second Officer** must be one of the following: Secretary;
Assistant Secretary; Chief Financial Officer; or Assistant Treasurer.
(In the alternative, a certified corporate resolution attesting to the signatory authority
of the individuals signing in their respective capacities is acceptable)
CITY OF PALO ALTO RFQ 109500 PAGE 1 OF 1