HomeMy WebLinkAboutStaff Report 2486City of Palo Alto (ID # 2486)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 3/5/2012
March 05, 2012 Page 1 of 2
(ID # 2486)
Summary Title: BAO & Change Order No.1 to Western States Oil PO
Title: Adoption of a Budget Amendment Ordinance in the Amount of $100,000
to Fund the Purchase of Automotive Fuel; and Approval of Change Order No. 1
to Purchase Order #4511000918 with Western States Oil for $100,000 Each Year
for an Amount Not to Exceed $2,976,675 Over the Three-Year Term for the
Provision of Automotive Fuel
From:City Manager
Lead Department: Public Works
Recommendation
Staff recommends that Council:
1.Adopt the attached Budget Amendment Ordinance (BAO) in the amount of $100,000
(Attachment A) to provide an appropriation for the purchase of automotive fuel; and
2.Approve and authorize the City Manager to execute Change Order No. 1 to Purchase
Order #4511000918 with Western States Oil for an additional amount of $100,000 each
year for a three-year term for a total Purchase Order amount not to exceed $2,976,675
for the provision of automotive fuel.
Discussion
On March 21, 2011, Council approved Purchase Order #4511000918 with Western States Oil in
the amount of $2,676,675 for the provision of automotive fuel for a three-year period from
April 1, 2011 to March 31, 2014.
The annual purchase order value of $892,225 was determined by multiplying the delivered cost
of the fuel (based on the February 7, 2011 Oil Price Information Service Index) by the estimated
quantity required at each site.
The City of Palo Alto is charged the daily posted rack average price for gasoline and diesel fuel
from the San Jose terminal, plus delivery fees. At the time of bid award, the “rack”
(undelivered) price of diesel fuel was $2.8269 per gallon, and unleaded gasoline was $2.5942
per gallon. Since then, fuel prices have increased appreciably –current “rack” pricing for diesel
is $3.5578 per gallon (approximately 26% increase), and unleaded is $3.6092 (approximately
39% increase). Fuel prices were even higher during the late summer and fall. The City’s
March 05, 2012 Page 2 of 2
(ID # 2486)
contract with Western States Oil locks in delivery fees however there are no means to control
the wholesale prices of the fuel. In addition, fuel consumption city-wide was six percent higher
in 2011 than in 2010, which was the baseline year used for estimating the quantities to be
purchased for each site. The increase in consumption can be attributed to the City’s aging fleet
of vehicles and equipment becoming less fuel efficient as they remain in service well beyond
their normally expected life cycles. There was also a temporary increase in fuel consumption at
the city’s landfill for managing additional dirt that was imported and stockpiled to use in the
landfill closure.
Because fuel prices and consumption have increased, the purchase order authority will soon be
exceeded. In order to insure that adequate funding is available to purchase automotive fuel, a
change order in the amount of $100,000 should be executed. The change order would increase
the annual contract amount to $992,225 for each of the three years.
Resource Impact
The attached Budget Amendment Ordinance will provide for the transfer of funding from the
Vehicle Replacement Fund Reserve into the current year’s operating budget to provide
sufficient budget to fund the purchase order including Change Order No. 1.
Policy Implications
Authorization of this change order does not represent a change to any existing policy.
Environmental Review
This contract is exempt from the California Environmental Quality Act under Section 15301 in
that the contract relates to ongoing operations. The 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:
·Budget Amendment Ordinance (PDF)
Prepared By:Keith LaHaie, Fleet Manager
Department Head:J. Michael Sartor, Director
City Manager Approval: ____________________________________
James Keene, City Manager
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING THE BUDGET FOR FISCAL YEAR 2012 TO PROVIDE
ADDITIONAL APPROPRIATION OF $100,000 WITHIN THE
VEHICLE REPLACEMENT FUND FOR FUEL PURCHASES
The Council of the City of Palo Alto does ordain as follows:
SECTION 1. The Council of the City of Palo Alto finds and
determines as follows:
A. Pursuant to the provisions of Section 12 of Article
III of the Charter of the City of Palo Alto, the Council on
June 20, 2011 did adopt a budget for Fiscal Year 2012; and
B. On March 21, 2011, the Council authorized the City
Manager to execute a purchase order with Western States Oil
for the provision of delivery of unleaded gasoline, diesel,
and biodiesel fuel (Staff Report 1444); and
C. The price of fuel is determined by the Oil Price
Information Service (OPIS); and
D. Due to increases in consumption and in the price of
fuel as determined by OPIS, the purchase order authority of
$2,676,675 will soon be exceeded; and
E. $100,000 is needed to execute a change order to
provide sufficient fuel through the end of the fiscal year;
and
F. City Council authorization is needed to amend 2012
Vehicle Replacement Fund operating budget as hereinafter set
forth.
SECTION 2. The sum of One Hundred Thousand Dollars
($100,000) is hereby appropriated to Supplies and Materials in
the Public Works Department and the Vehicle Replacement Fund
Reserve is correspondingly reduced.
SECTION 3. The Vehicle Replacement Fund Reserve is hereby
reduced by One Hundred Thousand Dollars ($100,000) to Seven
Million Two Hundred Twenty-Two Thousand Nine Hundred Forty-One
Dollars ($7,220,941).
SECTION 4. As specified in Section 2.28.080(a) of the
Palo Alto Municipal Code, a two-thirds vote of the City
Council is required to adopt this ordinance.
SECTION 5. As provided in Section 2.04.330 of the Palo
Alto Municipal Code, this ordinance shall become effective
upon adoption.
SECTION 6. The Council of the City of Palo Alto hereby
finds that this is not a project under the California
Environmental Quality Act and, therefore, no environmental
impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST: APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:
City Manager
Director of Public Works
Director of Administrative
Services