Title
Recommendation to Authorize the City Manager to Execute a Five-Year Agreement with Hunt and Sons, LLC for the Delivery of Unleaded and Diesel Fuels to City Fueling Stations for a Total Amount Not-to-Exceed $2,800,000.
In accordance with the California Environmental Quality Act (CEQA), this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Section (Existing Facilities). (Public Works 60141580)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
The City of Alameda (City) currently uses a combination of diesel, gasoline, and electricity to power its vehicle fleet and equipment. The City fueling stations at the Maintenance Service Center and Fire Stations require regular delivery of fuel to ensure the City’s fleet and backup generators can provide uninterrupted emergency and other City services. Staff recommends approval of a five-year agreement with Hunt and Sons, LLC (Hunt and Sons) for the delivery of unleaded and diesel fuels. The proposed agreement piggybacks on Hunt and Sons agreement with the State of California (State), a process allowed in the City’s Administrative Instruction Number 5 (Purchasing Policy). The authorized amount in the proposed agreement is based on past consumption, inflation and a contingency for the volatility of the cost of fuel. Hunt and Sons is not guaranteed the authorized amount and will only bill for the actual volume of fuel delivered. As the City continues to transition to zero emission vehicles, fuel consumption will decline. The exact rate of that decline and the degree of fuel price volatility over the next five years is difficult to predict. Therefore, staff recommends a not-to-exceed of $2,800,000 over the five-year term, which is based on total City fuel costs in Fiscal Year 2022-23 when the price per gallon was notably high. Actual costs will be allocated based on consumption to the various operating budgets that have vehicles in the City fleet.
BACKGROUND
The City has a combination of underground and above ground fuel storage and dispensing facilities for City fleet and emergency equipment. The fueling stations at the Maintenance Service Center and Fire Stations require regular delivery of fuel to ensure the City’s fleet and backup generators can provide uninterrupted emergency and other City services. This service was previously provided by Valley Oil.
The Purchasing Policy allows services to be purchased by piggybacking on another agency’s purchase agreement or through cooperative purchasing, as further described below. City Council must approve award of any agreement for service more than $75,000.
DISCUSSION
Following a competitive bidding process, the State entered into an agreement with Hunt and Sons for the delivery of fuel at various locations. The State agreement term is for three (3) years with an option to extend the contract for two (2) additional one (1) year periods. Staff confirmed with the State contract administrator that Hunt and Sons has satisfactory performed all services under the State agreement. Staff recommend piggybacking on Hunt and Son’s State agreement for the delivery of unleaded and diesel fuel to the City’s Maintenance Service Center and Fire Stations.
The agreement specifications require Hunt and Sons to ensure that all delivery vehicles and drivers are in compliance with all current Federal, State and Local registration, licensing, insurance and maintenance requirements as mandated by the Department of Transportation (DOT), Federal Motor Carrier Safety Administration (FMSA), Department of Toxic Substances (DTSC), California Air Resources Board (ARB), and California Highway Patrol (CHP), relating to the commercial transportation and delivery of bulk fuels in the State of California, for the duration of the agreement. The agreement specifications further require all drivers to be trained and certified in safety measures to prevent accidents endangering the public and environment.
The base price for fuel will be based on the current Oil Price Information Service (OPIS) daily average rack pricing (Richmond, California) at the time of delivery. The total composite cost to the City includes the base price plus a differential which stays static for the duration of the agreement. Other fees include delivery charges and relevant taxes. The authorized amount in the proposed agreement is based on past consumption, inflation and a contingency for the volatility of the cost of fuel. Hunt and Sons is not guaranteed the authorized amount and will only bill for the actual volume of fuel delivered.
As the City continues to transition to zero emission vehicles over the next five years, fuel consumption will decline. The exact rate of that decline and the degree of fuel price volatility is difficult to predict. Therefore, staff recommends a not-to-exceed $2,800,000 over the five-year term, which is based on total City fuel costs in Fiscal Year 2022-23 when fuel pricing was notably high.
ALTERNATIVES
• Award the contract as recommended
• Adjust or modify service level within the contract
• Do not award the contract and provide alternative direction to staff.
FINANCIAL IMPACT
Funds for fuel are budgeted in the Fleet Maintenance Division with costs allocated based on fuel consumption to the various operating budgets that have vehicles in the City fleet.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code.
This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
In accordance with CEQA, this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Section (Existing Facilities).
CLIMATE IMPACT
The Fleet Replacement Policy is consistent with the City’s Climate Action and Resiliency Plan and emphasizes greenhouse gas emission reductions. The revised policy includes a focus on right-sizing the City fleet, the purchase of electric vehicles when feasible, and lowering the fleet’s greenhouse gas emissions through acquisition of low emission vehicles. 13% of the City fleet is either hybrid or all electric. As the City continues to transition to zero emission vehicles, greenhouse gas emissions from the City fleet will continue to decline.
RECOMMENDATION
Authorize the City Manager to execute a five-year agreement with Hunt and Sons for the delivery of unleaded and diesel fuels to City fueling stations for a total amount not-to-exceed $2,800,000.
Respectfully submitted,
Erin Smith, Public Works Director
Financial Impact section reviewed,
Margaret O’Brien, Finance Director
Exhibit:
1. Agreement