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CC - CONSENT ITEM: Approval of an Agreement with Merrimac Energy Group for the Provision of Bulk Unleaded and Diesel Fuel for City Vehicles in an Amount Not-To-Exceed $2,935,000 for the Period Ending January 31, 2029.
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Meeting Date: January 13, 2025
Contact Person/Dept: Allison Cohen/Transportation
Phone Number: (310) 253-6530
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Attachments: Yes [] No [X]
Public Notification: (E-Mail) Meetings and Agendas - City Council (01/08/2025)
Department Approval: Tamar Fuhrer, Deputy Transportation Officer (12/12/2024)
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RECOMMENDATION
Staff recommends the City Council approve an agreement with Merrimac Energy Group for the provision of bulk unleaded and diesel fuel for City vehicles in an amount not-to-exceed $2,935,000 for the period ending January 31, 2029.
BACKGROUND/DISCUSSION
The Transportation Department orders bulk fuel deliveries for each of the City’s four fueling stations. These stations provide motor vehicle fuel for all the City’s vehicles, including Police, Fire, Transportation, and Public Works Departments and general shared use pool vehicles. Additionally, the Transportation Department fuel station serves as a retail fueling location for vehicles belonging to the Culver City Unified School District (CCUSD). All City-owned vehicles have twenty-four-hour access to the stations for the provision of fuel, and the fueling stations are managed utilizing a computer system. The fuel management software documents all fuel use such as price, quantity, time, vehicle number, and driver identification number, allowing for accurate internal fuel billing to City departments and CCUSD.
The Transportation Department currently manages bulk ordering of fuel for nine storage tanks and bills the using departments and CCUSD monthly for their fuel purchases. These fueling stations dispense approximately 170,000 gallons combined of regular unleaded and renewable diesel fuels on an annual basis, more than 650,000 gasoline gallon equivalents of renewable compressed natural gas, and a rapidly increasing volume of kilowatts of electricity to help move City vehicles to, through, and from Culver City.
As the quantities of petroleum fuel delivered to City-owned stations continue to decline as vehicles are replaced with zero and lower emission alternatives, bulk fuel agreements currently offered by many bulk fuel providers have become a more cost-effective alternative to spot-pricing. As fuel is a commodity with a constantly fluctuating price, these agreements are established utilizing the Oil Price Information Service (OPIS), which provides daily and weekly indexes of fuel prices. The OPIS price serves as the baseline price for the fuel and the wholesaler will add either a discount or premium to this price based upon the terms of the agreement.
Staff surveyed and researched the marketplace and identified an opportunity with Merrimac Energy Group to utilize an existing agreement with North County Transit District. Staff has contacted Merrimac Energy Group, and they are willing to extend the same terms of this agreement to the City of Culver City through January 2029. Under this proposed agreement, the City could recognize over $10,000 in annual discounts for bulk fuel purchases.
Pursuant to Culver City Municipal Code (CCMC) Section 3.07.055.G, the purchase of the goods and supplies is excepted from formal competitive bidding requirements when competitive bid procedures have already been utilized by the City or another public agency or non-profit entity whose main purpose is to help public agencies make purchases. The North County Transit District (NCTD) conducted a bid for diesel fuel, unleaded fuel and diesel exhaust fuel in December 2023 and awarded an agreement to Merrimac Energy Group. NCTD's fuel pricing agreement with Merrimac Energy Group is in place through January 31, 2029. Merrimac is a large volume fuel supplier and receives rates below OPIS pricing because of the volume of fuel they procure. Due to this volume, they are able to pass forward a lower rate to the City as an amount below OPIS. Merrimac is the current provider of bulk fuel services for the City’s fleet, as well as a number of other municipalities in Southern California including the cities of Los Angeles, Huntington Beach, Manhattan Beach, Baldwin Park, and Ventura. Merrimac Energy Group is willing to extend to the City of Culver City the same terms, conditions, and discounts that are included within the NCTD contract.
FISCAL ANALYSIS
The Adopted Budget for Fiscal Year 2024-2025 includes sufficient funding in Account No. 30870400.520000 (Transportation Equipment Maintenance - Petroleum Products) for the purchase of fuel (including electricity, compressed natural gas, propane, unleaded, and diesel fuels) which is shown on page 465 of the budget book Funds for future years of the agreement would be included in future fiscal year budgets.
ATTACHMENTS
None.
MOTION
That the City Council:
1. Approve an agreement with Merrimac Energy Group for the provision of bulk unleaded and diesel fuel for City vehicles in an amount not to exceed $2,935,000 for the period ending January 31, 2029; and
2. Authorize the City Attorney to review/prepare the necessary documents; and
3. Authorize the City Manager to execute such documents on behalf of the City.