The Public Works Department Vehicle Maintenance Division is responsible for providing fuel for city vehicles and equipment for all City departments, which consume an average of approximately 275,000 gallons of fuel per year. The City is currently in a one (1) year extension of a contract with Southern Counties Oil Co. dba SC Fuels that was entered into on May 9, 2023, which will expire May 9, 2024. Further, experience has shown that joining with other public agencies to purchase fuel enhances the City’s buying power.

In these joint contracts, the pricing of fuel is tied to the industry-accepted benchmark service for fuel supply contracts, known as the Oil Price Information Service (OPIS). The cost to the City is determined by the hourly fluctuating price listed by OPIS.  A fixed charge is then applied to determine the final cost per gallon. The City also expects to receive extra tax revenue due to the vendor being located within the City.

City staff recommends piggybacking on the results of the City of Santa Ana’s public bidding program, RFP #22-110, for the purchase of fuel. AAA Oil Co. has agreed to provide fuel at the same cost as shown in the City of Santa Ana bid process. The initial term of this agreement ends December 19, 2025, with one (1) two- (2) year contract extension that the City of Santa Ana is expected to exercise. The results of this review were as follows:

        AAA Oil Co.                        Unleaded: OPIS+0.0198                                 

                                                   Renewable Diesel: OPIS + 0.0387

The financial impact is $1,000,000 per year with three (3) option years for a total of $4,000,000 to the Fleet Operating Budget. There is no impact to the General Fund.

It is recommended that the City Council:

• Authorize the request to dispense with bidding in the best interest of the City pursuant to Garden Grove Municipal Code 2.50.060(G);

• Authorize the City Manager to execute an Agreement by and between the City of Garden Grove and AAA Oil Company, in an amount of $1,000,000, including three additional option years for a total of $4,000,000, and to make minor modifications as appropriate thereto, on behalf of the City; and 

• Authorize the Finance Director to issue a purchase order in the amount of $1,000,000 to AAA Oil Inc. dba California Fuels and Lubricants to provide fuel and fuel management for city vehicles.

By:  Steve Sudduth, Equipment Maintenance Supervisor