The Public Works Department is responsible for the purchase of fuel for over 490 pieces of equipment, which consume an average of 216,000 gallons of fuel per year. 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 does not pay federal tax or California use tax. City staff recommends piggybacking on the results of the California State University, San Bernardino public bidding program (#SBCMP0000045270) for the purchase of fuel. i.i. Fuels, Inc. has agreed to provide fuel at the same cost as shown in the California State University, San Bernardino bid process.  This is a three-year contract with the option to extend the agreement for an additional two years. The results of this review were as follows:

i.i. Fuels, Inc.         Unleaded: OPIS +0.015

                             Diesel:     OPIS +0.015

The financial impact is $864,000 per year to the Vehicle Maintenance operating budget.  This is a not to exceed the amount of $2,592,000 for three years.

It is recommended that the City Council:

• Approve the attached agreement with i.i. Fuels, Inc., in the amount of $2,592,000 for three (3) years, with an option to extend for an additional two (2) years, at a cost of $864,000 per option year, for a total of $4,320,000 over five (5) years for the purchase of fuel; and

• Authorize the City Manager to execute the agreement on behalf of the City and make minor modifications as necessary.

By:   Phillip Carter, Facilities Manager