HomeMy WebLinkAbout09-03-2019 Item 10 - Approval of Sole-source purchase for Trasit Fuel
Department Name: Finance
Cost Center: 2004
For Agenda of: September 3, 2019
Placement: Consent
Estimated Time: N/A
FROM: Brigitte Elke, Finance Director
Prepared By: Dan Clancy, Financial Analyst - Purchasing
SUBJECT: RESOLUTION TO ADOPT SOLE-SOURCE PURCHASE APPROVAL FOR
TRANSIT (BUS) FUEL FROM LOCAL SUPPLIER J.B. DEWAR
RECOMMENDATION
1. Adopt a resolution approving the sole source purchase for City bus fuel from local supplier
J.B. Dewar; and
2. Authorize the City Manager to approve the annual purchase order for bus fuel until:
a. Another vendor establishes the same service in San Luis Obispo that would allow for
competitive bidding; or
b. The bus fleet is electrified, rendering the service obsolete.
DISCUSSION
Background
The City’s bus fleet is maintained daily for optimal service during the regular transit service
provided throughout the City. Daily service includes fueling of the buses as well as the cleaning
of interior and exterior surfaces.
With the newly implemented Enterprise Resource Planning (ERP) and procurement system,
Transit staff submitted a purchase order request for fuel purchases for fiscal year 2019 -20 with
an estimated annual cost of $320,000. The purchase order requested the amount to be
encumbered under sole source to J.B. Dewar (Attachment A). This purchase had previously been
invoiced on a monthly basis and fell therefore below the Council approval threshold. With the
new procurement system, these types of purchases are now secured by a purchase order for the
entire fiscal year. The City’s purchasing policy requires all purchases over $200,000 per fiscal
year to be competitively bid with Council approval.
Competitive Bidding
The City could open a competitive request for proposals as there are many diesel fuel vendors
that could provide the required product. However, in each competitors’ case, the fuel would have
to be trucked into the City and transported to a specific delivery point. In addition, greenhouse
gas emission directly attributed by this type of service would increase the City’s environmental
impact.
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The City’s financial policies outline specific conditions that must be met in order to circumvent
competitive bidding. Finance and Transit staff met to discuss the details surrounding the sole
source request for policy compliance and established the following qualifying factors:
1. J.B. Dewar is the only bulk-fuel facility within San Luis Obispo;
2. J.B. Dewar has a card-lock price advantage program which allows the City to purchase
diesel fuel tax free;
3. Ancillary services are provided on-site to clean the buses overnight while being fueled;
The City would also have to find an alternative option for the cleaning of the buses as the two
processes could no longer be combined.
Considering the presented factors, staff recommends that the City continue the sole-source
purchase with J.B. Dewar until such time as another firm provides the same level of service and
a competitive bid would be in the best interest of the City. Additional sole-source justification is
provided in the Resolution (Attachment B).
Previous Council Action
The Council approved a similar resolution on June 19, 2007, under Resolution No. 9909 (2007
Series) to allow for asphalt purchases in this manner (Attachment C).
Policy Context
Transit has submitted a sole-source request pursuant to Section 204 of the City’s purchasing
policy which demonstrates the permissible application under City policy.
Public Engagement
This item will be reviewed during the public City Council meeting on September 3, 2019, and
the public will have an opportunity to comment.
CONCURRENCE
The Public Works department has worked collaboratively with Finance and concurs with the
recommended action.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15278.
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FISCAL IMPACT
Budgeted: Yes Budget Year: 2019-20
Funding Identified: Yes
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current Funding
Request
Remaining
Balance
Annual
Ongoing Cost
General Fund
Federal
Fees
Other: Transit $320,000 $320,000
Total $320,000 $320,000
ALTERNATIVES
The Council could decide to issue a request for proposal/bid. This is not recommended due to
the local sourcing of the fuel and the increased liability risks.
Attachments:
a - JB Dewar Sole Source Justification
b - Resolution
c - Resolution No. 9909 (2007 Series)
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City of San Luis Obispo Sole Source Justification Form
JB Dewar – Fuel Purchasing
It is the policy of the City of San Luis Obispo to solicit quotations or bids for purchases of commodities or services for
specified dollar amounts and to select vendors on a competitive basis (See City of San Luis Obispo Financial
Management Manual, Section 201, Exhibit 201-B).
Pursuant to San Luis Obispo Municipal Code Chapter 3.24.060, certain acquisitions in which the products or services
may only be obtained from a single source may be purchased without engaging in bidding procedures. Such Sole
Source acquisitions must be justified in sufficient detail to explain the basis for suspending the usual competitive
procurement process and approved by the approving authority before such a purchase is made.
1. What product or service is being requested? Why is it necessary?
Diesel and gasoline fuel are essential to the fixed-route transit operation in the City of San Luis Obispo.
City Transit vehicles (fixed-route, maintenance, and road supervisor vehicles) are fueled every evening
by the City’s Operations and Maintenance Contractor, First Transit.
2. Is this “brand” of product or services offered the only one that meets the City’s requirements? If
yes, what is unique about the product/services?
JB Dewar has a cardlock price advantage program which gives the City access to fuel savings and tax
free diesel fueling. Alternative fueling sites apply the federal, state, and motor vehicle tax. Additionally
the City bus yard facility (29 Prado) is adjacent to the JB Dewar fueling facility (75 Prado).
Due to proximity, convenience, and the JB Dewar cardlock price advantage program, transit vehicles
have fueled at JB Dewar for many years.
3. Is the product or service proprietary or is it available from various dealers? Have you verified this?
Diesel and gasoline fuel are available from various dealers. However, the “Red dye” diesel (most
commonly used transit fuel) is found is fewer places, most; requiring lengthier travel to secure.
4. Have other products/vendors been considered? If yes, which? and how did they fail to meet the
City’s requirements?
In the future the City’s transit fleet will be transitioning to electric fueled vehicles, but this is still a
long way off. Other vendors have be evaluated by the City’s fleet division (Isaac Shuck) but have not
produced the same competitive pricing seen at JB Dewars
5. Is the purchase an upgrade or addition to an existing system or brand of products adopted citywide?
If so, will purchase of this product avoid “switching” costs as opposed to purchasing another
product or service (e.g., additional training required; data conversion; implementation of a new
system; etc.)?
JB Dewar fuel purchasing is a continuation of existing fuel purchasing.
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6. What is the quoted price for the product or services and is it reasonable (based on other products
or services in the same field or based on historical pricing for the City for similar products or
services)?
Fuel prices are volatile.
__________________________________ ________________
Dan Clancy, Purchasing Analyst Date
Daniel Clancy
7/12/2019
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RESOLUTION NO. ________ (2019 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, MODIFYING PURCHASING PROCEDURES
FOR THE PROCUREMENT OF DIESEL FUEL FOR CITY TRANSIT
OPERATIONS
WHEREAS, the City of San Luis Obispo Transit system deploys diesel fuel buses for
daily transit service whin the City; and
WHEREAS, the City purchases approximately $320,000 of diesel fuel per fiscal year
through the Transit Fund; and
WHEREAS, J.B. Dewar is the only bulk-fueling company located within City limits; and
WHEREAS, J.B. Dewar has a card-lock price advantage program which gives the City
tax-free diesel fuel; and
WHEREAS, ancillary services are provided on-site to clean the buses overnight while
being fueled; and
WHEREAS, while issuing a public request for bid for the fuel could result in lower-cost
bids, the fuel would have to be trucked in from outside City limits; resulting in increased
greenhouse gas emissions directly caused by the purchase; and
WHEREAS, delivery by truck tanker fueling increases the City’s environmental liability
risk and requires separate services for the daily cleaning of the buses.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
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SECTION 1: That the Public Works Department – Transit Division is authorized to
purchase diesel fuel by sole-source with J.B. Dewar until such time as other companies provide
the same level of service within City limits allowing for competitive bids or electrification of the
City’s transit service renders the contract obsolete.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this 3rd day of September 2019.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, 2019.
____________________________________
Teresa Purrington
City Clerk
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RESOLUTION NO. 9909 (2007 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISP O
MODIFYING PURCHASING PROCEDURES FOR PROCUREMENT OF ASPHAL T
WHEREAS,the City purchases over $250,000 for asphalt annually through the Stree t
Maintenance operating program ; an d
WHEREAS,the cost per job for asphalt regularly exceeds $5,000 ; and
WHEREAS,there are currently only two companies – Union Asphalt and Hanson Aggregates –
operating asphalt batch plants in the county within 30 miles of San Luis Obispo ; an d
WHEREAS,the Union Asphalt batch plant in Paso Robles is about 13 miles farther away fro m
San Luis Obispo than the Hanson Aggregates batch plant in Santa Margarita ; and
WHEREAS,the cost of delivery makes the cost of asphalt from Union Asphalt invariably mor e
expensive than the cost of asphalt from Hanson Aggregates ; and
WHEREAS,open market purchasing procedures requiring written price quotations and purchas e
orders – as described in Section 295 of the City's Financial Management Manual – serve no usefu l
purpose when there is only one feasible vendor .
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo tha t
Public Works Department be authorized to buy asphalt in volumes valued up to $25,000 per job usin g
over-the-counter purchasing procedures and in volumes valued between $25,000 and $100,000 usin g
open market purchasing procedures as described in Section 295 of the City' Financial Managemen t
Manual .
Upon motion of Vice Mayor Mulholland, seconded by Council Member Settle, and on th e
following vote :
AYES :
Council Members Brown, Carter and Settle, Vice Mayor Mulholland and Mayo r
Romero
NOES :
Non e
ABSENT : Non e
The foregoing resolution was adopted this 19 th day of June 2007 .
R 9909
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Resolution No . 9909 (2007 Series)
Page 2
04'.0ire-tenae
Mayor David F . Romero
ATTEST :
APPROVED AS TO FORM :
Audrey Hoop e
City Clerk
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