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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. Packet Pg. 51 Item 10 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. Packet Pg. 52 Item 10 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) Packet Pg. 53 Item 10 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. Packet Pg. 54 Item 10 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 Packet Pg. 55 Item 10 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: Packet Pg. 56 Item 10 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 Packet Pg. 57 Item 10 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 Packet Pg. 58 Item 10 Resolution No . 9909 (2007 Series) Page 2 04'.0ire-tenae Mayor David F . Romero ATTEST : APPROVED AS TO FORM : Audrey Hoop e City Clerk Packet Pg. 59 Item 10 Page intentionally left blank. Packet Pg. 60 Item 10