Report to Mayor and City Council
Tuesday, September 03, 2024
Consent
SUBJECT:
Title
CONSIDER APPROVAL OF AMENDMENT NO. 2 TO EXTEND THE TERM OF THE CONTRACT SERVICES AGREEMENT WITH SOUTHERN COUNTIES OIL CO. DBA SC FUELS FOR BULK PURCHASING OF GASOLINE AND DIESEL FUEL FOR ONE YEAR AT A NOT-TO-EXCEED COST OF $355,000 (CITY COUNCIL)
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I. SUMMARY
Southern Counties Oil Company, dba SC Fuels (“SC Fuels”) has been providing the City with bulk fuel (gasoline and diesel) since July 1, 2012. On June 19, 2018, the City approved a five-year contract with SC Fuels from July 1, 2018, through June 30, 2023, in the amount of $1,250,000 with an administrative option to extend the term for up to an additional two years in one-year increments (Exhibit 1; the “Agreement”)). On June 20, 2023, the City Council approved Amendment No. 1 to the Agreement (Exhibit 2), which exercised the City’s first one-year option to extend and in doing so, increased the total Contract Sum to $1,650,000 and extended the term through June 30, 2024.
Staff is now requesting that City Council approve Amendment No. 2 to the Agreement (Exhibit 3) to exercise the City’s second one-year option to extend the term of the Agreement, with the extension period beginning July 1, 2024 and continuing through June 30, 2025, and with compensation not-to-exceed $355,000 for the one-year extension period.
II. RECOMMENDATION
Recommendation
Take the following actions:
1. APPROVE Amendment No. 2 to the Agreement with SC Fuels (Exhibit 3; the “Amendment”); and
2. AUTHORIZE the Mayor to execute the Amendment, following approval as to form by the City Attorney.
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III. ALTERNATIVES
TAKE another action the City Council deems appropriate and consistent with the requirements of the law.
IV. BACKGROUND
In 2012, the City entered into a three-year contract with Southern Counties Oil Company, dba SC Fuels, for bulk provision of gasoline and diesel fuel to the City for the period of time from July 1, 2012, through June 30, 2015. To enter into the contract, the City of Carson piggybacked on the purchasing contract between “The Cooperative Purchase Network” (TCPN) and SC Fuels.
In 2015, the City extended the 2012 contract for an extra $250,000 for an added year through June 30, 2016. On August 11, 2016, the City Council approved the issuance of a purchase order to extend the contract for six months through December 31, 2016, for another $125,000. On January 24, 2017, the City Council approved the issuance of another purchase order to extend the contract for six more months through June 30, 2017. On June 20, 2017, the City Council approved the issuance of a subsequent purchase order to extend the contract for another six months through December 31, 2017. On December 19, 2017, the City Council issued a final purchase order to extend the contract for an added six-month period through June 30, 2018.
On June 19, 2018, the City Council approved the current Agreement with SC Fuels for on-call services in a not-to-exceed amount of $1,250,000 over an initial five-year term from July 1, 2018, through June 30, 2023 (Exhibit No. 1). The approval included two one-year City options to extend the term of the Agreement.
Per Carson Municipal Code section 2611(i) (Other Purchases), “[t]he City Council has determined that the purchase of the following items does not require compliance with the bidding provisions of [the City’s purchasing ordinance, Chapter 6 of Article II of the CMC], so long as funds have been properly appropriated and such purchases conform with all other requirements of [the purchasing ordinance]: (11) Fuel purchases and other commodities that are subject to market pricing.” Under this authority, Council waived the formal process for bidding and competitive proposals for this purchase at the December 19, 2017, meeting.
Gasoline prices have continued to rise in recent years, with California being the highest in the nation due at least in part to its taxes. From December 2021 to December 2022, there was a 19.4 percent increase in import fuel prices. On June 20, 2023, City Council approved the first one-year extension option as memorialized in Amendment No. 1, which increased the total Contract Sum to $1,650,000 and extended the term through June 30, 2024. The one-year extension per Amendment No. 1 was at the same Pricing Methodology specified in the Agreement, except with respect to applicable tax rates as provided therein.
Staff recommends that City Council approve the proposed Amendment No. 2 to exercise the City’s second one-year option to extend the term of the Agreement in order to authorize continued bulk purchase of gasoline and diesel fuel and Cardlock on-call services from SC Fuels at the same Pricing Methodology specified in the Agreement (as amended by Amendment No. 1), with compensation not-to-exceed $355,000 over the extension period. The new total Contract Sum will be $2,005,000.
V. FISCAL IMPACT
The estimated annual cost for fuel services is $355,000 per year. Allocations totaling $355,000 were included in the adopted FY 24/25 General Fund budget under account numbers 101-80-840-275-7005 and 101-80-840-275-7006.
VI. EXHIBITS
1. SC Fuels Contract Services Agreement (pgs. 4-40)
2. Amendment No. 1 to SC Fuels Agreement (pgs. 41-75)
3. Draft Amendment No. 2 to SC Fuels Agreement (pgs. 76-81)
Prepared by: Dr. Arlington Rodgers, Jr., Director of Public Works, and Therese K. Foisia, Acting Administrative Analyst