HomeMy WebLinkAbout19 - Approval for the Purchase and Delivery of Unleaded Gasoline and Renewable Diesel FuelQ �EwPpRT
CITY OF
s NEWPORT BEACH
`q44:09 City Council Staff Report
August 22, 2023
Agenda Item No. 19
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Jason AI -Imam, Finance Director/Treasurer - 949-644-3126,
jalimam@newportbeachca.gov
PREPARED BY: Michael Gomez, Deputy Finance Director
mgomez@newportbeachca.gov
PHONE: 949-644-3123
TITLE: Approval for the Purchase and Delivery of Unleaded Gasoline and
Renewable Diesel Fuel
ABSTRACT:
The City of Newport Beach's (City) Finance Department issued a Request for Bids (RFB)
for the purchase and delivery of unleaded gasoline and renewable diesel fuel for the City's
fleet of vehicles. The replacement of renewable diesel provides the City a sustainable
alternative to reducing greenhouse gas emissions from equipment that utilizes diesel fuel.
Staff requests City Council approval for the purchase and delivery of unleaded gasoline
and renewable diesel fuel through a Purchase Order for the next three fiscal years, with
two, one-year extensions, to Pinnacle Petroleum, Inc.
RECOMMENDATIONS:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
and
b) Authorize the City Manager to approve Purchase Orders for the Public Works
Department for the purchase and delivery of unleaded gasoline and diesel fuel to June
30, 2026, for a three-year term, for a total not -to -exceed of $3,600,000 and the option
to extend the purchases for two additional years not -to -exceed $1,200,000 per fiscal
year.
DISCUSSION:
The City's Equipment Maintenance Division maintains a fleet of vehicles and equipment
which use gasoline and diesel fuel. The fleet consists of automobiles, small and large
trucks, specialized equipment, and other heavy motorized equipment. The City maintains
a total of seven storage tanks for unleaded gasoline and diesel fuel serving the City's 473
vehicles, consuming an estimated annual volume of 246,200 gallons of unleaded gasoline
and diesel fuel.
19-1
Approval for the Purchase and Delivery of Unleaded
Gasoline and Renewable Diesel Fuel
August 22, 2023
Page 2
The City's average expenditure for unleaded gasoline and diesel fuel over the last five
fiscal years is $832,470 per year.
Advances in modern technology have introduced a synthetic diesel fuel
(renewable diesel) that burns much cleaner than traditional petroleum diesel fuel, has
improved performance characteristics, and can be stored for long periods of time with no
deterioration from water accumulation.
Renewable diesel is made from fats and oils, such as soybean oil or canola oil, and
because of the way it is processed, renewable diesel is chemically the same as petroleum
diesel. Meeting the same ASTM D975 specifications in the US and EM 590 specifications
in Europe, renewable diesel is a direct replacement fuel for petroleum diesel.
The use of renewable diesel does not require any modification to the fleet or storage and
it does not affect performance. Renewable diesel burns cleaner and reduces greenhouse
gas (GHG) emissions by an average of 65% compared to petroleum diesel. Reviewed by
the Department of Energy and the U.S. Energy Information Administration (EIA), and
tested and used by agencies throughout the U.S., renewable diesel provides the City a
sustainable alternative to petroleum diesel that is an environmentally impactful solution
to reducing GHG with no added expenditure.
The City will continue to purchase unleaded gasoline with a 10% ethanol blend that meets
the California Air Resources Board (CARB) regulations for Phase 3 Reformulated
Gasoline (CaRFG3)
Request for Bids (RFB) Process and Evaluation
Staff developed an RFB solicitation containing requirements and a scope of services
detailing the need for the purchase and delivery of unleaded gasoline and renewable
diesel fuel related to the seven storage tanks serving the City's vehicles. On May 5, 2023,
the City's Purchasing staff issued a formal RFB on PlanetBids, the City's public bidding
portal for the purchase and delivery of unleaded gasoline and renewable diesel fuel. The
RFB submission deadline was May 19, 2023, and the process yielded seven bids which
were reviewed for responsiveness and adherence to the minimum requirements listed in
the RFB.
Evaluation Process
This RFB was evaluated based on the following technical factors:
• Lowest and responsible bid;
• Ability to deploy and perform requested services;
• Meet motor vehicle fuel standards;
• Abide by the City of Newport Beach's "zero leakage" standard for fuel transfer
operations.
19-2
Approval for the Purchase and Delivery of Unleaded
Gasoline and Renewable Diesel Fuel
August 22, 2023
Page 3
The lowest bidder was chosen based on the Bidder's negative or positive price markup
plus delivery charge based on the rack rate from Los Angeles Oil Price Information
Service (OPIS) Gross Terminal Daily Unbranded Rack Average Price, multiplied by the
estimated annual consumption. The matrix for the estimated annual cost below or
above the market prices is as follows:
Bidder
Extended Price
Low
Pinnacle Petroleum, Inc.
$69,914.60
2nd
Merrimac Energy Group
$68,380.30
3rd
TACener , LLC
$58,379.02
4th
AAA Oil, Inc.
$41,235.20
5th
Mansfield Oil Company of Georgia, Inc.
($28,239.42)
6th
Southern Counties Oil Co.
$3,443.18
7th
M.O. Dion & Sons, Inc.
$8,050.00
The lowest bidder, Pinnacle Petroleum, Inc. submitted a bid that provides the City the
lowest overcall cost, providing a discount of $69,914.60 per year below the market price.
Given the expertise and experience Pinnacle Petroleum, Inc. can provide to support the
City's delivery of unleaded gasoline and diesel to the seven storage tanks, staff
recommends the approval of a three-year term for a total not -to -exceed of $3,600,000
and the option to extend the purchases for two additional years not -to -exceed $1,200,000
per fiscal year.
FISCAL IMPACT:
The City expects to expend approximately $1,200,000 per fiscal year, which assumes
approximately 246,200 gallons of unleaded and diesel fuel annually. The Fiscal Year
2023-24 Adopted Budget includes sufficient funding for this expenditure level.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
19-3