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Recommendation to authorize City Manager, or designee, to execute all documents necessary to amend Contract No. 34598 with Merrimac Energy Group, of Long Beach, CA, and Contract No. 34597 with Falcon Fuels, Inc., of Paramount, CA for the purchase of petroleum fuels, to increase the annual aggregate contract amount by $1,150,000, for a total annual aggregate amount not to exceed $4,150,000, for the remaining two years of the three-year contract term, for a revised total aggregate contract amount not to exceed $11,300,000; and
Increase appropriations in the Fleet Fund (IS 386) in the Financial Management Department (FM) by $572,251. (Citywide)
DISCUSSION
On April 18, 2017, the City Council awarded fuel contracts to Merrimac Energy Group and Airspace, LLC, dba JFI JetCenter, both of Long Beach, CA, as primary vendors and Falcon Fuels, Inc., of Paramount, CA, as the secondary vendor, for the purchase and delivery of petroleum fuels, in an annual aggregate amount not to exceed $3,000,000.
City Council approval is requested to execute amendments to Contracts No. 34598 and 34597 with Merrimac Petroleum, Inc. and Falcon Fuels, Inc., respectively, to increase the annual aggregate contract amount by $1,150,000. Since the time the fuel contracts were originally bid, the cost of fuel has increased an average of 37 percent for unleaded and 55 percent for diesel fuel. This increase includes the California gas tax implemented in November 2017. The net affect of the fuel price increases necessitates an increase in purchasing authority above the amount originally authorized by the City Council. Fleet Services staff analyzed fuel costs and expenditures for the last quarter, and projected the need for an additional $1,150,000 in the current fiscal period and remainder of the contract term to meet the City’s fuel purchasing needs. The City’s transition to fuel efficient vehicles will continue to assist in keeping fuel expenses down despite the increase in fuel prices.
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