TO:
Honorable Mayor and Members of the City Council
THROUGH:
Bruce Moe, City Manager
FROM:
Erick Lee, Public Works Department Director
Sean Roberts, Maintenance Manager
Mike Grafton, Fleet Supervisor
Erika King, Senior Management Analyst
SUBJECT:Title
Consideration of a Resolution Approving Amendment No. 2 With Merrimac Petroleum, Inc. dba Merrimac Energy Group for Bulk Fuel Purchases
(Public Works Director Lee).
ADOPT RESOLUTION NO. 22-0148
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Recommended Action
RECOMMENDATION:
Staff recommends City Council consider the adoption of Resolution No. 22-0148 approving Amendment No. 2 to the Agreement with Merrimac Petroleum, Inc. dba Merrimac Energy Group (Merrimac) to:
1. Extend the contract term to December 5, 2023.
2. Increase the not-to-exceed compensation from $290,000 to $540,000 for the term ending December 4, 2023.
FISCAL IMPLICATIONS:
Resolution No. 22-0134 will exercise the City’s last optional extension year available under the Agreement, extending the term to December 5, 2023. The not-to-exceed compensation will also increase by $250,000 adjusting the contract total for the next term to $540,000. Sufficient funding for the contract is not completely available for the remainder of Fiscal Year 2022-2023 and will be brought back for City Council consideration as part of the first quarter budget update in December 2022.
BACKGROUND:
On December 5, 2018, the City Council approved an agreement for professional services with Merrimac to provide City fleet fuel services. The Parties allowed the Agreement to continue on a month-to-month basis pursuant to Section 2 through August 25, 2022.
On August 25, 2022, the Parties amended the Agreement (Amendment No. 1) to utilize the first of two optional one-year extensions.
DISCUSSION:
The City purchases an average of 8,000 gallons of fuel per month for its fleet of vehicles. Given the unprecedented increase in fuel prices that have occurred during the COVID-19 pandemic, staff performed an analysis of the Merrimac Fuel Agreement and determined that an increase to the not-to-exceed compensation in the agreement with Merrimac is necessary. Fueling market volatility has caused monthly fueling expenses to increase significantly, and the City is currently expending an average of $42,000 per month in fueling costs.
In order to ensure the continuity of fuel delivery and meet the City’s fleet management needs, staff recommends the City Council adopt Resolution No. 22-0134 approving Amendment No. 2 with Merrimac.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has reviewed this report and determined that no additional legal analysis is necessary.
ATTACHMENTS:
1. Resolution No. 22-0148
2. Amendment No. 2 - Merrimac Petroleum, Inc. dba Merrimac Energy Group
3. Agreement and Amendment No. 1 - Merrimac Petroleum, Inc. dba Merrimac Energy Group