REPORT TO COUNCIL
SUBJECT
Title
Authorize the Issuance of a Purchase Agreement to Valley Oil Company in the Amount of $875,000 for Unleaded and Diesel Fuel (F25-139)
Report
REPORT IN BRIEF
Approval is requested to authorize the issuance of a purchase agreement in the amount of $875,000 for unleaded and diesel fuel to Valley Oil Company of Mountain View. Approval is also requested to authorize the City Manager to increase the purchase agreement amount as needed for gasoline purchases through January 2026, subject to available budget and if pricing and service remain acceptable to the City.
EXISTING POLICY
Pursuant to Section 2.08.040 (d) of the Sunnyvale Municipal Code (SMC), Council approval is required for the procurement of goods and/or services greater than $250,000 in any one transaction.
Section 2.08.220 (b) of the Sunnyvale Municipal Code authorizes the purchasing officer to direct the city’s participation with one or more governmental, public or quasi-public agencies in a cooperative agreement for the procurement of goods and/or services, provided that at least one of the agencies has solicited bids.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
BACKGROUND AND DISCUSSION
In January 2022, the City’s contract with Valley Oil Company to supply fuel citywide expired. To ensure continuity of operations, the City Manager, pursuant to the authority delegated by Council for the procurement of goods for which the cost to the City is $250,000 or less, awarded a new contract to Valley Oil Company. This new agreement was based on a cooperative reverse auction led by the County of Santa Clara in December 2020, in which the City participated as a member.
Under the terms of this agreement, the City is currently paying $3.88 per gallon for gasoline and $3.90 for diesel. While these prices are below retail, they include a markup above a baseline rate set by the Oil Price Information Service (OPIS) for San Jose.
In April 2022 (RTC No. 22-0294), the City Manager was granted authority by Council to renew the City’s fuel contract for up to two additional years. Staff exercised these renewal options, and the current agreement is set to expire on January 11, 2025. Since then, the County of Santa Clara has amended its contracts for unleaded and diesel fuel, extending them through January 2026. (See Attachments 1 and 2 to the report.)
To align with the County’s revised term, staff is seeking authorization to issue a purchase agreement for the final year of the County’s contract. Additionally, to enhance flexibility and mitigate potential fuel supply disruptions, staff recommends that the Council delegate authority to the City Manager to increase the purchase agreement amount as needed for gasoline purchases through January 2026, contingent on budget availability if pricing and service levels remain acceptable to the City.
FISCAL IMPACT
In Fiscal Year 2024/25, $974,743 is budgeted for the purchase of all vehicle fuel and lubricants in under Program 14100 - Fleet, Fuel and Equipment in Fund 7021 - Fleet Services. The budget is anticipated to be sufficient to fully fund this purchase agreement. Purchase of vehicle fuel is funded through internal service charges applied to the various departments that utilize motorized equipment.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the NOVA Workforce Services reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
RECOMMENDATION
Recommendation
Take the following actions:
- Authorize the issuance of a purchase agreement to Valley Oil Company in an amount of $875,000 for unleaded and diesel fuel;
- Authorize the City Manager to execute the purchase agreement when all necessary conditions have been met; and
- Authorize the City Manager to increase the purchase agreement amount as needed for gasoline purchases through January 2026, subject to available budget and if pricing and service remain acceptable to the City.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $250 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
X Competitively bid contract*
___ Labor or personal employment contract
___ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: David Battaglia, Purchasing Officer
Reviewed by: Dennis Jaw, Acting Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. County of Santa Clara Agreement CW2239575 (Diesel Fuel)
2. County of Santa Clara Agreement CW2239572 (Unleaded Fuel)