REPORT TO COUNCIL
SUBJECT
Title
Modify Existing Purchase Agreements with Valley Oil Company in the Amount of $1,555,000 and Western States Oil Company in the Amount of $740,000 for Fuel (F26-201 & F26-203)
Report
REPORT IN BRIEF
Approval is requested to modify the existing purchase agreement (PA) with Bosco Oil, Inc., dba Valley Oil Company, increasing the PA amount from $875,000 to $1,555,000, and the existing PA with Tom Lopes Distributing, Inc., dba Western States Oil Company, increasing the PA amount from $400,000 to $740,000; and to extend the term of both PAs through January 11, 2027. The PA amounts require modification due to increased fuel consumption, higher per-gallon pricing, and expanded fleet operational needs. Approval is also requested to authorize the City Manager to modify the PA amounts if additional fuel is required, 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 SMC 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
The City has participated in the County of Santa Clara’s (County) fuel contracts with Valley Oil Company and Western States Oil Company as a result of a Reverse Auction conducted by the County in 2020 (RTC Nos. 22-1046 & 24-1152). The City’s current purchase agreements with Valley Oil Company and Western States Oil Company are set to expire on January 11, 2026, which is also the final renewal option term for the County agreements. Due to an issue with the County’s bidding platform, the fuel agreements were extended through January 11, 2027, to allow time for a new reverse auction solicitation in early 2026 (see Attachments 1 through 3 to the report).
To align with the County's revised terms, staff are seeking authorization to extend each purchase agreement through January 11, 2027, and increase both PAs to meet anticipated fuel demand (from $875,000 to $1,555,000 for Valley Oil Company, and from $400,000 to $740,000 for Western States Oil Company).
Fuel expenditures have increased over the past 24 months due to (1) elevated per-gallon market prices, (2) increased utilization of the City’s operational fleet, and (3) higher demand for diesel associated with large-equipment operations. Based on average consumption levels and current pricing, staff projects that the existing PA amounts will be insufficient to meet operational needs through FY 2026/27.
FISCAL IMPACT
Budget for vehicle fuel is appropriated in Fund 7021 - Fleet Services, which is funded through internal service charges to various departments that utilize motorized equipment. The increased costs will be included in the FY 2026/27 Recommended Budget.
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 City Hall 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:
- Amend an existing Purchase Agreement (PA) with Valley Oil Company, increasing the PA amount from $875,000 to $1,555,000 for fuel;
- Amend an existing Purchase Agreement with Western States Oil Company, increasing the PA amount from $400,000 to $740,000 for fuel;
- Authorize the City Manager to extend the terms of each Purchase Agreement through January 11,2027; and
- Authorize the City Manager to amend the new PA amounts, subject to available budget, 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 $500 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
_X_ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
___ 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: Matthew Paulin, Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Fourth Amendment to Agreement No. CW2239572 between Valley Oil Company and Santa Clara County (Unleaded Fuel)
2. Fourth Amendment to Agreement No. CW2239575 between Valley Oil Company and Santa Clara County (Diesel Fuel)
3. Sixth Amendment to Agreement No. CW2239583 between Western States Oil Company and Santa Clara County (Diesel Fuel)