1b. Approve Joint Fuel Purchase Agreement with MnDOT
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227,1110
Building Inspections
Phone: 952.227,1180
Fax: 952,227,1190
Engineering
Phone: 952,227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227,1110
Park & Recreation
Phone: 952.227.1120
Fax: 952,227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Natural Resources
Phone: 952.227.1130
Fax: 952,227,1110
Public Works
1591 Park Road
Phone: 952,227,1300
Fax: 952.227.1310
Senior Center
Phone: 952,227.1125
Fax: 952.227.1110
Web Site
www.ci.chanhassen.mn.us
1.h
-
MEMORANDUM
TO:
Todd Gerhardt, City Manager
()~
Paul Oehme, Director of Public Works/City Engineer4
'\)~
FROM:
DA TE:
November 24, 2008
SUBJ:
Approve Joint Fuel Purchase Agreement with MnDOT
PROPOSED MOTION
"The City Council approves the attached contract agreement with MnDOT for
2009 Joint Fuel Purchase."
City Council approval requires a simple majority vote of the City Council
present.
BACKGROUND
As you are aware, this past year fuel prices fluctuated widely and impacted the
2008 fuel budget. Because of the high fuel prices this summer, staff has explored
opportunities to reduce the fluctuation in fuel costs next year. Recently, we have
seen a significant drop in the price of oil, which should translate into lower fuel
prices for the rest of the year. However, this trend could easily reverse itself due
to many uncontrollable events. Staff has been working with MnDOT and several
cities and counties on a joint powers fuel purchase option that could lock in fuel
prices for 2009. The City of Chanhassen alone would not have good leverage to
lock in a competitive fuel contract since our fuel consumption is relatively small.
Many larger cities, such as Minneapolis and St. Paul, and MnDOT currently go
out for bids to lock in fuel purchases for the upcoming year. By locking in the
prices with these large users, the City of Chanhassen would be able to budget and
eliminate significant fluctuations of the market and not have to deal with potential
overruns at the end of the year.
Cities and counties will have the opportunity to purchase all or a portion of their
fuel through this contract. It is estimated that this contract could be as large as
5.8 million gallons of unleaded and diesel fuel with as many as 30 agencies
participating.
DISCUSSION
Staff is requesting participation in this State contract with half of our annual
estimated unleaded and diesel fuel needs. This approach will give the City some
Chanhassen is a Community for Life. Providing for Today and Planning for Tomorrow
Mr. Todd Gerhardt
Joint Fuel Purchase Agreement
November 24,2008
flexibility if prices continue to decrease due to market fluctuation, however
unlikely. Also, by locking in half of our fuel needs with the fixed price program
we will still have the ability to purchase fuel in the open market from local
suppliers or use the spot price program in the State contract, whichever is more
cost effective at that time.
The State is planning to go out for bids on the fuel purchase contract in early
December so staff does not know the contract fuel prices. By approving this
agreement, the City will be required to purchase the specified fuel amount at the
contract price. If bid prices come in higher than expected, the State may not
accept the bids and the City would purchase fuel as it has in the past by obtaining
quotes from local suppliers.
Attachments: State Contract
Fuel Order Form
g:\eng\budget & cip\blldget\09\bkgd 112408 apprv mndot joint fuel purchase agrmnt.doc
DATE:
OCTOBER 28, 2008
TO:
2009 FUEL CONSORTIUM MEMBERS
RE:
FUEL CONSORTIUM PURCHASE PROGRAM FOR STATE OF MINNESOTA AGENCIES
AND COOPERATIVE PURCHASING VENTURE MEMBERS
JACKIE FINGER - STATE OF MINNESOTA ACQUISITION MANAGEMENT SPECIALIST
FROM:
The State of Minnesota is preparing a solicitation for bulk purchases of diesel and gasoline products. The
purchase program will be based on two price strategies:
1. Fixed Price Program - This will require a participating agency or entity to be:
.
Located primarily in the seven county metropolitan area unless otherwise approved,
to agree and comply with the terms and conditions of the Contract,
to be able to take either gasoline or diesel fuel in the required product type and as
delivered by the Contract Vendor in quantities of at least 500 gallons per delivery,
to commit to a specific amount of the fuel for a monthly delivery,
to take 100 percent of the committed monthly amount at a fixed price contracted
on its behalf.
.
.
.
.
2. Spot Price Program - This price program may be used by any participating agency/entity, on an
as needed basis, and will require a participating agency/entity to be:
· Located within the borders of Minnesota,
· to agree and comply with the terms and conditions of the Contract,
· to place orders directly with the Contract Vendor for its requested amount and product
type,
· will pay the Contract Vendor the amount based on the Spot Price formula contracted
which is the Daily Rack Average Price plus the Contract Vendor's Total Bid Constant
(profit/overhead/delivery cost) per gallon delivered.
* NOTE: Your agency must be a current member of Cooperative Purchasing Venture (CPV) in
order to participate in the Fuel Consortium Program. If you are not a current CPV Member and
want to join the program, please contact Sherry Brown at 651.201.2404.
CAREFUllY REVIEW THE FOllOWING INFORMATION!!!
Only those agencies that wHILb7ga~~.~ig~.~i8.~.i~tn7~.i~~~.~~i~~i~r.e~ram must complete the fuel questionnaire
and return it to my attention 'ii.QrJlal.iJi,!flflin~1fJi>v'emHfthi11el~t'i~e~J!J8. Please be careful to provide accurate
information. If YOU are reQuired to obtain approval by your aovernina Board. plan
accordinaly.
Participation in the Spot Price Proaram does not require quantities to be submitted and may be used on an as
needed basis by any State agencies and CPV members if they so choose.
If you have any questions, please feel free to contact me by phone at 651.201.2436, by fax at 651.297.3996, or
via E-mail (PREFERRED):iackie.finaer~state.mn.us. Thank you.
FUEL CONSORTIUM - OVERVIEW
FIXED PRICE PROGRAM. The agencies listed on the Fixed Price Schedule are required to take 100% of its
monthly quantity listed and the Contract Vendor is required to provide 100% of the monthly quantities
contracted.
If the original purchaser is unable to take all of the monthly committed gallons, the Contract Vendor will be
responsible for contacting other locations participating in the Fixed Price Contract to determine if they are able
to take additional gallons.
If the Contract Vendor is able to ship the unused gallons from the original participating purchaser to another
participating agency, there will be no cost to the original participating agency.
If the Contract Vendor is unable to ship the unused gallons from the original participating purchaser to another
participating agency, they may sell the unused gallons on the open market and either debit or credit the
difference in price back to the original participating purchaser based on the open market sell price.
If the Contract Vendor is unable to provide all of the monthly committed gallons to a participating member by the
due date and time, the participating member may purchase the product on the open market and charge the
Contract Vendor for any additional costs incurred.
SPOT PRICE PROGRAM. In addition to a fixed price quantity for participants in the metropolitan area, the
Contract will also be available to all State agencies and CPV members on a statewide basis to meet their fuel
requirements. Purchasers will use the spot prices offered by the Contract Vendor. Quantities for spot price
purchases are currently unknown but it is the intention of the Department of Administration to broadcast the
availability of the Spot Price Contract to all State agencies and current CPV members.
If the Contract Vendor is unable to provide the order quantity to a State agency or CPV member by the required
due date and time, the State agency or CPV member may purchase the product on the open market and charge
the Contract Vendor for any additional costs incurred.
....................................................................................
Only State agencies and CPV Members primarily located in the seven county Metropolitan area may participate
in the Fixed Price Program unless otherwise approved.
Once final Contracts are executed, the participating agency or entity will be notified of the price and the name of
the Contract Vendor.
The signature below agrees to all terms, conditions and prices of any Contract
agreement entered into on its behalf by the State of Minnesota which includes, but
is not limited to, taking 100% of the monthly fuel quantities submitted for the Fixed
Price Program on the Fuel Order Form. There is no requirement to take any product
using the Spot Price Program.
AGENCY NAME:
ADDRESS:
CITY OF CHANHASSEN
7700 MARKET BOULEVARD. P.O. BOX 147. CHANHASSEN, MN 55317
CONTACT PERSON: PAUL OEHME
PHONE NO.: 952-227-1169 FAX NO.: 952-227-1170
TITLE: DIR. OF PIIRI Tr. 1^'nHK~
E-MAIL: POEHME@CI.CHANHASSEN.MN.US
AUTHORIZED SIGNATURE:
2009 FUEL CONSORTIUM PURCHASE PROGRAM
PAGE 1 OF 2
FIXED PRICE PROGRAM
2009 MONTHLY Gallons - 500 Gal. Minimum
REQUIREMENTS GASOLINE E-85 DIESEL
January
February 2500 2000
March
Put "0" if product April 2300 2100
is not required May
for a specific June 2900 2100
month. July
August 3000 1900
September
October 2100 2100
November
December 2400 1900
YEARLY TOTALS: 15200 0 12100
Based on your annual usage above, indicate below
the percentage product grade or blend that will be used annually.
Unleaded Gasoline 87 89 92 Other Other
% of Annual Total 100
Bio Diesel Blends B2 B5 B10 B20 Other
% of Annual Total 100
FUEL ADDITIVES USED
For information purposes, please indicate any fuel additives that are being used.
TYPE "Yes" "No" Brand Name
Injector Cleaner
Winter Blend yes marathon polar plus
Anti Microbial
Moisture Inhibitor
Other
The signature on this form agrees to all terms, conditions and prices of
any Contract agreement entered into on its behalf by the State of
Minnesota which includes, but is not limited to, taking 100%
of the monthly fuel quantities submitted for the Fixed
Price Program on the Fuel Order Form. There is no requirement
to take any product using the Spot Price Program.
FIXED PRICE PROGRAM
Participation in the Fixed Price Fuel Program requires the
State agency or CPV Member located in the seven (7) county
metropolitan area to take 100% of the quantity pledged
on the Fuel Order Form.
Participants must have a capacity for taking at least 500
per delivery.
PLEASE NOTE: I
Agencies should consider the amount of its annual
usage it wants to commit to this program. Please note
that the State DOT intends to only commit 50% of
its estimated annual requirement to the Fixed Price Program.
The balance of its requirements will use the Spot Price Program.
SPOT PRICE PROGRAM
Provide an estimate of the number of gallons of fuel you
might purchase from the Contract using the Spot
Price Program. There is no commitment implied by providing
the estimated usage -- this is for information purposes only.
Est. Annual Usage Number of Gallons/500 minimum delivery.
Gasoline 15237
E-85
Diesel 12062
Name
ISignature
Agency
Phone #
E-Mail Address
Date
charles siegle
city of chanhassen
952-2271300 Fax # 952-227-1310
csieqle@ci.chanhassen.mn.us
10/29/2008
2009 FUEL CONSORTIUM PURCHASE PROGRAM
PAGE 2 OF 2
TANK SIZES AND LOCATIONS
TANK NO. TANK SIZE ADDRESS
Tank 1 6000
Tank 2 10000
Tank 3
Tank 4
Tank 5
Tank 6
Tank 7
Tank 8
Tank 9
Tank 10
Tank 11
Tank 12
Tank 13
Tank 14
Tank 15
Tank 16
Tank 17
Tank 18
Tank 19
Tank 20
PRODUCT TYPE STORED
IN TANK (Check one)
GASOLINE E-85 DIESEL
x
x