BACKGROUND

Annually, the Village purchases approximately 165,000 gallons of unleaded gasoline and 75,000 gallons 20% bio-diesel fuel to operate our vehicles and various pieces of equipment.

On August 15, 2012, the Village awarded a contract for the purchase of unleaded fuel to RKA Petroleum of Romulus, Michigan and a contract for the purchase of 20% bio-diesel fuel to Mansfield Oil of Gainesville, Georgia.  The contract terms were for three years, with three possible one-year extensions.  Both vendors have performed well during the initial term of the contract and Staff is recommending a one-year extension for both vendors.

The price for the fuel is determined by the Oil Price Information Service (OPIS) price on the day of delivery, plus the vendor's markup.  The OPIS benchmark is used by Federal, State, Municipal and County governments to allow competitive pricing, while accounting for market volatility.  The following markups are per the original contract terms:

RKA  Petroleum    Regular Unleaded Fuel  @    - .0088 cents per gallon

Mansfield Oil          20% Bio-Diesel Fuel     @      .0001 cents per gallon

Both vendors have agreed to maintain current contract terms without a price escalation.

The operating budget for Public Works for the Fiscal Year Ending December 31, 2015 includes $532,900 for fuel purchases through various accounts.

RECOMMENDATION

It is recommended that the Village Board award a one-year contract extension to the lowest bidder RGA Petroleum of Romulus, Michigan, in a credit amount of .0088 cents per gallon for unleaded gasoline and a one-year contract extension to the lowest bidder Mansfield Oil of Gainesville, Georgia for a cost of .0001 cents per gallon for 20% bio-diesel fuel, and authorize Staff to execute the necessary agreements.