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REQUEST FOR COUNCIL ACTION <br /> Date:September 8, 2014 <br /> Item No.: 7.d <br />Department Approval City Manager Approval <br />Item Description: Authorization of Joint Fuel Purchase for City Fleet <br />B <br />ACKGROUND <br />1 <br />The city has been participating for several years with local, regional, and state agencies in the <br />2 <br />joint bidding of fleet fuel to lock in a stable price to minimize budget uncertainty. We feel it is <br />3 <br />best to once again bid jointly with these agencies and lock in a price for 2015 gasoline and diesel <br />4 <br />fuel purchases. <br />5 <br />Because we will be locked into this contract if we commit to participate, we recommend the <br />6 <br />Council authorize this joint bidding. We estimate we have saved approximately 4% over the <br />7 <br />open market pricing for fuel by participating in this contract to date for 2014. We feel we again <br />8 <br />have the potential to save on fuel purchases by committing to this contract. No one can predict <br />9 <br />with any certainty what the fuel market may ultimately do next year. There is some risk that the <br />10 <br />price on the open market could be more favorable. If we commit to participating again for 2015, <br />11 <br />we will be locked in to this contract. <br />12 <br />The city purchases many items and supplies from joint purchasing contracts. We have been a <br />13 <br />member of the State of Minnesota Department of Administration Cooperative Purchasing <br />14 <br />Venture program for many years. These purchases have saved the city thousands of dollars over <br />15 <br />the years due to the volume of these contracts. <br />16 <br />PO <br />OLICYBJECTIVE <br />17 <br />Staff seeks to find the most cost effective purchasing opportunities to meet budgetary objectives. <br />18 <br />Many purchasing options are subject to market volatility. We use the best information we are <br />19 <br />able to obtain and consider historical fluctuations in the market to recommend purchasing <br />20 <br />authorizations. All purchasing must comply with statutory requirements. <br />21 <br />FI <br />INANCIALMPLICATIONS <br />22 <br />We are anticipating that participation in this fuel bid will be our best opportunity to ensure stable <br />23 <br />fuel pricing for 2015 fleet fuel purchases. Current market pricing is slightly higher than our <br />24 <br />contract price for 2014 which will have some impact on 2015 budgets if the contract price is at <br />25 <br />or higher than current market pricing when it is bid. Historically market price is lower in the <br />26 <br />winter months when this bid is locked in. Fuel purchases are funded in department budgets and <br />27 <br />total approximately $340,000 annually. <br />28 <br />S <br />TAFF RECOMMENDATION <br />29 <br />Staff recommends continuation of our participation in this cooperative purchasing venture. <br />30 <br />Page 1 of 2 <br />