REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Execute Purchase Orders with Flyers Energy, LLC to Provide Various Mobil and Chevron Oils and Lubricants to Silicon Valley Power
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
The City of Santa Clara’s electric utility, Silicon Valley Power (SVP), utilizes various oils and lubricants in the generation equipment at its power plants. The manufacturers of the equipment require specific brand products (Chevron and Mobil) to be used in order to maintain the manufacturers’ warranties and ensure reliable and efficient operation.
DISCUSSION
Pursuant to City Code Section 2.105.140(d), a formal Request for Bids (RFB) was conducted as the solicitation method for this procurement with the award going to the lowest responsive and responsible bidder.
The RFB for various Mobil and Chevron oils and lubricants was published on the City’s e-procurement system on December 5, 2023. Over 2,200 vendors were notified of the bid opportunity through the e-procurement system, including the current providers for these products. The RFB requested bids from qualified sources to provide various Chevron and Mobil oils and lubricants, as required for operations at Donald Von Raesfeld Power Plant (DVR). One bid was received from Flyers Energy, LLC. Staff deemed the bid prices to be fair and reasonable compared to previous prices paid.
Based on historical purchases, the estimated annual cost is $100,000. The initial term is one year, with an option to extend it for four additional years. Any price increases must be approved by the City and substantiated by the contractor to the satisfaction of the City. Staff will evaluate price adjustments by comparing proposed pricing changes to the Producer Price Index (PPI) for Petroleum Oil and Grease Manufacturing and/or other applicable market indexes.
Staff has negotiated modified terms to the City’s standard Purchase Order which have been approved as to form by the City Attorney.
ENVIRONMENTAL REVIEW
The actions being considered do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378 (b)(2) of Title 14 of the California Code of Regulations as they authorize the purchase of supplies for SVP’s power plants.
FISCAL IMPACT
The maximum compensation to Flyers Energy, LLC, for the purchase of various oils and lubricants is $100,000 annually, or $500,000 for five years. Sufficient funds are available in the FY 2024/25 Adopted Operating Budget in the Electric Utility Fund’s Generation and Pumping Expense allocation for the asset requiring products or services.
Funds required for this agreement in future years will be requested through the regular budget process.
COORDINATION
This report has been coordinated with the Finance Department and the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, or by email to: clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov>.
RECOMMENDATION
Recommendation
1. Authorize the City Manager or designee to execute Purchase Orders with Flyers Energy, LLC for a total maximum aggregate compensation of $100,000 to provide various Mobil and Chevron oils and lubricants to Silicon Valley Power for the period starting on or around September 1, 2024, through August 31, 2025, to be funded by the Electric Utility Fund, subject to the review and approval as to form by the City Attorney; and
2. Authorize the City Manager or designee to issue additional Purchase Orders through June 30, 2029 to (a) order additional supplies subject to maximum compensation limits, (b) adjust rates based on evaluation compared to the applicable market index, or (c) increase the total maximum aggregate compensation to $500,000 over the five-year period, subject to the appropriation of funds and the review and approval as to form by the City Attorney.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager