Recommendation
Staff recommends that the Mayor and Council:

1. Approve a modification to the existing Master Agreement to Mansfield Oil Company for ultra low sulphur diesel fuel in the amount not to exceed an additional $163,000 for an adjusted total of $370,000 for the 12-months ending December 31, 2008 and $370,000 per each option year.

2. Award State of Maryland rider contract (#001IT817103) to Mansfield Oil Company for bio-diesel at the low differential price of $0.0419 per gallon for the time period of October 1, 2008 through February 28, 2010 for the not to exceed amount of $370,000 annually, with the option to extend through February 28, 2011 at the discretion of the City Manager and contingent upon funding.

Discussion
Staff is preparing to transition from ultra low sulfur #2 diesel (ULSD) to bio-diesel. During this transition staff needs access to both contracts in case of problems that may arise with bio-diesel deliveries or availability. Therefore, staff is requesting a modification to the current contract due to rising cost of fuel and the approval of a new contract for suppling bio-diesel fuel.

The City currently utilizes the Washington Metropolitan Area Transit Authority (WMATA) contract for ultra low sulfur #2 diesel fuel. Mansfield Oil Company is the diesel fuel supplier for this contract. In addition, Mansfield Oil Company is the vendor the State of Maryland has contracted to provide biodiesel fuel B-5 and B-20 for State, Local, and Municipal government agencies.

The Mayor and Council adopted “Green City” as one of the City's top priorities for 2008-2010, and has envisioned as a ten-year goal, “[A] Rockville [that] has dramatically reduced its carbon footprint and greenhouse gas emissions by utilizing alternative sources of energy…” The Fleet Services Division of the Public Works department is striving to meet that vision by purchasing a biodiesel blend for all diesel vehicles in the City fleet. Biodiesel is a alternative fuel derived from animal fat or vegetable oil (such as soybean oil or recycled restaurant grease), which can be refined and substituted for diesel as a stand-alone fuel (called B100, for 100% biodiesel) or in a blend of biodiesel and ultra low sulfur (ULS) diesel (such as B5, for 5% biodiesel 95% ULS diesel blend or B20, for 20% biodiesel blend).

Biodiesel is proven to provide emissions reduction for multiple pollutants including green house gas emissions when compared to the emissions from diesel. According to the California Air Resources Board, a B5 blend emits 3.2% less of Carbon Monoxide, 3.9% less of Carbon Dioxide and 3.1% less of particulate matter.

Additionally, biodiesel has energy security benefits since it is produced in the United States and, therefore, reduces our reliance on foreign oil.

Mayor and Council History
On January 08, 2007 the Mayor and Council awarded a contract to Mansfield Oil Company of Gainesville, Georgia for ultra low sulfur #2 diesel fuel for the period of January 1, 2007 through December 31, 2007 with the option to extend for three (3) one year periods. The contract is a rider of Washington Metropolitan Area Transit Authority (WMATA) Bid No. #IFB-CO6062/CPR.

This is the first time biodiesel fuel has been brought before the Mayor and Council.

Procurement Information
Since January 1, 2007, the City of Rockville has purchased ultra low sulfur #2 diesel fuel, under Master Agreement #850-0125070018, from Mansfield Oil Company at the low bid differential price of $0.0388 per gallon to the published page in the Oil Price Information Service (OPIS) Publication. The contract prices are on an escalating/de-escalating basis. Adjustments in price are based on the OPIS bi-monthly-published price on the first and third Monday of each month of the contract. The bid price does not include the State of Maryland motor fuel taxes, which are paid separately.

The State of Maryland has awarded the contract for the period of March 3, 2008 through February 28, 2010 for biodiesel fuel to Mansfield Oil Company of Gainesville, Georgia at the low bid differential of $0.0419 per gallon to the published price in the Oil Price Information Service (OPIS) publication. The contract has a provision for one (1) additional option year and prices are on an escalating/de-escalating basis.

Adjustments in fuel prices are based upon the OPIS bimonthly published price on the first and third Monday of each month of the contract.

Fiscal Impact
Sufficient funds are currently available in FY09 up to the requested amount to purchase ultra low sulfur #2 diesel fuel or biodiesel fuel for the use in City vehicles and equipment. Staff intends to return for a midyear budget amendment to cover the increased expenses due to the volatile cost of fuel, which has exceeded the projected budget price per gallon.

Fuel is charged to each appropriate fund at the time of delivery and is based on the number of percent of vehicles assigned to each fund. Payments will be allocated to the various funds as follows:

The additional $163,000 for the modification of the current master agreement ending December 31, 2008 would breakdown as follows:
General 110-850-0803-0312 = 35% ($57,050)
Water 210-850-0803-0312 = 4% ($6,520)
Sewer 220-850-0803-0312 = 7% ($11,410)
Refuse 230-850-0803-0312 = 51% ($83,130)
Storm Water Management 330-850-0803-0312 = 1% ($1,630)
Golf Course 340-850-0803-0312 = 2% ($3,260)

The current difference in price per gallon for bio-diesel vs ULSD is approximately $0.08 or an increase of $6,800 annually.

Next Steps
Purchasing Office will issue a modification to the Master Agreement#MA8500125070018A and issue a contract for the purchase of biodiesel fuel. Additionally, a midyear budget amendment to cover the rising cost of fuel, which has exceeded the projected budget price per gallon, will be presented to the Mayor and Council.

Department Head:



Craig Simoneau, P.E.; , Director of Public Works
Approved on: 09/16/2008

City Manager:

Scott Ullery, City Manager
Approved on: 09/17/2008