REPORT TO THE CITY COUNCIL
July 20, 2017
FROM: BRUCE RUDD, Interim Director
Department of Transportation
BY: JIM SCHAAD, Assistant Director
Department of Transportation
DUANE MYERS, Fleet Manager
Department of Transportation/Fleet Management Division
CLIFF TRAUGH, Senior Management Analyst
Department of Transportation/Fleet Management Division
SUBJECT
Title
Actions pertaining to awarding a sole source agreement to E.J. Ward, Inc., for a fuel management system upgrade
1. RESOLUTION - Award a sole source purchase contract in the amount of $270,000 to E.J. Ward, Inc., of San Antonio, TX, for the purchase of a fuel management system hardware upgrade
2. ***RESOLUTION - 2nd amendment to the Annual Appropriation Resolution (AAR) No. 2017-165 appropriating $270,000 into the Department of Transportation budget (Requires 5 affirmative votes)
Body
RECOMMENDATION
Staff recommends Council award a sole source purchase contract in the amount of $270,000 to E.J. Ward, Inc., of San Antonio, TX, to upgrade the fuel management system hardware, replacing equipment that has reached the end of its economic and technological life and approve the 2nd amendment to the AAR No. 2017-165 appropriating $270,000 into the Department of Transportation budget for the purchase of a fuel management system hardware upgrade.
EXECUTIVE SUMMARY
The City utilizes a fuel management system to manage fuel transactions for approximately 2,000 pieces of equipment. The system authorizes and records approximately 150,000 transactions totaling 2,700,000 gallons ($5,500,000) per year. The City’s current fuel management terminal hardware was purchased nearly 20 years ago and is at the end of its useful life. The system is beginning to experience terminal hardware failures due to the age of the equipment. Additionally, several advancements in technology have made the current hardware technologically obsolete. The hardware supplier, E.J. Ward, Inc., has begun to phase out support of this legacy system. Purchase of new hardware with advanced technology will allow the Fleet Management Division to better track vehicle fuel transactions, mileage readings, and other telematics data. E.J. Ward, Inc. has developed upgraded hardware that will successfully interface with the City’s current system. E.J. Ward is the only supplier offering an upgrade with proven compatibility with the City’s existing vehicle modules. Use of another fuel management system supplier would require replacements of vehicle fuel modules in the City’s vehicle fleet.
BACKGROUND
Fuel costs are the Fleet Management Division’s largest expense, at roughly $4,500,000 per year. The system automatically authorizes 150,000 fueling transactions per year at nine sites throughout the city, and records critical data such as vehicle number, mileage/operating hours, transaction date/time and location. The system also tracks fuel tank inventory, records fuel receipts, notifies of fuel tank leaks/pump faults, prevents incorrect fuel type use, and minimizes theft. Lastly, data from the fuel is exported to the Fleet Management system to drive vehicle preventative maintenance schedules, analyze fuel costs, and reconcile fuel inventory.
The current fuel management system provided by E.J. Ward, Inc. has been in use for nearly 20 years. The vendor has a proven track record for support of its product. The system has performed well in its intended function, but the fueling terminals are now at the end of their useful life. Terminal hardware failures are becoming more frequent and the system capability is far behind currently available technology. Because of this, the system does not offer the reliability or features needed by the City. Sales of the old system were phased out due to technological obsolescence and E.J. Ward is beginning to limit parts and technical support based on the system age. The division recently experienced failure of its application server and was required to upgrade application software because the supplier had phased out support for the 20-year-old version.
Upgrade of the system with a modern fuel management system offers significantly improved functionality, including web-based reporting tools, ability to capture vehicle diagnostic data, acceptance of RFID card reader authorizations, wireless LAN data transfer, and passive GPS technology, all of which add value to the City.
Staff is requesting Council approval of a sole-source procurement from E.J. Ward, Inc. After surveying fuel management system purveyors, staff has determined E.J. Ward is the only vendor able to upgrade the City’s fuel management system without replacing all vehicle fuel modules. Over the last 20 years the City has invested in fuel modules for approximately 2,000 vehicles. The E.J. Ward upgrade is guaranteed compatible with the City’s existing vehicle fuel modules and would eliminate the need to retrofit the entire fleet. If the City were to purchase another system, new vehicle fuel modules would be required for all City vehicles.
ENVIRONMENTAL FINDING
Pursuant to the definition provided in the California Environmental Quality Act Guidelines Section 15378, the award of this contract does not qualify as a “project”; therefore, it is exempt from the California Environmental Quality Act requirements.
LOCAL PREFERENCE
Local preference was not considered because the only entity that can provide the hardware is not a local company.
FISCAL IMPACT
This agreement will not impact the General Fund. Appropriated funds were not expended in FY17 and this action will re-appropriate the funds to FY18.
Attachments:
Sole Source Memo
Standard Agreement
Resolution Approving Exception to Formal Bid
Resolution Amending the AAR