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STAFF REPORT

MEETING

DATE: July 26, 2016

TO: City Council

FROM: Felicia Newhouse, Public Works Administrative Manager

Russ Thompson, Public Works Director

SUBJECT: RESOLUTION AUTHORIZING THE INTERIM CITY MANAGER TO

TERMINATE THE CITY’S AGREEMENT WITH SCI DISTRIBUTION,

LLC AND EXECUTE AN AGREEMENT WITH MSI FUEL

MANAGEMENT, INC. FOR THE PURCHASE AND INSTALLATION OF

A NEW FUEL MANAGEMENT SYSTEM FOR THE CITY’S VEHICLE

FLEET, INCREASE THE PROJECT BUDGET BY $5,000 (TO $65,000),

AND ADOPT A CATEGORICAL EXEMPTION PURSUANT TO THE

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)

CEQA DETERMINATION: The proposed action includes a finding of Exemption from the

provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA

Guidelines Section 15303.

REQUEST

Consider approving a resolution authorizing the Interim City Manager to terminate the City’s

agreement with SCI Distribution, LLC and execute an agreement with MSI Fuel Management,

Inc. for the purchase and installation of a new fuel management system for the City’s vehicle fleet;

increase the project budget by $5,000 (to $65,000), and adopt a categorical exemption pursuant to

the California Environmental Quality Act (CEQA).

RECOMMENDATION

Approve the resolution.

BACKGROUND

Modern fuel management systems are comprised of both hardware and software components.

Hardware components include unique vehicle identification and fuel pump control units. At the

fueling station, when the fuel nozzle is inserted into the vehicle’s gas tank, the vehicle ID sends a

signal to the pump control, allowing the fuel to be dispensed to the authorized vehicle. While the

vehicle is fueling, data is transmitted from the vehicle to the pump control unit.

The software component collects the data gathered during fueling transactions, including fuel

consumption per vehicle, odometer readings, total run hours, and engine warning light system

922 Machin Avenue Novato, CA 94945

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alerts. With a modernized system, fuel usage can be monitored to determine if a vehicle is not

running optimally, or if there is an emissions-related problem that requires attention prior to a

vehicle’s regularly scheduled maintenance. Modern systems reduce costly emergency repairs,

extend the life of the fleet, and provide useful reporting functionality for budget and cost control

efforts. A more detailed explanation of modern fuel management systems can be found in the

November 10, 2015 Staff Report.

HISTORY

In spring of 2015, the City of Novato issued a request for proposals (RFP) to install a new fuel

management system for the City’s 100-plus vehicles and two fueling stations. Three vendors

responded to the RFP – SCI Distribution, MSI Fuel Management, and Fuel Serv.

An interdepartmental committee determined that all three vendors would provide similar levels of

system performance and reliability. Therefore, overall cost was the foremost consideration. The

following chart shows initial and on-going costs for each of the three vendors:

Vendor Purchase Price

(Corp Yard & PD

Locations)

Ongoing Costs for

Support/Licensing

Fuel Serv $61,369 $668/year

MSI Fuel

Management

$59,007 $0/year*

SCI Distribution $55,240 $1,200/year

*The November 10, 2015 staff report incorrectly identified MSI as having a $2,190/year licensing fee. The correct

amount is zero dollars per year. The previously quoted amount is the cost to purchase an extended warranty and should

not have been included in the cost comparisons as a one-year warranty was already included in the purchase price for

all vendors.

On November 10, 2015, staff recommended, and the City Council approved, adoption of

Resolution 70-15 (Attachment 3) authorizing the City Manager to award a contract with SCI

Distribution.

On January 5, 2016, the contract with SCI Distribution was fully executed and a Project Action

Plan Schedule was approved by both parties. Estimated completion date of the entire project was

scheduled for March 1, 2016. After several attempts to motivate the vendor to commence the

project in accordance with the agreement, City staff sent a letter to the CEO on April 5, 2016,

outlining the vendor’s failure to deliver specified product within a reasonable timeline.

In late April and in May of 2016, after continued dissatisfaction with the responses from SCI

Distribution, the vendor selection committee reconvened to discuss the project status and next

steps. Their recommendation to executive staff was to terminate the SCI Distribution contract and

enter into an agreement with the next lowest responsible bidder, MSI Fuel Management, for a new

fuel management system.

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DISCUSSION

Over the past several months, City staff has made many good faith efforts to work with SCI.

Unfortunately, their unresponsiveness to product and service delivery requests in accordance with

the terms of the agreement has resulted in project implementation delays. City staff has lost

confidence in the ability of this vendor to successfully deliver a fuel management system.

Since the City has not made any payments to the vendor, and the vendor has not delivered any

product or services to date, there is no financial detriment to cancelling the contract. The contract

authorizes the City to terminate the agreement at any time, with or without cause, in its sole

discretion upon written notice to the vendor.

CEQA DETERMINATION

Staff recommends that the purchase and installation of a replacement fuel management system at

the Police Department and at the Corporation Yard gas pumps is categorically exempt from the

requirements of the California Environmental Quality Act (CEQA) and the City of Novato

Environmental Review Guidelines pursuant to CEQA Guidelines Section 15303, New

Construction or Conversion of Small Structures.

FISCAL IMPACT

City staff has contacted the next lowest responsible bidder, MSI Fuel Management, and they have

committed to their original price proposal submitted in 2015. The MSI Fuel Management bid is

within the original project budget of $60,000. The number and type of vehicles in the City’s fleet

will have a minor impact on the number and type of hardware that will be in the final product

order. Staff recommends budgeting contingency costs at approximately 10% for a total project

budget not to exceed $65,000. As discussed in the November 2015 staff report (Attachment 2),

$30,000 of the purchase is to be funded from the Technology and Organizational Investments

(TOI) fund within the Capital Improvement Program budget, and $30,000 is to be funded with

Vehicle/Equipment Replacement Fund (Fund 605) monies. The additional $5,000 for the increased

project budget will be funded with unallocated Fund 605 monies.

RECOMMENDATION

Staff recommends the City Council authorize the Interim City Manager to terminate the City’s

agreement with SCI Distribution, LLC and execute an agreement with MSI Fuel Management,

Inc. for the purchase and installation of a new fuel management system for the City’s vehicle fleet,

increase the project budget by $5,000 (to $65,000), and adopt a categorical exemption pursuant to

the California Environmental Quality Act (CEQA).

ATTACHMENTS

1. Draft Resolution

2. November 10, 2015 Staff Report- Available Online

3. Resolution 70-15

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CITY COUNCIL OF THE CITY OF NOVATO

RESOLUTION NO. _____

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

NOVATO AUTHORIZING THE INTERIM CITY MANAGER

TO TERMINATE THE CITY’S AGREEMENT WITH SCI

DISTRIBUTION, LLC AND EXECUTE AN AGREEMENT

WITH MSI FUEL MANAGEMENT, INC. FOR THE PURCHASE

AND INSTALLATION OF A NEW FUEL MANAGEMENT

SYSTEM FOR THE CITY’S VEHICLE FLEET, INCREASE THE

PROJECT BUDGET BY $5,000 (TO $65,000), AND ADOPT A

CATEGORICAL EXEMPTION PURSUANT TO THE

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)

WHEREAS, the City of Novato has existing gas pumps installed at 909 Machin Avenue

(Novato Police Department) and 550 Davidson Street (Novato Corporation Yard) which are aged

and inefficient; and

WHEREAS, the City of Novato has identified an opportunity to improve reporting

functions and operational efficiencies with new fuel management system technologies; and

WHEREAS, a request for proposals was issued and three vendors responded – SCI

Distribution, MSI Fuel Management, and Fuel Serv; and

WHEREAS, SCI Distribution was identified as the lowest responsible bidder with a

purchase price of $55,240 (fifty-five thousand two hundred and forty dollars), and MSI Fuel

Management was identified as the next lowest responsible bidder with a purchase price of $59,007

(fifty-nine thousand and seven dollars); and

WHEREAS, SCI Distribution was selected as the preferred vendor based on price; and

WHEREAS, on November 10, 2015, the City Council of the City of Novato adopted

Resolution 70-15 authorizing the City Manager to award a contract with SCI Distribution, LLC to

purchase a fuel management system for the City’s vehicle fleet, and $60,000 was apportioned for

this contract; and

WHEREAS, SCI Distribution has failed to perform in accordance with the terms of said

contract, including not delivering specified equipment; and

WHEREAS, the termination clause of said contract authorizes the City to terminate the

agreement at any time, with or without cause, in its sole discretion upon written notice to the

vendor; and

WHEREAS, the City of Novato has not made any payments to SCI Distribution and SCI

has not delivered any product or service to date; and

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WHEREAS, funds have previously been apportioned for the project and are available to

award a new contract for a similar scope of work to MSI Fuel Management, the next lowest

responsible bidder; and

WHEREAS, the increased project budget of $5,000 (to $65,000) can be funded with

unallocated funds within the Vehicle/Equipment Replacement Fund (Fund 605); and

WHEREAS, the City Council has previously reviewed the project scope and description

of a similar fuel management system for the City’s vehicle fleet and has determined that the project

qualifies for a categorical exemption pursuant to California Environmental Quality Act (CEQA)

Guidelines Section 15303, New Construction or Conversion of Small Structures.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Novato does

hereby authorize the City Manager to terminate the City’s agreement with SCI Distribution, LLC

and execute an agreement with MSI Fuel Management, Inc. in an amount not to exceed $65,000

for the purchase and installation of a new fuel management system for the City’s vehicle fleet to

improve reporting functions and operational efficiencies; and

BE IT FURTHER RESOLVED that the City Council of the City of Novato authorizes an

increase to the project budget in the amount of $5,000 (to a new project total of $65,000), from the

unallocated balance within the Vehicle/Equipment Replacement Fund (Fund 605); and

BE IT FURTHER RESOLVED that the City Council of the City of Novato does hereby

adopt a CEQA categorical exemption for the project and its associated actions based on the

following findings:

Section 1. Record

The Record of Proceedings (“Record”) upon which the City Council bases these findings

and its actions and determinations regarding the approval of the installation of a replacement fuel

management system pump controller at the Police Department and Corporation yard gas pumps

includes, but is not limited to, the staff report, its attachments, City files and records and other

documents prepared for and/or submitted to the City and/or City Council relating to the installation

of a fuel management system for the City’s vehicle fleet, (2) the evidence, facts, findings and other

determinations set forth in this resolution, (3) the City of Novato 1996 General Plan and its related

EIR, (4) all designs, plans, studies, data and correspondence submitted by the City in connection

with the project, (5) all documentary and oral evidence received at public workshops, meetings,

and hearings or submitted to the City during the comment period related to the project, and (6) all

other matters of common knowledge to the City Council including, but not limited to, City, state,

and federal laws, policies, rules, regulations, reports, records and projections related to

development within the City of Novato and its surrounding areas.

The location and custodian of the records is the Novato Public Works Department, 922

Machin Avenue, Novato, California, 94945.

Section 2. CEQA Findings

The City Council hereby adopts the Statement of Findings and Facts set forth below and

attached hereto and incorporated herein by reference. Based thereon and on the Record as a whole,

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the City Council hereby finds that no significant environmental effects will be created by the

project and its associated development actions. Therefore, the project shall be determined exempt

from CEQA pursuant to Section 15303, New Construction or Conversion of Small Structures, as

discussed below.

Statement of Findings and Facts

CEQA Guidelines Section 15303, New Construction or Conversion of Small Structures,

exempts projects involving the installation of small new equipment and facilities in small

structures, and the conversion of existing small structures from one use to another where only

minor modifications are made in the exterior of the structure. The installation of fuel management

hardware at the Police Department and Corporation Yard gas pumps is considered to be equivalent

to the installation of small new equipment and facilities in small structures. Accordingly, the

installation of a fuel management system pump controller at the Police Department and

Corporation Yard gas pumps meets the criteria for a categorical exemption pursuant to CEQA

Guidelines Section 15303.

* * * * * *

I HEREBY CERTIFY that the foregoing resolution was duly and regularly adopted by the City

Council of the City of Novato, Marin County, California, at a meeting thereof, held on the 26th day

of July, 2016, by the following vote, to wit:

AYES: Councilmembers

NOES: Councilmembers

ABSTAIN: Councilmembers

ABSENT: Councilmembers

____________________________________

City Clerk of the City of Novato

Approved as to form:

____________________________________

City Attorney of the City of Novato

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