Crowley protests City’s fuel contract award

A fuel vendor has put in a formal protest to some of the City’s plans to buy a year’s fuel to heat its public buildings and fuel its equipment and vehicles.
The City issued a Request for Quotes in October with the bid opening set for Oct. 19 to award the estimated $400,000 worth of vendor contracts, based on information at the Nome Common Council meeting on Oct. 30.

Bonanza Fuel and Crowley Fuel responded to the request for quotes on the four separate types of fuel—heating fuel #1, equipment fuel, unleaded gasoline and vehicle diesel fuel. Crowley bid lower on unleaded and diesel vehicle fuel; both Bonanza and Crowley bids—$3.34 and $2.92 a gallon—on heating fuel were higher than the price on the current state contract through the state Division of General Services, at $2.74 a gallon. Bonanza holds the state contract.

Tom Moran, city manager, notified bidders that the City reserved the right to go with the state contract for heating fuel rather than contract with either of the bidders. State regulations require government entities to buy through the state contract.
Crowley submitted a timely protest, saying the devil was in the details. Crowley responded to the RFP requirement for a fixed price with a competitive bid [$2.9194], Nelson Bjork, Crowley sales and marketing manager, said. That price could be lower than the state contract price through Bonanza, which is $2.74.
How can that be?
The state contract for Nome falls under Remote Delivery Locations in the pricing structure. The Alaska Division of General Services price is not fixed. The total fuel cost per gallon depends on the contract vendor’s current retail price, minus taxes, minus a discount offered by the vendor. The discount amount is set and must remain through the contract. However, the reference price, or the current retail price can fluctuate, according to DGS rules. Bonanza controls its retail price, Crowley argues.

The City’s RFP states to bidders that a contract to provide fuel to the City “may be negated at any time should the State of Alaska’s (through the Division of General Services) pricing be lower than the bid award.”

Bonanza Fuel Inc. manager Scot Henderson came to the podium at the Council meeting to explain. Bonanza, owned by Sitnasuak Native Corp., has rarely raised the retail price once it is set based on the price Bonanza has to pay for fuel coming off barge transport. The price holds throughout the winter. The City buys the greater part of its fuel supply during mid-winter.

The Council voted unanimously to authorize the City administration to purchase heating fuel through the state contract held by Bonanza Fuel. Additionally, the City will purchase diesel fuel for its heavy equipment at Public Works Dept. through the state contract at $2.74 per gallon.

The Request for Quotes estimated a need for approximately 83,100 gallons of heating fuel for the City’s 19 buildings. The fuel must be treated for the cold climate. The contract calls for the vendor to keep the tanks on automatic refill basis. Crowley will supply unleaded gasoline for City and Nome Public Schools vehicles at $3.37 per gallon for an estimated 11,500 gallons; fuel for City diesel vehicles at $2.95 per gallon, for an estimated volume of 3,700 gallons. The vendor will provide with fuel cards for 24-hour availability.

In other business the Council:

• Passed a resolution awarding a roof covering and foam insulation project on the Mini Convention Center to TMG Wall Systems, Inc. for the price of $78,000. The City had budgeted $65,000 for the repair; Tom Moran, city manager, told the Council he thought he could get the difference by finding places to cut in department funding.

• Approved a resolution awarding a contract to Polyseal Insulation for leveling and filling the slab floor at the Public Works shop for the total price of $97,760. The Polyseal bid arrived two days late; however the packet showed a postmark before the deadline. Another bidder, ICE Services, which bid higher, and arrived for the bid opening, filed a bid protest calling foul. The company’s bid was opened and read aloud before the late Polyseal bid arrive, meaning Polyseal could have known the ICE bid before submitting their bid, The ICE representative said. Not so, Moran said, referring to the postmark on the Polyseal bid, adding that the City had a policy in place to accommodate the mail system and other delays due to Nome’s remote location. The ICE bid would have put the job more than $100,000 over the budgeted amount, Moran said.

• Passed a resolution approving the hire of Quinten Johnson as Emergency Services Technician. Quinten Johnson is the son of Councilman Doug Johnson. Quinten will not be subject to direct supervision by his father.