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RCS Board won't re-bid fuel contract

Although a new proposal was sent last week by Sibley Oil Company to the Russellville City Board of Education, superintendent Heath Grimes said the board already approved a bid from FleetStar Fuel Company, and there is no need to re-bid the system's diesel fuel supply contract this year.

In July, the board approved Sibley Oil Company to provide diesel fuel for RCS buses and equipment. Two bids were received, from Sibley Oil and from FleetStar, owned by board member Greg Trapp.

Fuel contracts are based on markup over the rack price, meaning the amount at which refineries sell diesel fuel to their clients. Rack prices constantly change, so bids provide for a certain markup over that fluctuating price. Sibley's bid, at just under $.07 per gallon, was the low bid, so the board approved that bid for fiscal year 2015.

The bid specified that diesel fuel would “be delivered weekly at your bid above daily rack price.” Last month, the RCS board rescinded Sibley's bid because, as of the first day of school (August 13), Sibley had not provided an on-site delivery method. Later that afternoon, with less than 300 gallons on-site, the board approved Trapp's bid in a 3-0 vote with Trapp abstaining.

Last Thursday, Sibley sent a second proposal to Grimes and RCS transportation supervisor Alan Wilson that would have dropped the markup per gallon to less than two cents. This would involve buses refueling at Legacy Chevron on Highway 43.

Sibley's proposal, sent by text message, read: “I spoke with Chevron and I can get the school a 5 cent a gallon discount if you will use a Chevron business card. That will put me under 2 cents a gallon.”

Grimes acknowledged receiving Sibley's message but said he did not expect any board action to come from it.

“The board voted and made a decision to rescind his bid because he did not meet the specs,” Grimes said. “I don't even know if we could legally rescind the bid we accepted, since we have a bidder who can perform all the specs in the bid.

“We're not inclined to do that. We followed the bid law, did everything we're supposed to do, so we're moving forward."

Sibley said he didn't provide for on-site delivery because he believes the most recent delivery method, with a 1,200-gallon tanker truck stationed at the RCS bus barn, violates state law.

“The way they have the bid structured, unless you put a truck on-site you can't get the bid. And that's simply not legal. You can't store fuel in a truck like they're doing,” Sibley said.

After consulting with Russellville fire marshal Justin Green last month, Grimes said if the truck is left on school premises, it would be housed inside a fence with the driver's education vehicles, and all refueling would be done outside. That way, he explained, the system would comply with all regulations.

On Monday, Sibley said he doesn't understand why the school can change its delivery method now but won't consider his proposal that offered another option.

“They've obviously changed from what was being done and what was in the specs, so why wouldn't they look at an option that would provide them diesel fuel at a rate that's as cheap as any in the nation?” Sibley said.

Grimes said the delivery changes came after RCS  officials met with Green.

“The fire marshal said we can't refuel that close to a building. If that had been said before, obviously we wouldn't have done it,” Grimes said. “When it became an issue and everyone started looking at it, we asked questions ourselves. We went to the city and state fire marshal for the regulations."

Grimes said another concern about Sibley's proposal related to the additional miles the buses would log traveling to and from Legacy Chevron. He said the system is  not reimbursed for unloaded miles and that bus routes are designed to minimize the number of times required to cross Hwy. 43.

FleetStar's bid of $.1099 over rack price was the same amount the company charged last year to RCS. FleetStar's per-gallon markup for 2012 and 2013 was $.0899.

While records show FleetStar was paid approximately $64,000 for fuel during the 2012-13 fiscal year, $68,200 in fiscal year 2013-14, and $42,000 through 10 months of the current fiscal year, Trapp said the overwhelming majority of those payments were used to pay his diesel supplier.

“Everything out of the monies paid by Russellville City Schools, except 11 cents per gallon, we use to reimburse what we paid our fuel supplier,” Trapp said. “Out of that 11 cents, we have transport costs to pick up the fuel, drivers, insurance and licensing requirements, cargo insurance and all the soft costs associated with the driver. We keep up maintenance on the onsite truck, as well as insurance. There's a tag and inspection sticker on the tank as well."

Trapp said he planned to house the tanker truck at his FleetStar location and transport it to the bus barn as fuel is needed. Additionally, he noted, he absorbs the costs associated the with the truck, as evidenced by his bid, which reads: “$.1099 price. Will deliver and provide fuel truck at bus facility at no charge.”

After all applicable expenses, Trapp said the profit margin is negligible per gallon.

Green said last week that the system's amended method of fuel delivery was in compliance with fire code regulations. He also noted that, subject to the distance restrictions from buildings and property lines, there was nothing unlawful about the tanker truck remaining on school property.

Sibley's original plan was to install a tank at the bus barn, and he was waiting for approval from the State of Alabama on his proposed delivery method when he learned his bid had been rescinded.

Sibley later learned any construction on school property would have to be pre-approved by the state building commission. Additionally, he had concerns about paying for installation of a tank and receiving only a one-year contract to supply fuel.

Even with the transport costs factored in, Sibley said his proposal to have buses refuel at Legacy Chevron would be cost-efficient for RCS.

“They could very easily bring the buses to refuel at Legacy Chevron. We are open 24 hours,” Sibley said. “There is adequate room to fuel three buses at a time, and it would be a cheaper option than the current system, without the risks.”

The bid invitation calls for “approximately 20,000 (+/-) of Off-Road (Ultra-Low Sulfur) Diesel Fuel.

FleetStar invoices to Russellville City Schools totaled 19,000 gallons for 2012-13; 23,400 gallons for 2013-14; and 21,919 gallons on the 2014-15 contract through June of 2015. The invoices reflect the steady decline in fuel costs. The rack price per gallon for diesel fuel on August 22, 2014, was $3.029, compared to rack price of $1.97 per gallon on June 23, 2015.

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