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APPROVE MOTION TO ENTER INTO A COOPERATIVE PURCHASING AGREEMENT FOR AUTOMOTIVE PARTS AND SOLUTIONS
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RECOMMENDATION
It is recommended that the City Council by motion:
1. Approve findings pursuant to Stockton Municipal Code §3.68.070(A)(5) in support of an exception to the competitive bid process.
2. Approve the use of the Omnia Partners Cooperative Purchase agreement, Contract No. 158963, with O’Reilly Auto Enterprises LLC, to provide Automotive Parts and Solutions, for a term through October 31, 2027, with an option to renew for four (4) additional years through October 31, 2031, in a total not-to-exceed amount of $150,000.00 per year.
It is also recommended that the City Manager be authorized to take necessary and appropriate actions to carry out the purpose and intent of this motion.
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Summary
The City of Stockton has a need for contracts for automotive parts and solutions to support City operations.
The City has a fleet of approximately 1,100 different types of vehicles ranging from light duty administrative vehicles to heavy duty specialty vehicles. Central Stores and Fleet Services are responsible for stocking and maintaining the inventory of appropriate parts and supplies available to service vehicles as needed. Central Stores manages an inventory of approximately 1,500 automotive parts and supplies with a value of $1,700,000. Everyday stock and non-stock automotive parts are ordered to ensure Fleet Services can service vehicles and return them to the relevant City department for continued services to the community.
Omnia Partners is a cooperative purchasing organization that works with lead public agencies to manage, evaluate, and award national contracts. Once awarded, these cooperative contracts are marketed by Omnia Partners and made available to other public entities, such as counties, municipalities, school districts, special districts, and nonprofit organizations, allowing them to access competitive pricing and services from the selected suppliers. Omnia Partners collaborated with Region 14 ESC-TX, a lead Texas contracting authority, to solicit, evaluate and award a contract for automotive parts and solutions. The contract was granted to O'Reilly Auto Enterprises, LLC., with an estimated annual spend of $100 million.
O'Reilly Auto Enterprises, LLC is a prominent American retailer that specializes in the sale of automotive aftermarket parts, tools, supplies, equipment, and accessories. Their business model is centered on providing a comprehensive selection of high-quality automotive products and services, supported by knowledgeable staff. The company has a strong presence in both physical retail locations and e-commerce. They operate over 5,800 O’Reilly Auto Parts stores across 47 states, serving both DIY (do-it-yourself) customers and professional repair shops. There are four (4) O’Reilly Auto Parts stores located within the City of Stockton area to support City operations. They also have a growing emphasis on digital services and delivery options.
O'Reilly Auto Enterprises, LLC is known for its customer service, product knowledge, and extensive inventory, helping customers maintain or repair their vehicles. In addition to the full-line of automotive parts, the company provides several value added services, including free testing for batteries, starters, alternators and check engine light reading; battery and radiator core charges; core returns; free oil, fluid and battery recycling; custom hydraulic hoses; brake drum and rotor resurfacing; custom automotive paint mixing; auto parts machine shop service; Loaner Tool Program for rental equipment
It is recommended that City Council approve a motion authorizing the City Manager to execute the City’s Cooperative / Piggyback Agreement with O’Reilly Auto Enterprises, LLC as specified above.
DISCUSSION
The City requires the acquisition of automotive parts and solutions to meet the City’s needs and provide services to the community in an estimated amount of $150,000 per year. Specifically, this contract will be used by Public Works and Central Stores.
The use of cooperative purchasing agreements leverages the collective buying power of the cooperative partners to negotiate lower prices. The strength in the numbers of cooperative partners enables members to access a contractual solution that could not be achieved on their own.
This solicitation and contract document has been reviewed and, it has been determined that, the contract meets the needs of the City departments and it meets the City Procurement requirements, pursuant to Stockton Municipal Code §3.68.070(A)(5) and City policies 17.05.010 (General Procurement Policy), 17.05.020 (Formal Procurement Policy) and 17.05.060 (Exemptions to Competitive Bidding Policy).
Present Situation
At present there is no contract for these services and the annual expenditure exceeds our formal competitive threshold of $100,000 and requires a formal agreement with council approval.
The Omnia Partners cooperative contract offers a full-line of automotive parts and services at significant discounts through the four (4) local O’Rielly Auto Parts stores or through their e-commerce portal.
Utilizing the Omnia Partners cooperative agreement allows the City the opportunity to participate in leveraged negotiated pricing that we could not necessarily obtain on our own. The annual estimated spend is $100 million dollars verses the City’s annual spend of $150,000. The contract discount for automotive parts is 41% or more off catalog pricing.
Staff recommends entering into the City’s Cooperative Agreement (Attachment A) to utilize Omnia Partners’ contract with O’Reilly Auto Enterprises, LLC #158963.
Findings
Stockton Municipal Code Section 3.68.070(A)(5) allows an exception to the competitive bidding process, enabling the City to utilize the terms and conditions of a competitively solicited and negotiated cooperative purchasing agreement. The exception applies when the agreement meets the City’s procurement and business needs, and the City Council has approved findings that support and justify the exception. The following findings support and justify an exception under Section 3.68.070(A)(5):
1. Cooperative contracts qualify as an exception to the City’s competitive bidding process as outlined in City Municipal Code §3.68.070(A)(5) and City Policy 17.05.050, specifically: “Cooperative purchasing agreements authorized by the City Council for the purchase of supplies or services through other governmental jurisdictions or public agencies.”
2. The Request for Proposal (RFP) was conducted in line with procurement best practices through an open, competitive, and transparent solicitation process, adhering to all applicable procurement laws and regulations. The contract was solicited, evaluated, and awarded by the lead public agency, Region 14 ESC-TX, specifically for automotive parts and solutions to O’Reilly Auto Enterprises LLC.
3. The use of cooperative contracts aligns with procurement best practices by lowering the City’s procurement costs, improving time efficiency, and enabling the City to acquire products of equal or superior quality, along with value-added services, at competitive consortium-negotiated pricing.
4. By leveraging the Omnia Partners agreement, the City can take advantage of national pricing, securing discounts of 41% or more off parts and supplies. Pricing the City could not achieve through our own solicitation
FINANCIAL SUMMARY
Funding for automotive parts and solutions is already included within individual departmental operational budgets as part of the City’s annual budget process. No additional funding is required to enter into the cooperative purchasing agreement with O’Reilly Auto Enterprises, LLC.
Attachment A - Omnia Partners Cooperative Contract #158963 with O’Reilly Auto Enterprises, LLC