Nationwide Aggregated Purchase
of Motor Fuel
for State and Local Governments
…true Aggregation – your added volume makes a difference!
www.depo.org
July, 2010
Leverage your Buying Power:
State and Local governments have enormous buying power
And now, DEPO’s Aggregated Buying Platform enables you to
leverage that buying power
Use the same refined, sophisticated and precision tools as the
private sector
Ease of use - No new software or learning curve to join a pooled
purchase
No “Buying Coop” to join; no membership dues; no buyer
participation fees
True aggregated purchasing means your additional volume
should improve the pricing for all participants
Collaborative Buying Saves Money:
Collaborative buying
Typically difficult to organize, especially across borders
DEPO takes the work out of organizing aggregated or collaborative
purchasing, makes it easy, straight-forward and rewarding
Your existing IFB and underlying documentation
Upload your detailed documents or easily build your IFB on the DEPO
platform
Maintain your own specs/requirements
Your documents and specs govern your bids
You cede no discretion or control to DEPO or any other party
Easy to use, money saving and no cost to buyers
Ensures more suppliers, and improved, tighter bids from suppliers
Tighter bids mean fewer hedge factors built into their bids
Motor Fuel Purchasing:
Typically, motor fuel represents a major expenditure for SLGs
Major expenditures present significant savings opportunities
Most SLGs/transit agencies are in the middle of existing fuel
contracts, but you can still save money by using the DEPO
platform
Your existing contracts are normally not guaranteed-purchase
contracts
If you participate in a motor fuel pool and receive better pricing, you can,
typically, order off a new contract without penalty under your old contract
Your existing contract vendor will, most likely, bid on the new contract in
order to have the opportunity to capture all or a portion of the larger fuel
pool volume
Sealed Bid Approach:
Fully compliant with all known competitive bid laws,
practices and procedures
Entire process modeled after familiar sealed bid approach
You do not contract with DEPO, hire us or pay us a fee
You do not cede any discretion to DEPO or any other party
You evaluate your own bids and accept or reject them as you
have in the past
If you award a contract, that contract is solely between the
supplier or suppliers you chose and your entity
You Decide:
Multi-year contracts and your required renewal options
Whether you want to continue receiving Bundled bids
Fuel purchase and delivery from same vendor
Traditional method of purchase
Or, whether you want to permit Unbundled bids
Permits vendors to bid on sale of fuel, delivery of fuel or
combination of both
Attract more fuel suppliers (including, possibly, refiners), more fuel
delivery companies (often MBE/WBE or locally-owned)
More vendors encourages more competition
More competition leads to improved pricing and greater savings
Could lead to more aggressive bidding since each party is enabled to
address what it is best equipped to do
You can also specify:
Whether you want to continue purchasing fuel in the proven
and accepted traditional unguaranteed purchase manner
Or whether you want to guarantee a portion of your
requirements for
Improved pricing on this portion of your purchases
Improved hierarchy positioning in the event of fuel shortages and
allocation due to weather, plant shut downs, etc.
We sometimes recommend placing 50%-70% of your last year’s
volume in the Guaranteed Purchase Pool and 100% in the
Unguaranteed Purchase Pool to compare bid pricing
Whether you require supplier local storage or some similar
requirements
Comprehensive, yet Flexible:
Select your specific Fuels and Quantities
From among 460, including diesel, biodiesel, gasoline, natural gas, jet and
aviation fuels
Your Contract terms
Start Date (may be several months in the future)
Renewal Option requirements
Include or exclude State and/or Federal taxes (and amounts)
Your Pricing mechanism
Choose index (OPIS, Platts, Argus)
Non-hedgeable indices if you do not plan to hedge
Hedgeable indices if you plan to hedge now or in the future
Your Delivery requirements
Storage tank locations
Number, size and type of tanks
Special instructions for trucking/delivery
Typical Index-based Pricing:
Fuel Pricing for periodic deliveries on bundled bid basis
Per Gallon for Bundled Bids
Index
(your selected index – OPIS, Platts, Argus)
± Supplier fixed differential
(Increasing volume should reduce this price
differential)
+ Freight
+ Other charges
= Delivered Pricing
(other per gallon charges and truckload or per
hour charges)
Typical Index-based Pricing-cont’d:
Fuel Pricing for Unbundled bidding (allows each participant in
supply chain to do what it is best qualified to do)
Per Gallon for Unbundled Bids
Sale of Fuel (only)
Delivery of Fuel (only)
Index
n.a.
± Differential
n.a.
n.a.
+ Freight charges
+ Other charges
+ Other charges
= Rack Price
= Delivery Charges
Is Hedging Desirable?
What does hedging do -- Hedging is a means of stabilizing prices
to better permit operating against a budget
Hedging should not be viewed as a means of saving money – for
savings, look to collaborative/aggregated buying
Is hedging speculating – most view hedging as a means for
removing speculation for buyers. Some say playing everyday
price volatility is speculation
Need help determining whether hedging is suitable for you and in
formulating your hedging strategy – we can help
Bulk fuel buyer of 2.5 million gallons (or more) annually needed
for hedging