City of Fort Worth Establishes First-Ever National Fuel Contract

According to Wayne Corum of Fort Worth, Texas, freight is an important factor in many fleet agencies' fuel purchasing decisions. The freight on the Fort Worth/­National IPA contract benefits large agencies.

At a Glance

• Some benefits of the City of Fort Worth's national fuel contract include:
• Reduced transactional costs by eliminating need for multiple quotes or bids.
• Savings in bulk fuel costs.
• No fees to use the contract.
• Lowered pricing as more agencies join.

Fuel costs are the largest expense for most public fleet departments around the country. Some fleets are coping by cutting fleet size or implementing fuel-saving policies, while other agencies are looking at a macro way to help reduce fleet costs and control prices.

Fort Worth Establishes Fuel Consortium

The management of fuel costs is dependent on effective contract price management, which is why the Fort Worth (Texas) Fuel Consortium Contract is such a significant step. An initial fuel consortium was created by Fort Worth in 2002 that gathered a number of governmental entities together to buy fuel at a reduced rate.

However, resource constraints began to limit Fort Worth's ability to recruit new agencies to participate, said Wayne Corum, director of the Equipment Services Department for the City of Fort Worth. While the initial model had been one that other local consortiums wanted to take advantage of, Fort Worth was looking for an opportunity to expand its fuel program nationally. No other fuel contract was available for public agencies nationally.

And during the last few years, suppliers have increased their collective capacity to serve a national group of fuel customers.

Meanwhile the fluctuating nature of fuel prices increased the urgency for something to be done to control costs so Fort Worth and its fellow consortium members could better manage their budgets.

So Fort Worth began to work with National IPA, a nationwide cooperative purchasing organization dedicated to public agencies. Its focus is on helping agencies reduce procurement costs by leveraging group volume.

"When we first developed the consortium, there were many others who wanted to join it based on the level of savings they could expect to achieve," Corum said. "But we determined that it was possible to get even more gallons (under an agreement) so that we could negotiate the lowest possible price. The goal is to use leveraged buying as much as possible."

Converting to a National Contract

Under the National IPA program, cooperative contracts are publicly solicited and awarded by a principal procurement agency and made available for use by other participating agencies across the country. Public agencies may also utilize any agreement in the National IPA portfolio by registering with the cooperative. There are no minimum requirements or fees to participate and all agreements are non-exclusive in nature.

As Corum and his team sought to develop such a fuel agreement, they spent three months putting together the proposal. During that process, they needed to get fuel pricing information from each rack city in the 48 contiguous states to get an accurate representation of prices.

"We wanted to take our agreement from a local to a national program," said Corum, whose department uses approximately two million gallons of fuel per year. The remaining 30-odd agencies under the initial consortium contract would total another 12 million gallons of fuel annually.