Osceola County considers fuel purchasing

Osceola County Board of Supervisors members Jayson Vande Hoef, LeRoy DeBoer and Mike Schulte discuss cost savings for fuel purchasing the meeting March 26.

SIBLEY—A change in the way Osceola County purchases fuel may lead to savings for the county.

County engineer Scott Rinehart said the county is paying more than its neighbors for diesel fuel at the Osceola County Board of Supervisors meeting March 26.

He suggested the county consider changing the way it purchases fuel.

The county purchases its fuel from Co-op Energy Co. in Sibley, of which it is a member. Rinehart said a more economical option would be to seek bids from other suppliers and purchase fuel through a process called fuel letting.

With this approach, the county would purchase fuel at the daily rack price and pay a small additional amount on top of that price to the company supplying the fuel.

According to Rinehart, most counties do fuel letting, including O’Brien County where Rinehart also is the engineer, because it is much cheaper than paying pump prices. A price comparison for fuel purchased by Osceola and O’Brien County across several months in 2020 revealed Osceola County is paying significantly more.

“We averaged right at 44 cents less than what you guys did, so it’s substantial,” Rinehart said.

Osceola County didn’t have a contract, it just purchased directly from Co-op Energy.

Board of supervisors chairman Ed Jones said the county also is missing on some savings because it does not receive dividends from Co-op Energy because there are not individual memberships set up for the different county offices.

“All of our fuel purchases since the beginning of time, in secondary roads and everywhere else, have never gotten a dividend check,” Jones said.

Because of the amount of money the county spends on fuel, the board is considering applying its procurement policy to fuel purchases, which would require the county to seek bids and have a contract with a supplier. The fuel budget for the year is $220,000.

“Our procurement policy says anything over $100,000 for services or supplies should be bid out,” Jones said.

He estimated that with fuel as well as tires, oil, grease and parts for the secondary roads department and the sheriff’s office, the county pays Co-op Energy close to $400,000 per year.

Board member Jayson Vande Hoef clarified that the procurement policy is not a blanket policy and is generally related to procurement of services or supplies related to federal and state awards. However, the board still could decide to invoke that policy as reasoning for seeking bids.

Board member Jerry Helmers asked if it would be more cost effective to lock in a fuel price, rather than purchasing at daily rates. Rinehart said this could be risky, pointing out that although fuel prices are usually lower in the fall than during winter months, this will not necessarily wash out over the entire year, especially if there are sudden changes in the market.

“If you’d locked in your diesel fuel just before the shutdown, you’d have been paying 80 cents or 90 cents a gallon more through the whole season,” Rinehart said. “I certainly wouldn’t want to be the guy that pulled the trigger on the price to lock in diesel fuel for the county.”

He said using the rack price and paying day by day is generally the best way to guarantee the county would pay an average fuel price for the year.

The board agreed to seek bids for fuel purchasing, including from suppliers outside the county.

“Just to maximize taxpayers’ money, it would probably mean see who can get the best price,” Jones said. “With as big as Co-op is, I’d imagine they’d be competitive with everyone else.”

Further debate on requirements for a county engineer also came up at the meeting. The county has been looking to hire a full-time county engineer since July and are on their second span of sharing an engineer with another county, first with Dickinson County and now with O’Brien County.

Rinehart said he recently spoke with a candidate from Arizona who seemed qualified and had a home in the Iowa Great Lakes region. He said the candidate would be interested if the county would lift the residency requirement from the position.

Jones said the requirement places Osceola County at a competitive disadvantage because other counties in the area, including O’Brien County, do not have the same requirement. Rinehart lives in Clay County.

Jones added that another qualified candidate backed out last year because of the housing shortage in Osceola County.

Vande Hoef said he would be willing to discuss lifting residency as a requirement at the time of hire as long as the candidate was committed to moving to the county as soon as possible.

“If it’s the highest paid position in our county and it won’t be one of our residents, it just doesn’t resonate with me,” Vande Hoef.

A motion to remove the resident requirement was voted down. Jones and Mike Schulte were in support, Vande Hoef was opposed, along with Helmers and LeRoy DeBoer.