|
TO: Participating Municipalities in the SHACOG Purchasing Alliance FROM: Stanley Louis Gorski SUBJECT: Rock Salt - Exercise of Second Option Year For the second consecutive year, many have questioned if we actually had a winter season, but according to the calendar, winter is officially behind us, and the second season under the current rock salt contract will soon be coming to an end. Although it may appear somewhat early, pursuant to the terms of the contract, attention must already be focused on the next winter season. Recall that the bid for the current contract was designed to accommodate a multi-year arrangement. The third year of the contract - referred to as the second option year - is one that must be achieved by mutual agreement with the vendor, Cargill, Inc. It is unknown at this time if Cargill is interested in pursuing an option year. Nonetheless, it is necessary to protect your municipal interest by formally giving notice of your municipality’s desire to extend the contract if Cargill finally agrees. Under the current terms, unless the municipality has terminated the contract with Cargill, Inc. the participating municipality may give notice of its intent to extend the term of the contract from July 1, 2024 to June 30, 2025. This notice must be communicated in writing to the vendor by May 1, 2024. Cargill, Inc. then has until May 10, 2024 to notify the participating municipality in writing if it wants to continue the contractual relationship. If it agrees, then the contract continues under the same terms and conditions, with only the price subject to an adjustment. That price may be adjusted by the CPI formula in the contract. Only the first option year price, unchanged by fuel price adjustments, is used in that calculation. By way of example, the formula would accommodate the current CPI of 3.2% so if that percentage was to prevail, the price would increase from $85.85 (the initial first option year price not altered by fuel price adjustments) per ton to $88.60 per ton. The option to extend is exercised by giving written notice to the vendor by May 1, 2024 that your municipality is exercising that option. Because the municipality is the official party to the contract with the vendor, only the municipality can exercise the option. Consequently, each municipality must send its own letter. For your convenience, a sample letter is attached. (This letter should be transferred to your municipal letterhead.) It is unknown if Cargill will grant exceptions for communications received late, so if you are going to invoke the option year, it is imperative that your letter is sent so that it arrives before the May 1, 2024 deadline. You should email your letter exercising the first option year to [email protected]. Receipt is to be acknowledged by Cargill. You are requested to copy both SHACOG and your COG on your email. If Cargill, Inc. agrees to the option, those participating municipalities that invoked the second option year will receive subsequent communication concerning estimated requirements for the forthcoming winter season. If the vendor declines, you will receive pertinent information for the next bid. Please note that you do not have to commit to an estimated tonnage requirement at this time. Your letter is intended only to secure the option year. Considerations concerning the balance of the current year purchase obligations and estimated requirements for the second option year, if successfully secured, will be addressed later in subsequent communications. Should you have any questions or require additional information concerning the above, please contact the SHACOG's office by phone at 412-429-1130 or send an email to [email protected]. 
|
||