27-11 - Attachment D Fuel and Bituminous Index.pdf

PRICE ADJUSTMENTS BASED ON FLORIDA DEPARTMENT OF TRANSPORTATION (FDOT)

FUEL AND BITUMINOUS INDEX

Unit prices in contracts that are longer than twelve (12) months and include provisions for price adjustments based on movement of the FDOT Fuel and Bituminous Price Index posted at https://www.fdot.gov/construction/fuel-bit, may be adjusted annually. The baseline index will be the [Gasoline and Diesel Fuels—Regular Unleaded Gasoline] or [Gasoline and Diesel Fuels—Number 2 Diesel, Low Sulfur] or [Bituminous Materials—Asphalt Cement (AC- 20/30)] or [Bituminous Materials—Polymer Materials (PG76-22)] or [Bituminous Materials— Cutback (RC-70)] or [Bituminous Materials—Emulsified Asphalts (RS-1/RS-2)] in gallons for the month and year in which the contract began. The adjustments will not be cumulative; and will be computed using the original contract unit prices. Adjustments may be requested no earlier than 365 days after the contract start date. Adjustments shall be computed using the latest index that is published and available on the date the County receives the adjustment request in writing.

The unit price(s) changed as a result of these adjustments shall become effective on the first (1st) day of the next month, provided the request is submitted at least fifteen (15) days prior. If later than fifteen (15) days prior, the adjustment will become effective on the first (1st) day of the following month. Adjustments may be requested every 365 days thereafter for the term of the contract. Adjustments will not be retroactive or prorated. The County reserves the right to also request adjustments, following the first adjustment and at the same interval, especially if the referenced index decreases and it is deemed to be in the County's best interest.)

FUEL-RELATED PRICE ADJUSTMENTS

Unit prices in contracts that are longer than twelve (12) months may be adjusted bi-annually due to the unusual fluctuation of fuel prices. Unit prices may be adjusted, up or down, based on the combined movement of the U.S. Department of Labor's Producer Price Index for Finished Goods (1982 = 100) (http://www.bls.gov/ppi/home.htm and the U.S. Energy Information Administration's (EIA) Gulf Coast No. 2 Diesel Retail Sales by All Sellers (cents per gallon) (https://www.eia.gov/petroleum/gasdiesel/). The month and year in which the contract began will be used as the baseline for each index. The original contract unit prices will be changed by County, upon written request of the vendor, using the following formula:

Step 1: (Baseline PPI Index – PPI Index for Request Month) / Baseline PPI Index = % PPI Change Step 2: (Baseline EIA Index – EIA Index for Request Month) / Baseline EIA Index = % EIA Change Step 3: (% PPI Change X .80) + (% EIA Change X .20) = Weighted % Change Step 4: (Weighted % Change X Original Unit Price) + Original Unit Price = New Adjusted Unit Price

The adjustments will not be cumulative and will be computed using the original contract unit prices. Adjustments may be requested no earlier than 365 days after the contract start date.

Adjustments shall be computed using the latest PPI that is published and available on the date the County receives the adjustment request in writing. The unit price(s) changed as a result of these adjustments shall become effective on the first (1st) day of the next month, provided the request is submitted at least fifteen (15) days prior. If later than fifteen (15) days prior, the adjustment will become effective on the first (1st) day of the following month. Adjustments may be requested every 365 days thereafter for the term of the contract. Adjustments will not be retroactive or prorated. The County reserves the right to also request adjustments, following the first adjustment and at the same interval, especially if either index decreases and it is deemed to be in the County's best interest.

http://www.bls.gov/ppi/home.htm https://www.eia.gov/petroleum/gasdiesel/

Worksheet for Fuel-Related Price Adjustments:

Step 1: - / =

(Baseline PPI) (Request Month PPI) (Baseline PPI) (% PPI Change)

Step 2: - / =

(Baseline EIA) (Request Month EIA) (Baseline EIA) (% EIA Change)

Step 3: X .80 = X .20 =

(% PPI Change) (Weighted PPI) (% EIA Change) (Weighted EIA)

(Weighted PPI) (Weighted EIA) (Weighted Total)

Step 4: X =

(Weighted Total) (Original Unit Price) (Adjustment Amount)

(Original Unit Price) (Adjustment Amount) (New Adjusted Price)

(a) Simple percentage method.

One method of price adjustment is to have the base price changed by the same percentage as the percent change in a selected PPI. To illustrate, suppose that a price adjustment clause called for using the intermediate demand PPI titled Materials and components for manufacturing, not seasonally adjusted. Also suppose that the value of this index was 178.4 for December 2010, the month that corresponds with the base price for adjustment, $1,000 per unit. Twelve months later, when December 2011 data were released and the first stipulated price adjustment was to be made, the index value for December 2011, published mid-January 2012, was 187.7. The percent change represents an increase of 5.2 percent in the index for Materials and components for manufacturing and a $52 per unit increase in the price for the product. (See below.)

Index at time of calculation, December 2011: .................... 187.7

Divided by index at time base price was set, December 2010: .... 178.4

Equals .......................................................... 1.052

Base price ..................................................... $1,000

Multiplied by .................................................. 1.052

Equals adjusted price .......................................... $1,052

In later years, this procedure could be applied again by taking the next year's December index value, dividing by the index value at the time the base price was set, and proceeding as described above. For example, let us assume that this contract continued through the year 2013. In mid- January 2013, the December 2012 index would be released by PPI. The ratio of price change would be derived by taking the December 2012 index and dividing by the December 2010 value, and multiplying this result by the base price of $1,000 to provide an updated price for 2013.

Index at time of second calculation, December 2012: ............. 187.2

Divided by index at time base price was set, December 2010: ..... 178.4

Equals .......................................................... 1.049

Base price ..................................................... $1,000

Multiplied by .................................................. 1.049

Equals adjusted price .......................................... $1,049