ITB 2026-020-Stone Supply and Hauling Services-Addendum 1.pdf

CITY OF SALEM

PURCHASING DEPARTMENT

114 NORTH BROAD STREET

P.O. BOX 869

SALEM, VA 24153

PHONE (540) 375-3063

DATE: APRIL 27, 2026

ITB # 2026-020

STONE SUPPLY AND HAULING SERVICES

DATE AND TIME BID DUE: APRIL 30, 2026, AT 3:00 PM (LOCAL TIME)

ADDENDUM # 1

This Addendum # 1, dated April 27, 2026, amends or supplements Invitation To Bid (ITB) # 2026-020 as indicated below:

I. Vendor Questions (VERBATIM):

1. I am writing in reference to the above bid for The City of Salem. With diesel fuel prices continuing to rise, we will need to add a fuel surcharge. Where on the bid form can we put the fuel surcharge?

Response: In response to questions received from prospective bidders regarding fuel price volatility over the potential five (5) year contract term, the City of Salem is issuing this Addendum No. 1 to add a Fuel Surcharge Adjustment provision to the contract terms. The adjustment applies to the hauling cost only and permits rates to move up or down with the EIA Weekly Retail On-Highway Diesel Price, subject to the terms below.

The Bid Form (Attachment A) is NOT changed. Bidders shall submit the original Bid Form as issued in the ITB.

This Addendum adds a single new submittal — the Fuel Factor Declaration (Attachment B) — which Bidders shall complete and submit with their bid response.

Bidders are reminded that the quantities shown on the Bid Form are estimated annual quantities used only for bid comparison. Stone is ordered on an as-needed basis throughout each contract year, with individual deliveries placed by the Street Department and Water Department. Each delivery will be priced at the hauling rate in effect for the month the delivery is made, as determined by the Fuel Surcharge Adjustment clause below.

All other terms and conditions of ITB # 2026-020 remain unchanged. The bid due date of Thursday, April 30, 2026 at 3:00 PM (Local Time) is not changed.

1. New Clause — Fuel Surcharge Adjustment

The following clause is hereby added to the Scope of Work / Specifications section of ITB # 2026-020:

Fuel Surcharge Adjustment.

The Hauling Cost Per Ton quoted on the Bid Form shall be subject to a monthly fuel surcharge adjustment based on the U.S. Energy Information Administration (EIA) Weekly Retail On-Highway Diesel Fuel Price for the Lower Atlantic Region, as published at www.eia.gov.

(a) Peg Price. The baseline ("Peg") price shall be the EIA Lower Atlantic Region price published on the Monday of the week in which the contract is executed. The Peg shall be documented in writing between the City and the Successful Bidder and shall be reset at the beginning of each renewal term.

(b) Review Period. The surcharge shall be recalculated once per calendar month, based on the EIA price published on the first Monday of that month. The recalculated rate shall apply to all deliveries made during that month, based on the actual delivery date. Deliveries made in one month shall not be billed at another month's adjusted rate, regardless of when the invoice is issued.

(c) Deadband. No adjustment shall be made if the current EIA price is within plus or minus twenty-five cents ($0.25) per gallon of the Peg. If the current EIA price falls outside of this band, a surcharge or credit shall apply as set forth in subsection (d).

(d) Adjustment Formula. When the deadband is exceeded, the hauling cost per ton shall be adjusted by the following formula:

Surcharge per ton = (Current EIA Price − Peg Price) × Fuel Factor

The Fuel Factor shall be the value (in gallons per ton) stated by the Bidder on the Fuel Factor Declaration submitted with the bid response, and shall apply uniformly to all hauling under the contract regardless of stone type, department, or quantity. A negative result (when the current EIA price falls below the Peg minus $0.25) shall be applied as a credit, reducing the hauling cost for that month.

(e) Application and Invoicing. The adjustment applies only to the Hauling Cost Per Ton line. The Cost Per Ton for stone (or topsoil) shall not be subject to this adjustment. Each invoice subject to a surcharge or credit shall, in addition to the invoice information required elsewhere in this ITB, include: (i) the delivery date, (ii) the EIA Lower Atlantic Region price in effect for the month of delivery and the publication date of that price, (iii) the Peg Price, (iv) the Fuel Factor used, (v) the per-ton surcharge or credit amount as a separate line item, and (vi) the resulting adjusted hauling rate. Months in which the deadband is not exceeded shall be invoiced at the base hauling rate with no surcharge line item required.

(f) Base Rate Integrity. The Hauling Cost Per Ton stated on the Bid Form shall represent the Bidder's base hauling rate at the Peg Price. Bidders shall not include any fuel escalation premium, contingency, or anticipated price increase in the Hauling Cost Per Ton on the Bid Form. Fuel price changes shall be addressed solely through this Fuel Surcharge Adjustment clause.

(g) No Other Escalation. This Fuel Surcharge Adjustment is the sole mechanism for pricing adjustment within any contract year. Base pricing (stone cost, hauling cost, and Fuel Factor) is otherwise firm through the initial one-year term and subject to renegotiation only at the start of each renewal period as provided in the Contract Period section of the ITB.

2. New Required Submittal — Fuel Factor Declaration

Bidders shall complete and submit the Fuel Factor Declaration (Attachment B) provided in this Addendum with their bid response. The Fuel Factor stated by the Bidder is the gallons of diesel consumed per ton of stone hauled, and will be used in the surcharge formula above for the entire term of any resulting contract.

If the Fuel Factor Declaration is not submitted or is submitted blank, the City will assume a Fuel Factor of zero (0.00) gallons per ton, meaning no surcharge or credit adjustment will apply to the contract for the entire term.

Note on Bid Evaluation: Bids will be evaluated based on the Total Price Per Ton as submitted on the original Bid Form. The Fuel Factor only affects future monthly surcharge calculations and does not factor into the initial bid comparison. However, the City reserves the right to consider the reasonableness of a Bidder's stated Fuel Factor as part of its responsibility determination.

3. Worked Example (Illustrative Only)

The example below illustrates how the Fuel Surcharge Adjustment will be calculated. Figures are for illustration only and do not represent actual or expected prices.

Item Value

Peg Price (EIA Lower Atlantic at contract execution) $3.60 / gallon (illustrative)

Current Month EIA Price (first Monday of month) $4.10 / gallon

Difference +$0.50 / gallon (exceeds ±$0.25 deadband)

Bidder's Stated Fuel Factor 0.25 gallons / ton

Surcharge Calculation $0.50 × 0.25 = $0.125 / ton

Applied to Hauling Only (not stone cost) Hauling rate for the month: Base + $0.125 / ton

In this example, the bidder's invoice for stone delivered in the applicable month would show the base hauling rate plus a fuel surcharge of $0.125 per ton. The stone cost per ton would be unchanged. If the EIA price had instead fallen to $3.00 per gallon (a $0.60 decrease from the Peg, exceeding the deadband), the hauling rate would be reduced by $0.60 × 0.25 = $0.15 per ton as a credit.

4. Additional Questions and Clarifications

Q1. How is the Fuel Factor determined?

A1. Each Bidder shall state a single Fuel Factor (gallons of diesel per ton hauled) on the Fuel Factor Declaration.

This single value applies to all hauling under the contract regardless of stone type, department, or quantity, and allows each Bidder to account for its specific fleet efficiency.

Q2. Do I need to use the original Bid Form, or has it been replaced?

A2. The original Bid Form (Attachment A) is unchanged and shall be submitted as issued. This Addendum does not replace the Bid Form; it adds the Fuel Factor Declaration as an additional required submittal.

Q3. Should I include a fuel premium in my Hauling Cost Per Ton on the Bid Form?

A3. No. The Hauling Cost Per Ton on the Bid Form shall be the Bidder's base rate assuming diesel at the Peg Price. Bidders shall not bake any fuel escalation or contingency into the base hauling rate. Fuel price changes are handled exclusively through the Fuel Surcharge Adjustment clause. See Section 1(f).

(continued)

City of Salem — Purchasing Department

ATTACHMENT B (NEW PER ADDENDUM # 1)

ITB # 2026-020 — Fuel Factor Declaration

FUEL FACTOR DECLARATION

Required Submittal — Submit With Bid Response

In accordance with Section 1 of this Addendum, the undersigned Bidder declares the following Fuel Factor for use in the Fuel Surcharge Adjustment formula. This Fuel Factor will apply to all hauling performed under any resulting contract, regardless of stone type, department, or quantity.

Bidder's Fuel Factor: ________________ gallons per ton

BIDDER ACKNOWLEDGMENTS

☐ The Hauling Cost Per Ton stated on the Bid Form is the Bidder's base hauling rate assuming diesel fuel at the Peg Price established at contract execution.

☐ The Bidder has NOT included any fuel escalation premium, contingency, or anticipated price increase in the Hauling Cost Per Ton on the Bid Form.

☐ The Bidder understands that fuel price changes will be addressed solely through the Fuel Surcharge Adjustment clause and that no other fuel-related adjustment will apply during any contract year.

☐ The Bidder understands that the surcharge moves up or down based on the EIA Lower Atlantic Region diesel price, and that downward adjustments (credits) will reduce the Bidder's hauling rate when diesel prices fall below the Peg by more than $0.25 per gallon.

Company Name:

Authorized Signature:

Printed Name & Title:

Date:

BY SIGNING THIS DOCUMENT, THE OFFEROR ACKNOWLEDGES THAT THEY HAVE RECEIVED THIS ADDENDUM # 1 AND

FULLY UNDERSTANDS THESE CLARIFICATIONS AND CHANGES.

***THE SIGNED ADDENDUM MUST BE INCLUDED IN THE BID SUBMITTAL***

OFFEROR’S SIGNATURE:

COMPANY:

END OF ADDENDUM # 1 TO ITB # 2026-020