BOARD MEETING DATE: October 6, 2006
AGENDA NO. 14

Approve a Contract Modification as Part of MSRC’s FY  2003‑ 04 Work Program and Issue Solicitations and Award Sole-Source Contracts Under FY  2006-07 AB 2766 Discretionary Fund Work Program

SYNOPSIS:

As part of the FY 2003-04 Work Program, the MSRC approved an award to Orange County Transportation Authority for ten gasoline-electric hybrid buses, and now requests the Board to approve a modification substituting 20 CNG buses for eight hybrids.  The MSRC developed a two-phase $12.7 million FY 2006-07 Work Program. Phase I ($11.2M) consists of these elements: Alternative Fuel Infrastructure, CNG School Bus Incentives, Off-Road Diesel Exhaust Aftertreatment Retrofits, Transit Bus Incentives for Natural Gas Engines Meeting 2010 Standards, Advanced CNG Class 8 Goods Movement Engine Incentives, Bike Metro Upgrade and Migration; and Exercising the Option for Additional Programmatic Outreach. Currently, the MSRC requests approval to issue two solicitations and award three sole-source contracts. The MSRC also requests authority to adjust contracts up to five percent and for the Board Chairman to execute agreements. 

COMMITTEE:

Mobile Source Air Pollution Reduction Review, September 21, 2006

RECOMMENDED ACTIONS:

1. Approve a contract modification (#MS04006) with the Orange County Transportation Authority to substitute the purchase of 20 CNG transit buses for eight gasoline-electric hybrid buses, as described in this letter;
2. Approve the issuance of two Program Announcements as part of Phase I of the FY  2006‑ 07 Work Program, as described in this letter and as follows:

1. Incentives for the Purchase of Advanced Low-Emission Heavy-Duty Natural Gas Engines for Urban Transit Buses; and
2. Alternative Fuel Infrastructure Funding Opportunities;

3. Approve $1 million to provide CNG School Bus Incentives to public school districts as part of Phase I of the FY  2006‑ 07 Work Program, through the issuance of contracts to the previously qualified vendors A‑ Z Bus Sales and BusWest, in an amount of $500,000 each, as described in this letter;
4. Approve a $1.5 million sole-source contract with Westport Innovations, Inc. for implementation of the Advanced Natural Gas Heavy-Duty Engine Incentives Program, as part of Phase I of the FY  2006‑ 07 Work Program, as described in this letter;
5. Authorize MSRC the authority to adjust contract awards up to five percent, as necessary; and
6. Authorize the Chairman of the Board to execute new and modified contracts under FYs 2003-04 and 2006-07 AB 2766 Discretionary Fund Work Programs, as described above and within this letter.

Ron Roberts
Vice-Chair, MSRC

Background

In September 1990 Assembly Bill 2766 was signed into law (Health & Safety Code Sections 44220-44247) authorizing the imposition of an annual $4 motor vehicle registration fee to fund the implementation of programs exclusively to reduce air pollution from motor vehicles. AB 2766 provides that 30 percent of the annual $4 vehicle registration fee subvened to the AQMD be placed into an account to be allocated pursuant to a work program developed and adopted by the MSRC and approved by the AQMD Governing Board.  

FY 2003-04 Work Program

The MSRC previously awarded a contract to Orange County Transportation Authority (OCTA) in the amount of $405,000 for the purchase of ten gasoline-electric hybrid transit buses under the FY 2003-04 Work Program. OCTA has been reimbursed $72,000 under this Contract.  In August 2006 OCTA requested to substitute the purchase of 20 CNG buses for eight of the gasoline-electric hybrid buses. The MSRC considered this request at their September 21, 2006 meeting; further details are described below in the Proposals section.

FY 2006-07 Work Program

At its August 17, 2006 meeting, the MSRC conceptually approved funding categories for a two-phase, $12.7 million FY 2006-07 Work Program. Phase I ($11.2M) consists of these elements: Alternative Fuel Infrastructure, CNG School Bus Incentives, Off-Road Diesel Exhaust Aftertreatment Retrofits, Incentives for Advanced Heavy-Duty Natural Gas Engines for Transit Buses, Advanced CNG Class 8 Goods Movement Engine Incentives, Bike Metro Upgrade and Migration; and Exercising the Option for Additional Programmatic Outreach.  Two elements, namely CNG School Bus Incentives for private pupil transportation providers and the Option for Additional Programmatic Outreach, were brought forward for AQMD Board Approval in September.  The MSRC has now approved the specifics for the following additional categories under Phase I of the FY  2006‑ 07 Work Program: CNG School Bus Incentives for public school districts, Alternative Fuel Infrastructure, Heavy-Duty Natural Gas Transit Bus Engine Incentives, and Advanced CNG Class 8 Goods Movement Engine Incentives.  At this time the MSRC seeks AQMD Board approval of these solicitations and awards. Details are described below in the Proposals section.

Outreach

For the Program Announcements described below, in accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the Program Announcements and inviting bids will be published in the Los Angeles Times, the Orange County Register, the San Bernardino Sun, and Riverside County Press Enterprise newspapers to leverage the most cost-effective method of outreach to the entire South Coast Basin.

Additionally, potential bidders may be notified utilizing AQMD’s own electronic listing of certified minority vendors.  Notice of the Program Announcements will be mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations, the State of California Contracts Register website, and placed on the Internet on both the MSRC’s website at http://www.cleantransportationfunding.org/ and on AQMD’s Web site (http://www.aqmd.gov/, where it can be viewed by making menu selections “Inside AQMD”/“Employment and Business Opportunities”/“Business Opportunities” or by going directly to http://www.aqmd.gov/rfp/index.html).  Information will also be available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.  A press release on funding opportunities available in the FY 2006-07 Work Program will be issued and placed on the MSRC’s website.

Bidders’ Conferences

To assist potential bidders in submitting qualified proposals, non-mandatory Bidders’ Conferences will be conducted at AQMD headquarters, as follows: at 1:30 p.m. in Room CC6 on October 25, 2006 for the Alternative Fuel Infrastructure Funding Opportunities Program, and at 1:30 p.m. in Room CC2 on November 1, 2006 for the Heavy-Duty Natural Gas Transit Bus Engine Incentives Program.

Proposal Evaluation and Panel Composition

Proposals received for the Program Announcements (further outlined under the Proposals section) will be evaluated by members of the MSRC-TAC, a diverse group of individuals appointed by participating members as prescribed in the Health & Safety Code.  Separate evaluation teams will be formed to evaluate proposals submitted in response to the two solicitations, the membership of which will be identified in the Board letter recommending specific contract awards.

Proposals

At its September 21, 2006 meeting, the MSRC considered several recommendations from its MSRC-TAC and unanimously approved the following:

FY 2003-04 Work Program

As stated in the Background section, the MSRC previously awarded a contract to OCTA in the amount of $405,000 for the purchase of ten gasoline-electric hybrid transit buses under the FY 2003-04 Work Program.  OCTA purchased, and entered into service, two of the specified buses. However, OCTA has now requested to redirect the funds remaining in the contract to CNG buses, which they believe will enhance the overall cost-effectiveness and be consistent with their current fleet plans.  Specifically, OCTA requested to substitute the purchase of 20 CNG buses for the eight remaining gasoline-electric hybrid buses, as well as a fifteen‑ month contract term extension.  At its September 21, 2006 meeting, the MSRC unanimously approved OCTA’s request.

FY 2006-07 Work Program

As mentioned in the Background section, at its September 21, 2006 meeting, the MSRC approved the four elements of Phase I of its FY 2006-07 Work Program. The MSRC had previously decided to offer CNG school bus incentives to both public school districts and private pupil transportation providers. At its August 17, 2006 meeting, the MSRC approved an allocation of $2 million for CNG school bus incentives for private pupil transportation providers, as well as the process by which incentives would be provided directly to the private pupil transportation provider. At that time the MSRC also set aside $1 million for CNG school bus incentives for public school districts, with the understanding that the details for this portion would be brought back for MSRC consideration at a later date.  The MSRC has now further discussed this category and determined that the structure and provisions of the FY  2005‑ 06 CNG School Bus Incentives Program, including an incentive level of $60,000 per Type D bus, should be maintained.  School Districts would therefore still be able to purchase buses from the MSRC’s qualified vendors with this discount. Thus, at its September 21, 2006 meeting the MSRC approved awards of $500,000 each to A‑ Z Bus Sales and BusWest.  These two vendors were previously qualified in response to the MSRC’s Request for Vendor Qualifications in FY  2002‑ 03.  Because the third previously qualified vendor, California Bus Sales, has been purchased by BusWest, A‑ Z Bus Sales and BusWest are also the only authorized distributors of CNG school buses in California. 

The second and third elements under Phase I of the FY 2006-07 Work Program, for which the MSRC approved Program specifics at their September 21, 2006 meeting, would solicit applications via Program Announcements, as follows:

• PA2007-05 ($3.5 million): Alternative Fuel Infrastructure Funding Opportunities Program, providing funds for new and upgraded or expanded alternative fuel stations as well as facility modifications.  New publicly accessible stations will be eligible for 50 percent of capital costs up to a maximum of $250,000-$350,000 depending on station type.  New limited access stations will be eligible for 25 percent of capital costs up to a maximum of $150,000, except that new stations for which the applicant can demonstrate a high volume of throughput will be eligible for 50 percent of capital costs not to exceed $350,000, whether public or limited access.  Upgrades/expansions will be eligible for 50 percent of capital costs up to $150,000 for public access and 25 percent of capital costs up to $75,000 for limited access.  Facility modifications to accommodate the maintenance of alternative fuel vehicles will be eligible for 50 percent of costs up to a maximum of $50,000.  Commercial entities seeking MSRC funding, whose primary business is the construction of refueling stations and/or sale of fuel, must disclose how the Federal Tax Credits are accounted for when developing station construction cost estimates and fuel pricing.  The MSRC’s co-funding will be inclusive of any AQMD cost-sharing, such that together the combined funding won’t exceed 50 percent of the total costs.  The maximum funding for any entity is 60 percent of the total funding for this element.

 

• PA2007-06 ($2 million): Incentives for the Purchase of Advanced Low Emission Heavy Duty Natural Gas Engines for Urban Transit Bus Operators, providing funds towards the purchase of engines certified to the 2007 optional 0.2 gram NOx per brake horsepower-hour standard.  This will be the required standard in 2010; thus, purchasers would be three years early in adopting this technology.  The Program will provide $20,000 per qualifying bus engine on a first-come, first-served basis.

The final Phase I FY  2006‑ 07 Work Program element considered at the September 21, 2006 MSRC meeting was the Class 8 Goods Movement Advanced Natural Gas Engine Incentives Program.  As mentioned in the Background section, on August 17, 2006 the MSRC set aside $1.5 million for this Program, with details to be considered at a later meeting.  For a number of years, there were no heavy‑ duty low emission engines available for Class 7 and 8 truck applications.  Recently this has changed.  For the 2006 engine model year, a natural gas HPDI System installed on a Cummins ISX 15-liter engine is certified to the optional 1.2 g/bhp-hr NOx  + NMHC standard.  For the 2007 engine model year, the Cummins ISX equipped with an HPDI System is expected to be certified at 0.8 g/bhp-hr NOx.  On September 21, 2006 the MSRC determined that the best approach would be to offer $35,000 per vehicle buydowns or rebates on HPDI Systems, to be passed through to end users on a first-come, first-served basis via a $1.5 million sole-source contract with Westport Innovations.  Installation of an approved electronic monitoring unit and operating at least 75% within the AQMD jurisdiction would be requirements for receiving the incentive.  Furthermore, MSRC incentive funds could not be combined with funding from any AQMD incentive program.

The MSRC respectfully requests the AQMD Board’s approval of the above contract awards, contract modifications, and funding allocations under the FY  2003‑ 04 Work Program and Phase I of the FY 2006-07 Work Program.  Additional FY  2006‑ 07 Work Program elements are expected to be brought forward in the next few months.  The MSRC also requests authority to adjust the funds allocated to each project specified in this Board letter by up to five percent of the project's recommended funding. The Board has granted this authority to the MSRC for all past work programs. Finally, the MSRC requests the Board authorize the AQMD Chairman of the Board the authority to execute all agreements described in this letter.

Sole-Source Justifications

1. CNGSchool Bus Incentives for Public School Districts: As an element of Phase I of its FY  2006‑ 07 Work Program, the MSRC allocated $1 million to provide incentives to public school districts for CNG school buses.  As discussed in Proposals above, the MSRC determined that the best approach for these end users would be to offer a buy‑ down incentive on the purchase of buses through participating vendors.  While the MSRC and AQMD strive to retain technical services and award contracts through a competitive bid basis, the AQMD’s Procurement Policy recognizes that, at times, the unique experience of one vendor makes the pursuit of a competitive procurement futile.  Such is the case in this instance, since the two school bus vendors mentioned above are the only ones in California that offer the types of buses eligible under the MSRC’s Program.  Bluebird and Thomas are the only manufacturers who offer a CNG school bus product, and A‑ Z Bus Sales and BusWest are their only authorized distributors in California.  Additionally, the MSRC has contracted with these vendors for the last four years, initially qualifying them through an RFQ process.  This request for two sole-source awards of $500,000 each to A‑ Z  Bus Sales and BusWest is made under provision VIII.B.2.c.(1): the desired services are available from only the sole source due to the unique experience and capabilities of the proposed contractor or contractor team; and (3) the contractor has ownership of key assets required for project performance.
2. Class 8 Goods Movement Natural Gas Engine Incentives: As an element of Phase I of its FY  2006‑ 07 Work Program, the MSRC allocated $1.5 million for a Class 8 Goods Movement Advanced Natural Gas Engine Incentives Program.  As discussed in Proposals above, the MSRC determined that the best approach would be to offer a buy-down or rebate incentive in the amount of $35,000 per engine.  While the MSRC and AQMD strive to retain technical services and award contracts through a competitive bid basis, the AQMD’s Procurement Policy recognizes that at times circumstances exist which make a competitive bid process invalid.  Therefore, the request for a sole-source award is made under provision B.2.c.(2).: The project involves the use of proprietary technology; and B.2.c.(3): The contractor has ownership of key assets required for project performance.  For 2007, Westport is expected to be the only manufacturer producing a system which, when applied to a large-displacement (10 liters or larger) engine, are certified at 0.8 g/bhp-hr NOx.  In addition, there are no other alternative fueled engines in this size category certified for sale in California.  It is the intent of the MSRC to execute a sole-source contract in the amount of $1.5 million with Westport Innovations, Inc. to provide buydowns or rebates on qualifying HPDI Systems.

Resource Impacts

The AQMD acts as fiscal administrator for the AB 2766 Discretionary Fund Program (Health & Safety Code Section 44243). Money received for this program is recorded in a special revenue fund (Fund 23) and the contracts will be drawn from this fund. These contracts will have no fiscal impact on the AQMD’s operational budget.

Attachments (EXE 1475.5 kb)

Alternative Fuel Infrastructure Funding Opportunities Program #PA2007-05
Incentives for the Purchase of Advanced Low Emission Heavy Duty Natural Gas Engines for Urban Transit Bus Operators #PA2007-06
2006-07 Addl WP Awards Solicitations and 2003-04 Modification.doc