BOARD MEETING DATE: December 7, 2007
AGENDA NO. 11

PROPOSAL:

Approve Contract Modifications under MSRC’s FYs 2005-06 and 2006-07 Work Programs and Issue Solicitations and Award Sole-Source Contracts under FY 2007-08 AB 2766 Discretionary Fund Work Program

SYNOPSIS:

At its November 8, 2007 meeting, the MSRC approved a modification request from Westport Fuel Systems to substitute a demonstration program for a portion of the funds in the existing incentive program for advanced heavy-duty natural gas engines and awarded additional funds to A-Z Bus Sales for CNG school bus incentives under the FYs 2005-06 and 2006-07 Work Programs, respectively. The MSRC also approved a $13.745 million FY 2007-08 Work Program and unanimously approved moving forward with the following elements: Local Government Match, Alternative Fuel Infrastructure, Alternative Fuel School Buses, Heavy-Duty Alternative Fuel On-Road Engines, Heavy-Duty Natural Gas Off-Road Cargo Handling Engines, and Big Rig Freeway Service Patrol. Therefore, at this time the MSRC requests approval to modify two contracts under the FYs 2005-06 and 2006-07 Work Programs as well as issue five solicitations and award two sole-source contracts, totaling $12.2 million, under the FY 2007-08 AB 2766 Discretionary Fund Work Program. The MSRC further requests authority to adjust contracts up to five percent and for the Board Chairman to execute agreements.

COMMITTEE:

Mobile Source Air Pollution Reduction Review, November 8, 2007

RECOMMENDED ACTION:

1. Approve a contract modification (#MS06043X) with Westport Fuel Systems to substitute a demonstration program component for a portion of the performance required by the existing incentive program, with $100,000 which was originally designated for HPDI system incentives re-allocated to the purchase of a new Class 8 truck equipped with an HPDI system, under the FY 2005-06 Phase II Work Program, as described in this letter;
2. Approve a funding augmentation in an amount not to exceed $420,000 ($155,000 from unallocated funds and $265,000 reallocated from the FY 06-07 Phase II Work Program for school bus incentives for private pupil transportation providers) of existing contract #MS07001 with A-Z Bus Sales, Inc. under the CNG Public School Bus Incentives Program, under the FY 2006-07 Phase I Work Program, as described in this letter;
3. Approve the issuance of five solicitations, with targeted funding levels totaling $9.2 million under the FY 2007-08 Work Program, as described in this letter and as follows:
   1. Local Government Match Program Announcement;
   2. Alternative Fuel Infrastructure Funding Opportunities Request for Proposals;
   3. Alternative Fuel School Bus Incentive Program Request for Qualifications;
   4. Incentives for the Purchase of Heavy-Duty Natural Gas Off-Road Cargo Handling Equipment (Yard Hostlers) Program Announcement; and
   5. Incentives for the Purchase of Heavy-Duty Alternative Fuel Engines for On-Road Vehicles Program Announcement.
4. Approve two sole-source contracts totaling $3 million for implementation of Big Rig Freeway Service Patrol (FSP) under the FY 2007-08 Work Program, as described in this letter and as follows:
1. A $1.5 million contract with the Los Angeles County Metropolitan Transportation Authority (Metro); and
2. A $1.5 million contract with the Orange County Transportation Authority (OCTA).
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 2005-06, 2006-07 and 2007-08 AB 2766 Discretionary Fund Work Programs, as described above and within this letter.

Barry R. Wallerstein, D.Env.
Executive Officer

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 2005-06 Work Program

The MSRC allocated $2 million for an Advanced On-Road Natural Gas Heavy-Duty Engine Program under its FY 2005-06 Phase II Work Program. To implement the program, the MSRC awarded a $2 million sole-source contract to Westport Innovations to enable fleet customers to purchase engines, equipped with the Westport’s HPDI system, with a $50,000 per engine incentive. Customers would realize 100% of the benefit of the incentive. A contract was executed with Westport Fuel Systems (the U.S. affiliate of Westport Innovations) to implement this program, with a deadline for trucks to enter service by December 31, 2007. Westport estimates that they will be delivering 13 trucks eligible for the MSRC incentive, by the end of 2007. However, Westport has now requested that their contract be extended by nine months, and that some of the funds originally designated for HPDI system incentives be reallocated towards the purchase of a demonstration vehicle. The MSRC considered this request at their November 8, 2007 meeting; further details are provided below in the Proposals section.

FY 2006-07 Work Program

The MSRC set aside a total of $6 million to continue the CNG School Bus Incentives Program as part of the FY 2006-07 Work Program. Of this amount, $4 million was allocated to provide buydown incentives for private providers of student transportation and $2 million was allocated for public school districts. To implement the public school district portion of the program, the MSRC awarded sole-source contracts to A-Z Bus Sales and BusWest. These vendors had qualified under an RFQ process to implement a similar MSRC program in previous years. Initially each vendor was awarded $500,000, and subsequently A-Z Bus Sales’ contract was augmented based on sales performance to its current value of $1,500,000. At its November 8, 2007 meeting, the MSRC considered a request from A-Z Bus Sales for an additional $420,000 for two new purchase orders; further details are provided in the Proposals section.

FY 2007-08 Work Program

At its August 16, 2007 meeting, the MSRC conceptually approved funding categories for its FY 2007-08 Work Program. The Work Program consists of these elements: Demonstration of After-treatment Devices on Off-Road Equipment (Showcase), Local Government Match, Alternative Fuel Infrastructure, Alternative Fuel School Buses, Heavy-Duty Alternative Fuel On-Road Engines, Heavy-Duty Natural Gas Off-Road Cargo Handling Engines, Intelligent Transportation Systems Study, On-Road Demonstration of Devices to Reduce NOx, 91 Freeway Big Rig Freeway Service Patrol (FSP), and Rideshare-2-School. At its November 8, 2007 meeting, the MSRC considered five solicitations and two awards to implement portions of the FY 2007-08 Work Program. Further details are described below in the Proposals section.

Outreach

For each solicitation described below, in accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the multiple solicitations 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 solicitations 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. Further, a press release on funding opportunities available in the FY 2007-08 Work Program will be issued and placed on the MSRC’s website.

Bidders’ Conferences

To assist potential bidders in submitting qualified proposals for those programs with substantial differences from the prior year’s solicitations, non-mandatory Bidders’ Conferences will be conducted at AQMD headquarters, as follows: at 1:30 p.m. in Room CC6 on January 4, 2008 for the Local Government Match Program, and at 10:30 a.m. in Room CC6 on January 9, 2008 for the Alternative Fuel Infrastructure Program.

Proposal Evaluation and Panel Composition

Proposals received in response to each solicitation (further outlined under the Proposals section) will be evaluated by members of the MSRC’s Technical Advisory Committee (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 five solicitations.

Proposals

At its November 8, 2007 meeting, the MSRC considered several recommendations from its MSRC-TAC and unanimously approved the following:

FY 2005-06 Work Program

As stated in the Background section, the MSRC previously awarded a contract to Westport in the amount of $2,000,000 to provide incentives for trucks equipped with HPDI natural gas systems under the FY 2005-06 Work Program. Westport estimates that 13 trucks eligible for the MSRC incentives will have been delivered by the end of 2007. However, Westport has now requested that some of the funds originally designated for HPDI system incentives be reallocated towards the purchase of a demonstration vehicle. Specifically, Westport requested to redirect $100,000 originally allocated for HPDI system incentives towards a demonstration component, specifically to purchase a demonstration truck, which they believe will enhance prospective customers’ acceptance of the natural gas technology, as well as a nine-month contract term extension. At its November 8, 2007 meeting, the MSRC unanimously approved Westport’s request.

FY 2006-07 Work Program

As stated in the Background section, A-Z Bus Sales requested additional funds under the CNG School Bus Incentives Program for public school districts. Through orders both in process and fulfilled, A-Z Bus Sales has expended all $1,500,000 of its existing contract value. Subsequently, A-Z Bus Sales has received additional orders, which were considered by the MSRC on a first-come, first-served basis. The vendor received an order from Desert Sands Unified School District for two full-sized buses, and an order from Coachella Valley Unified School District for five full-sized buses, each of which would be eligible for $60,000 per bus incentive. At its November 8, 2007 meeting, the MSRC awarded $420,000 to A-Z Bus Sales to enable them to provide the incentives for these bus orders, using $155,000 from unallocated funds and $265,000 reallocated from the funds originally set aside to provide incentives to private providers of student transportation.

FY 2007-08 Work Program

As stated in the Background section, previously the MSRC conceptually approved funding categories for its FY 2007-08 Work Program. On November 8, 2007, the MSRC unanimously approved release of five solicitations totaling $9.2 million under the FY 2007-08 AB 2766 Discretionary Fund Work Program, as follows:

• PA2008-02 ($3.0 million): Local Government Match PA, providing the traditional dollar-for-dollar match funding for heavy-duty alternative fuel vehicles up to $25,000 per vehicle and alternative fuel infrastructure with a maximum amount per project up to $400,000. However, it also includes a new category to provide a match towards the cost of installing fleet management systems which provide remote vehicle diagnostics, including monitoring and diagnostics of vehicle emission control system performance. Vehicles equipped with such systems approved by the California Bureau of Automotive Repair are exempt from the biennial smog check program because emission control system problems are both detected and corrected much more quickly. Awards under this category are limited to $75,000 per entity, with the category total capped at $500,000. Funding for all eligible entities will be distributed on a first-come, first-served basis with a geographic minimum per county of $375,000. The PA includes an open application period commencing January 15, 2008 and closing March 28, 2008.
  
• P2008-12 ($2.5 million): Alternative Fuel Infrastructure Funding Opportunities RFP, providing funds for new and upgraded or expanded alternative fuel stations as well as facility modifications. New stations will be eligible for 50 percent of capital costs up to a maximum of $400,000, expansions will be eligible for 50 percent of capital costs up to a maximum of $200,000, and 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 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. Proposals will be competitively ranked on the basis of strategic location/gap closure, potential for multiple users, and fuel throughput/cost-effectiveness. The RFP includes an open application period commencing with its release and closing March 28, 2008.
  
• Q2008-14 ($1.2 million): Alternative Fuel School Bus Incentives RFQ, seeking qualified vendors to offer a $60,000 buydown incentive for mid- and full-sized alternative fuel school buses and $25,000 for cutaway “Type A” alternative fuel school buses. This program allows for the qualification of school buses fueled with liquefied petroleum gas (LPG), commonly referred to as propane, as well as CNG school buses. Qualifying vendors must offer for sale such alternative fuel school buses certified for the transport of school children by the California Highway Patrol, whose engines are certified by the California Air Resources Board, and which offer a manufacturer’s warranty. The RFQ includes an open application period commencing with its release and closing January 18, 2008.
  
• PA2008-05 ($1.0 million): Incentives for the Purchase of Heavy-Duty Natural Gas Off-Road Cargo Handling Equipment (Yard Hostlers), providing $40,000 per vehicle for the purchase of new off-road yard hostlers equipped with natural gas engines certified at the “0.2g” NOx standard which will take effect in 2010. Funding for all eligible entities will be distributed on a first-come, first-served basis with a geographic minimum per county of $80,000. The PA includes an open application period commencing January 3, 2008 and closing February 15, 2008.
  
• PA2008-04 ($1.5 million): Incentives for the Purchase of Heavy-Duty Alternative Fuel Engines of On-Road Vehicles, providing the incremental cost of the alternative fuel engine option not to exceed $30,000 per vehicle for the purchase of new heavy-duty on-road vehicles equipped with natural gas engines certified at the “0.2g” NOx standard which will take effect in 2010, or for the repower of existing heavy-duty on-road vehicles with such engines. Funding for all eligible entities will be distributed on a first-come, first-served basis with a geographic minimum per county of $200,000. The PA includes an open application period commencing January 3, 2008 and closing February 15, 2008.

In addition to the above programs, the MSRC also considered specifics for a Big Rig FSP Program. This program would provide a three-year demonstration/implementation of FSP specifically targeting large disabled trucks and semi tractor trailers. This program aims to reduce non-recurrent traffic congestion, and thereby vehicular emissions, by quickly clearing truck-involved incidents. The targeted corridor is 28 miles of the 91 Freeway. The MSRC has determined that this program would best be implemented by the two county transportation commissions, Metro and OCTA, in whose jurisdiction the targeted corridor falls (see sole-source justification below). Metro proposes to demonstrate both class 8 tow rigs as well as FSP service trucks (specially equipped pickup trucks); OCTA proposes to demonstrate FSP service trucks only. The initial targeted funding level for both agencies is $1.5 million each for a total of $3.0 million.

The MSRC respectfully requests the AQMD Board’s approval of the above contract modifications and contract awards and to release five solicitation documents under the FYs 2005-06, 2006-07, and 2007-08 Work Programs. Additional FY 2007-08 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 Justification

Big Rig FSP Program: As an element of its FY 2007-08 Work Program, the MSRC allocated $3.0 million for a Big Rig FSP Program. As discussed in Proposals above, this program will be implemented by initiating sole-source contracts with the two county transportation commissions in whose jurisdiction the targeted corridor falls. While the MSRC and AQMD strive to retain technical services on a competitive basis, the AQMD Procurement Policy and Procedure 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. Each of the two County Transportation Commissions mentioned above acts as the "Service Authority for Freeways and Expressways (SAFE)" for their county. There are no other providers of freeway service patrols on this segment of the 91 Freeway.

This request for sole-source awards to the two county transportation commissions 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.

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 3563 kb)

1) Local Government Match Program #PA2008-02

2) Alternative Fuel Infrastructure Funding Opportunities Program RFP #P2008-12

3) Alternative Fuel School Bus Incentives Program RFQ #Q2008-14

4) Incentives for the Purchase of Heavy-Duty Natural Gas Off-Road Cargo Handling Equipment (Yard Hostlers) Program #PA2008-05

5) Incentives for the Purchase of Heavy-Duty Alternative Fuel Engines of On-Road Vehicles Program #PA2008-04