BOARD MEETING DATE: September 5, 2008
AGENDA NO. 19

PROPOSAL:

Approve Replacement Contract, Contract Modification and Awards under FYs 2004-05 and 2008-09 AB 2766 Discretionary Fund Work Programs

SYNOPSIS:

The MSRC approved multiple new and replacement contracts and modifications under the FYs 2004-05 and 2008-09 AB 2766 Discretionary Fund Work Programs. These include additional funding for alternative fuel school bus incentives, contracts awarding funds for the purchase of heavy-duty natural gas vehicles by local governments, and a contract to provide incentives for the purchase of natural gas home refueling units. The MSRC seeks AQMD Board approval of additional FY 2008-09 Work Program elements as well as these new and replacement contracts and modifications under the FYs 2004-05 and 2008-09 Work Programs.

COMMITTEE:

Mobile Source Air Pollution Reduction Review, June 30 and August 21, 2008, Recommended for Approval

RECOMMENDED ACTIONS:

1. Approve new/replacement contract with the City of La Cañada Flintridge in the amount of $20,000 for the purchase of a heavy-duty natural gas bus as part of the FY 2004-05 Work Program, as described in this letter;
2. Approve Partial FY 2008-09 AB 2766 Discretionary Fund Work Program with the following elements:
1. Alternative Fuel School Bus Incentives Program totaling $600,000;
2. Additional Local Government Match Program project totaling $50,000; and
3. Home CNG Refueling Unit Incentives Program totaling $296,000.
3. Approve award of a sole-source contract in an amount not to exceed $600,000 to A-Z Bus Sales under the Alternative Fuel School Bus Incentives Program as part of the FY 2008-09 Work Program, as described in this letter;
4. Approve augmentation of an award to the City of Irvine, in an amount not to exceed $50,000 for the purchase of up to two heavy-duty natural gas vehicles under the Local Government Match Program as part of the FY 2008-09 Work Program, which together with $9,000 previously awarded for remote vehicle diagnostics will result in a combined award of $59,000, as described in this letter;
5. Approve the award of a sole-source contract to FuelMaker Corporation, in an amount not to exceed $296,000, to provide buy-down incentives for the purchase and installation of natural gas home refueling units as part of the FY 2008-09 Work Program, as described in this letter;
6. Authorize MSRC the authority to adjust contract awards up to five percent, as necessary and previously granted in prior work programs; and
7. Authorize the Chairman of the Board to execute new and modified contracts under FYs 2004-05 and 2008-09 AB 2766 Discretionary Fund Work Programs, as described above and within this letter.

 

Ron Roberts
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 Board.

FY 2004-05 Work Program

As part of the FY 2004-05 Work Program, the City of La Cañada Flintridge was awarded a contract under the MSRC’s Local Government Match Program for $20,000 towards their purchase of a heavy-duty CNG bus. In July 2007, the MSRC approved a one-year contract term extension, contingent upon the City executing an agreement within six months with an agency on whose purchase they would “piggyback.” The City was unable to meet this deadline. On June 30, 2008, the MSRC considered a new/replacement contract for the City as part of the FY 2004-05 Work Program. Further details are described below in the Proposals section.

FY 2008-09 Work Program

Alternative Fuel School Bus Incentive Program

As a part of the FY 2007-08 Work Program, the MSRC allocated a total of $1.42 million for the Alternative Fuel School Bus Incentive Program to provide buydown incentives for school districts. To implement the Program, the MSRC awarded contracts to A-Z Bus Sales and BusWest, with each qualified vendor initially awarded $300,000; subsequently, A-Z Bus Sales’ contract value has been increased due to sales performance. At its August 21, 2008 meeting, the MSRC considered a request from A-Z Bus Sales for an additional $600,000 for purchase orders from two school districts; further details are provided below in the Proposals section.

Local Government Match Program

Also as a part of the FY 2007-08 Work Program, the MSRC released a $3 million Local Government Match Program Announcement #PA2008-02. One of the eligible categories provided for a dollar-for-dollar match, up to $25,000 per vehicle for heavy-duty alternative fuel vehicles. Funding for all eligible categories was to be distributed on a first-come, first-served basis with a geographic minimum per county of $375,000. In June 2008 the MSRC approved funding totaling $4,189,435 for 29 applications (using the $3 million originally allocated in the FY 2007-08 Work Program plus $1,189,435 from the FY 2008-09 Work Program. It was subsequently determined that a portion of the City of Irvine’s request for funding, while received on the first day, was inadvertently misplaced and not included in the original funding consideration. At its August 21, 2008 meeting, the MSRC considered the City’s request for funding towards the purchase of two heavy-duty CNG vehicles under this Program; details are provided in the Proposals section.

CNG Home Refueling Unit Incentive Program

As part of its FY 2003-04 Work Program, the MSRC allocated $400,000 for the implementation of a CNG Home Refueling Unit Incentive Program. A single manufacturer, FuelMaker Corporation, had developed such an apparatus which they launched into the retail marketplace under the brand name “Phill” in spring 2005. However, Phill was also offered for lease via American Honda. So the MSRC awarded $100,000 to FuelMaker and $300,000 to American Honda, respectively, to provide a $1,000 per unit incentive to Phill purchasers and lessees. This was matched by a $1,000 per unit incentive from AQMD. All funding associated with the FuelMaker contract was fully expended, but American Honda only utilized $4,000 with the $296,000 balance reverting to the AB 2766 Discretionary Fund upon contract termination. At its August 21, 2008 meeting, the MSRC considered further participation in the CNG Home Refueling Unit Incentive Program; details are provided in the Proposals section.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, public notices advertising the Local Government Match Program solicitation and inviting bids were 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 have been notified utilizing AQMD’s own electronic listing of certified minority vendors. Notice of the solicitation was 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 at AQMD’s Web site (http://www.aqmd.gov where it could 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 was also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724. Further, the solicitation was posted on the MSRC’s website at http://www.cleantransportationfunding.org and electronic notifications were sent to those subscribing to this website’s notification service.

Proposal Evaluation and Panel Composition

Applications received in response to the Program Announcement (further outlined under the Proposals section) were 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.

Proposals

At its June 30 and August 21 2008 meetings, the MSRC considered recommendations from its MSRC-TAC and unanimously approved the following:

FY 2004-05 Work Program

As stated in the Background section, the City of La Cañada Flintridge was awarded a contract for $20,000 towards the purchase of a heavy-duty CNG bus. The City was not able to identify a manufacturer who would process an order for a single bus. Therefore, they attempted to identify another public agency purchasing a bus with similar specifications, so they could “piggyback” on an existing purchase contract. In July 2007, the City thought they had identified a suitable opportunity, and the MSRC approved a one-year contract term extension, contingent upon the City executing a piggyback agreement within six months. The City was unable to meet this deadline. However, shortly thereafter La Cañada Flintridge secured an option for a bus purchase. On June 30, 2008, the MSRC unanimously approved a new/replacement 24-month contract for the City in the amount of $20,000 for this purchase.

FY 2008-09 Work Program

Alternative Fuel School Bus Incentive Program

As stated in the Background section, A-Z Bus Sales requested additional funds under the Alternative Fuel School Bus Incentives Program for school districts. A-Z Bus Sales was previously qualified to offer these incentives in response to the MSRC’s Request for Vendor Qualifications in FY 2007-08. A-Z Bus Sales has received orders from the Redlands and Desert Sands school districts for a total of six CNG and six propane Bluebird school buses. The propane buses would each be eligible for a $40,000 incentive and each of the CNG buses for a $60,000 incentive, totaling $600,000. All of the $1,480,000 awarded to A-Z Bus Sales under the MSRC’s FY 2007-08 Work Program has either been expended or purchase orders have been issued against it. Therefore, A-Z Bus Sales requested an additional $600,000 to cover the buydown incentives for these twelve buses. On August 21, 2008, the MSRC approved $600,000 for an Alternative Fuel School Bus Incentive Program as part of their FY 2008-09 Work Program, and the MSRC awarded A-Z Bus Sales this $600,000 in order to provide the full incentives for the ordered buses. The sole-source justification is provided below.

Local Government Match Program

As stated in the Background section, as an element of their FY 2007-08 Work Program, the MSRC released a Local Government Match Program Announcement #PA2008-02. On June 30, 2008, the MSRC unanimously approved funding totaling $4,189,435 for 29 applications, using the $3 million originally allocated to the Local Government Match Program from the FY 2007-08 Work Program plus $1,189,435 from the FY 2008-09 Work Program. Subsequent to this action, which was approved by the AQMD Board on July 11, 2008, staff discovered that the City of Irvine had requested funding for the purchase of two heavy-duty vehicles which were not included in the MSRC’s earlier consideration. The City had already been awarded $9,000 for remote vehicle diagnostics for up to 36 vehicles. On August 21, 2008, the MSRC unanimously approved augmenting the City of Irvine’s initial award by $50,000 for the purchase of two heavy-duty CNG vehicles for a total award of $59,000.

CNG Home Refueling Unit Incentive Program

As mentioned in the Background section, the MSRC previously participated in a CNG Home Refueling Unit Incentive Program as an element of their FY 2003-04 Work Program. The MSRC’s $1,000 per unit incentive was matched by $1,000 from AQMD. Once the $100,000 in MSRC’s contract with FuelMaker was exhausted, AQMD took action to augment their FuelMaker contract to continue to provide incentives at $2,000 per unit due to the heavy demand for the device. At its August 21, 2008 meeting, the MSRC considered further participation in the CNG Home Refueling Unit Incentive Program. The MSRC approved $296,000 for a CNG Home Refueling Unit Incentive Program as a part of their FY 2008-09 Work Program and awarded a $296,000 sole-source contract to FuelMaker, with an incentive level of $2,000 per unit. MSRC funds would be utilized after the AQMD’s incentives have been fully expended. The sole-source justification is provided below.

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 under the FYs 2004-05 and 2008-09 Work Programs.

Sole-Source Justifications

1. Alternative Fuel School Bus Incentives Program: As an element of its FY 2008-09 Work Program, the MSRC allocated $600,000 to provide incentives for alternative fuel school buses. 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 the pursuit of a competitive procurement futile. Such is the case in this instance, since the MSRC completed an RFQ process in February of this year and qualified two vendors: A-Z Bus Sales, which sells Bluebird products; and BusWest, which sells Thomas products. A-Z Bus Sales has submitted documentation of alternative fuel Bluebird school bus orders from school districts which exceed the total amount awarded to them by the MSRC. A-Z Bus Sales is the only MSRC-qualified vendor able to fulfill the latest orders for Bluebird propane and full-sized CNG buses. Therefore, this request for a sole-source award of $600,000 to A-Z Bus Sales is made under provision VIII.B.2.c.(1): the desired services are available only from 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. CNG Home Refueling Unit Incentive Program: As discussed in Proposals above, the MSRC identified an opportunity to encourage the use of CNG vehicles by the general public by providing incentives for the purchase of home refueling units. 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. FuelMaker is the only company which currently manufactures a home-based indoor CNG refueling appliance. Therefore, the request for a sole-source award is made under Section VIII.B.2.c.(1): The unique experience and capabilities of the proposed contractor or contractor team.

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.