KFB MASTER Lars G Ortegren KFB-Meddelande 1999:12 I TlTELITITLE PUBLICERINGSDATUMlDATE PUBLISHED Co-ordinated procurement of vehicles July, 1999 within the Zeus project UTGIVARElPUBLISHER F~~RFAT"AREIAUTHOR KFB - Swedish Transport and Lars G Ortegren Communications Research Board, SERIElSERIES Stockholm KFB-Meddelande 1999:12 KFBs DNR 1996-696 ISSN 1401-1271 ABSTRACT (Aim,Method, Results The main objective of the ZEUS Project is to put into service a considerable number of zero or low emission vehicles. This requires purchasing efforts, either individually by each ZEUS city, or as a co-ordinated effort by several of the cities. In the case of electric vehicles, it was decided to apply a co-ordinated procurement process aiming at framework agreements to form the contractual base for the purchase by several cities on more or less identical terms. The ZEUS Procurement Consortium (ZPC) was formed for this purpose. This report provides a description of the procurement process used, and the experience gained from this application. It also summarises the contractual results and data for the vehicles purchased. To provide a basis for comparing co-ordinated and non-co-ordinated procurements, the reports also briefly summarises the result of individual purchases by the ZEUS cities. This report should be seen as the first part in a series of two. The second part is planned to deal with early operating experience from the vehicles purchased. I Kommunikationsforskningsberedningens- KFB - publikationsserierredovisar forskare sina projekt. Publiceringen innebar inte att KFB tar stallning till framforda Bsikter, slutsatser och resultat. KFB-ra orter forsaljs genom Fritzes Offentliga Publikationer, 106 47 Stockholm. Tel: 08-690 91 90, fax: OS-gfO 91 91, e-post: [email protected] internet: www.fritzes.se Ovriga KFB-publikationer bestalls och erhllls via KFB. Man kan dessutom abonnera pB tidningen KFB-Kommunik6. KFB Reports are sold through Fritzes', S-106 47 Stockholm. Other KFB publications are ordered directly from KFB , DISCLAIMER Portions of this document may be illegible in electronic image products. Images are produced from the best available original document. I KOMMUNIKATIONS FORSKNINGS BEREDNINGEN Co-ordinated Procurement of Vehicles within the ZEUS Project Lars G Ortegren Contents: 1. Background P. 3 2. Introduction P. 3 3. ZPC: Organisation, work distribution and time schedule P- 5 4. Choice of procurement procedure P. 6 5. Initiation of procurement and selection of tenderers P. 7 6. Preparation of Invitation to Tender P. 8 7. Tender evaluation criteria p. 10 8. Evaluation of tenders p. 11 9. Resulting framework agreements and supply contracts p. 12 10. Experience of co-ordinated procurement p. 15 11. Local (non-co-ordinated) procurement of vehicles and refuelling equipment for the ZEUS Project p. 25 12. Co-ordinated procurement for the ZEUS Project in comparison with alternative procurement processes. Attitudes of suppliers. p. 26 13. The tendered vehicles - experience and reflections p. 28 14. Conclusions p. 29 2 1. Background The ZEUS Project, supported by THERMIE at the European Directorate for Energy, is a joint 3-year effort by eight European cities to introduce and demonstrate zero and low emission vehicles in their urban environments. The Project was launched in December of 1996 by Athens/Amaroussion of Greece, Bremen of Germany, Copenhagen of Denmark, Helsinki of Finland, LondodCoventry of England, Luxembourg, Palermo of Italy and Stockholm of Sweden. The ZEUS Project has identified several horizontal issues to be jointly pursued by the participating cities, each horizontal issue being co-ordinated by one of the cities. One of these horizontal issues has been named "Co-ordinated procurement" with Stockholm as the city with the primary responsibility. Based on the general objectives of the ZEUS Project, the objectives of this horizontal issue has been detailed as follows: Help remove market obstacles that hinder the widespread use of zero and low emission vehicles. Endeavour to: Reduce high initial cost of vehicles Establish a re-fuelling and maintenance infrastructure Reduce the perceived high technical and economic risks' associated with alternative fuel vehicles Take advantage of available incentives for early market penetration 2. Introduction This report deals with the procurement of vehicles within the ZEUS Project. A forthcoming report will summarise early experience from the operation of the procured vehicles. Procurement of vehicles within the ZEUS Project has been conducted both as a co- 3 ordinated effort by certain cities, and by individual efforts by each city. This report will concentrate on the results of the co-ordinated procurement, but it will also summarise the results of the individual procurement efforts. The objectives, as detailed in chapter 1, has formed the basis for the identification of certain general strategies to be pursued during the course of the project. In summary these strategies are: Try to maximise the purchasing volume as a means of reducing the high initial cost of vehicles; Try to accomplish parallel efforts by both suppliers and purchasers in the development of a refuelling and maintenance infrastructure; Try to reduce the perceived high technical and economic risks by a well considered design of each procurement contract. Identify and take advantage of available economic incentives as a means of reducing life cycle costs in this early market penetration phase. In the early phase of the ZEUS Project, it was decided to form the ZEUS Procurement Consortium (ZPC) as a forum for preparation and conduct of co-ordinated vehicle procurement. The basis for membership in ZPC was the common interest in the procurement of specific types of vehicles, notably electric and gas-adapted vehicles. On that basis, the following cities joined ZPC: The City of Athens, of Greece; The Municipality of Amaroussion, Greece, represented contractually by its Development Company; The City of Copenhagen, Denmark; The City of Coventry, England; The London Boroughs of Camden, Southwark and Sutton, England; The City of Palermo, Italy; The City of Stockholm, Sweden, represented contractually by its procurement and logistics arm,Stockholm MFO. The general scope of work done within ZPC has been as follows: Prepare and agree on performance and other user requirements; Agree on the procurement process; Prepare and agree on an Invitation to Tender; Evaluate tenders and agree on preferred tenders; Negotiate Framework Agreements and Supply Contracts with the preferred tenderers. 4 3. ZPC: Organisation, work distribution and time schedule All decisions within the framework of ZPC has been taken by a Project Group with one or more representatives of each member. Key decisions, such as acceptance of draft contracts, has been subject to internal briefings by the representatives and decisions by each respective decision maker. The following individuals have served as Members of the ZPC Proiect GrouD: Municipality of Amaroussion and Ms. Eleni Maglara, Environmental Programmes Athens: Co-ordinator, Central Union of Local City of Authorities of Greece; City of Copenhagen: Mr. Niels Jensen, Danish Co-ordinator for the ZEUS Project, Road Department; Ms. Jette Kjaer, Head of Section, Department of Construction and Technology; City of Coventry: Mr. Myles Mackie, Strategy Officer, City Development Directorate; London Borough of Camden: Mr. Geoff Warren, Section Head, Transport Planning; Mr. Bob Turner, Senior Transport Planner; Mr. Malcolm Norton, Head of Transport Services; London Borough of Southwark Mr. John Whitlow, Head of Corporate Purchasing; Mr. David Solman, Principal Officer Planning Policy and Research; London Borough of Sutton: Mr. Helmut Lusser, Managing Director, Global to Local, Ltd., and UK Co-Ordinator for the ZEUS Project; Mr. John Grice, Contract Services; Mr. John Griffith, Transport; City of Palermo: - Mr. Antonio Mazzon, Urban Environment Group; City of Stockholm: Mr. Mattias Lundberg, Environment and Health Protection Administration (EHPA), Issue Co- ordinator (until September 13, 1997); Mr. Charlie RydCn, EHPA, Issue Co-Ordinator (from September 14, 1997); Mr. Sven Alexanderson, Head of Vehicle Division, Stockholm MFO; Mr. Lars G. Ortegren, Lars G Ortegren AB, consultant to Stockholm MFO. 5 In addition to the above mentioned Project Group Members, the following experts have joined certain Project Group meetings: Mr. Jonathan Murray, Energy Saving Trust (UK); Mr. Olof Ohlsson, Stockholm Energi AB; Mr. Hans G. Pettersson, Swedish Transport and Communications Research Board; Mr. Lars G Ortegren of Lars G Ortegren AB, a Swedish consultant company, has served as the combined advisor to and chairman of the ZPC Project Group. In addition, he has prepared most draft documents, including User Requirement Specifications, Invitation to Tender, tender evaluation documents, and draft contract documents. He also served as secretary at the meetings of the Project Group and assisted the Project Group in its negotiations with suppliers. A total of seven formal meetings have been held by ZPC Project Group, each meeting documented by Minutes. In addition, a considerable fax communication between the Project Group chairman and the Project Group members, has served as a means of information and reaching intermediate decisions between meetings. A time schedule was established during the initial phase of ZPC’s project work and has been updated on a couple of occasions. The latest version is attached as Appendix 1. It is intended,