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.
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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, in the context of this report, mainly to show the flow of work and the time needed to accomplish certain intermediate goals. Due to the implication of tenders and the need to adapt parts of the procurement strategy, the final activities of the time schedule - negotiations - has taken considerably longer than originally expected.
4. Choice of procurement procedure
The applicable European Council Directive, Council Directive 93/96EEC of 14 June 1993 regarding ”Co-ordinating procedures for the award of public supply contracts” offers three main alternative procedures for the procurement of the kind anticipated for ZPC and its members. These main alternatives are:
- Open procedure (“whereby all interested suppliers may submit tenders”); - Restricted procedure (“whereby only those suppliers invited bythe contracting authorities may submit tenders”); - Negotiated procedure (“whereby contracting authorities consult suppliers of their choice and negotiate the terms of the contract with one or more of them”).
ZPC decided to apply the restricted procedure for the following main reasons:
- Potential suppliers of the kind of vehicles that ZPC members intended to procure were well known; - A considerable number of small-scale firms are known to develop this kind of vehicles, but most of them lack the capability to manufacture to the standards required and to provide the required after-sales service. It was considered to mislead such developing firms by applying the open procedure.
However, in order not to miss the potential of competitive tenders from certain small-scale firms, it was also decided to publicly announce the forthcoming tendering opportunity and
6 allowing others than the ones pre-selected by ZPC to apply for permission to tender by submitting a qualifying statement.
Note: Due to the contents of tenders for certain categories of vehicles, ZPC later revised their strategy with regard to the procedure applied for this particular vehicle category, see Chapter 9.
5. Initiation of procurement and selection of tenderers
ZPC's choice of procurement strategy was confiied by two notices in Supplement to the Official Journal, 97/S34 -15901EN and 97/S34 - 15909EN, both published 18 February 1997, see Appendix 2. Induded in these notices are the technical and economic criteria to be met by suppliers wanting to submit a tender.
As a result of publication of the above mentioned notices, applications to submit tenders were received from six companies. All of these applicants were granted permission to submit tenders, however, in most cases with reservations regarding the degree of their meeting the qualification criteria and corresponding requirements for complementary information andor statements to be provided as part of their tenders.
In addition to the aforementioned six applicants, eight major automotive manufacturers had been pre-selected by ZPC as prospective tenderers, based on existing technical and economic information and their past performance as supplier of the kind of vehicles to be procured by ZPC. It was presupposed, however, that these pre-selected companies would be requested to prove, as part of their tenders, that they meet the same criteria as the ones announced in Supplement to the Official Journal.
ZPC decided to follow common practice for this kind of procurement and not disclose the names of those pre-selected and those accepted as tenderers after application. It may be of some general interest for the reader of this report to know what the geographical locations of these parties were ("Country of origin"), see table below.
Country of origin Number of prospective tenderers Czechia 1 Denmark 1 Finland 1 France 3 Germany 3 Italy 1 Japan 1 Sweden 1 United Kingdom 1 USA 1
7 6. Preparation of Invitation to Tender
Following discussions within the ZPC Project Group, it was decided to structure the forthcoming Invitation to Tender as follows:
* Background information Purpose of this Invitation to Tender The ZEUS Project and the ZEUS Procurement Consortium (ZPC) The prospective purchasers Specification of User Requirements: General comments, interpretation Foreseen categories and number of vehicles to be purchased Evaluation of performance Foreseen approximate time schedule Framework Agreement Enquiries
* General requirements for acceptance of tenders Address and marking Number of copies, format Time limit for receipt of tenders Validity of tender Structure of tender * Specific requirements on the content of tenders General information on Tenderer and his local distributors Financial information Tenderer's technical capabilities Statement regarding Tenderer's meeting Specification of User Requirements Proposed delivery time schedule Technical description of Baseline Vehicle Technical performance of Baseline Vehicle Technical description of optional equipment and auxiliaries Tenderer's maintenance and service organisation Price quotation for Baseline Vehicle Price quotation for the addition of optional equipment and auxiliaries Price quotation for certain spare parts Offer for warranties Tenderer's concurrence with proposed contractual arrangements
* Treatment and evaluation of tenders by ZPC Confidential treatment of tenders Tender evaluation criteria Rights to reject tenders
8 The above structure required the addition of three appendices to be included in the Invitation to Tender document. These appendices should deal with:
1. Specification of User Requirements 2. Draft Framework Agreement and Supply Contract 3. Formfor Tenderer's statement of compliance with Specification of User Requirements
The work to prepare the I" document started by preparing a Draft Specification of User Requirements (SUR) to contain all essential requirements by the foreseen vehicle users for meeting safety standards, operation, performance, environmental impact and maintainability. It was agreed to apply the following general strategy when preparing the SUR:
- Limit requirements to those essential for the users; - Do not impose unnecessary requirements for vehicle design and manufacturer's choice of components; Adapt performance and other requirements to what is known to be commercially feasible within the immediate near future. - Distinguish between mandatory requirements, imposed by laws and government regulations, and other requirements;
All ZPC Project Group members were given an opportunity to discuss the contents of the Draft SUR with their respective local colleagues and supervisors before the document was finalised for inclusion in the SUR.
Similarly, other parts of the I" document were drafted by the Project Group Chairman /Secretary, discussed at Project Group meetings, and reviewed by each Project Group member and his local colleagues and/or supervisors before final acceptance.
Certain parts of ZPC's Invitation to Tender are believed to be rather unique when compared with similar documents. One such unique feature is the inclusion of draft contract documents. The background and reason for inclusion of this feature is primarily that the objective of this procurement was to negotiate a Framework Agreement between the selected tenderer and all or most of the ZPC members. Experience from similar procurements tells that the negotiations of such agreements tend to be very time consuming if the parties are not in principal agreement on the structure and basic terms and conditions beforehand. The inclusion of such draft contract documents in invitations to tender tends to be the rule in several other trades, but so far not in the automotive trade.
A particularly innovative feature of ZPC's Draft Framework Agreement is the inclusion of an oDtion right transfer mechanism. The reason for this feature goes back to one of the strategy points referred to in Chapter 2, i.e. the effort to maximise the purchasing volume as a means of reducing the high initial cost of vehicles. As the purchasing power of the ZPC members is after all limited, there is a need to find ways to attract interest from third parties who may find the terms and conditions of the foreseen ZPC Framework Agreement to be more attractive than those possible negotiable by themselves. The option right transfer mechanism is intended to work as follows:
Each ZPC member obtains a certain number of option rights, and each option right grants him the right to buy one additional vehicle on the
9 same conditions as those applicable to the vehicles that he is buying as part of his initial purchasing commitment;
Each ZPC member has the right either to use one or more of his option rights for the purchase of vehicles for his own use, or to transfer them to a third party (“option applicant”) to be identified in the Framework Agreement for acceptance by the supplier;
Once an option right has been transferred - as a result of a very simple administrative procedure - then the remaining business transactions is a matter only between the supplier and the option applicant.
A probably less unique feature of ZPC’s ITT document is the firm requirement for structure and content of the tenders. This is to simplify the evaluation and comparison of tenders, and to make the selection of tenders for negotiations fair to all tenderers.
Initially, two I?T documents were foreseen to be issued: one for electric or hybrid-electric vehicles, and another for vehicles adapted to the use of compressed natural gas or biogas (gas- adapted vehicles). However, as the result of in-depth discussion within the ZPC Project Group, it was concluded that the relatively low purchasing volume in combination with the fact that only two ZPC members had the intention to purchase gas-adapted vehicles, would make a co-ordinated procurement less cost-effective than previously foreseen. It was therefore decided not to make gas-adapted vehicles subject to a co-ordinated mocurement but to take advantage of other cooperation opportunities between the parties concerned when procuring gas vehicles.
In the case of electric or hybrid-electric vehicles, it was decided to specify a requirement for three categories of vehicles:
A: Four seat cars; B: Two seat cars; C: Car derived vans.
The final ITT document was released and sent to all fourteen prospective tenderers on April 1lth, 1997. It required tenders to be submitted on or before May 21st, 1998. Following requests from tenderers for the van category, the tender deadline for that vehicle category was later postponed until June 25, 1997.
A copy of the full I”document, “Invitation to tender for the supply of electric or hybrid- electric cars and vans” can be obtained by writing to the following address:
Stockholm MFO Att.: Mr. Sven Alexanderson P.0 Box 30057 S-104 25 Stockholm Fax: t-46 8 695 0063
7. Tender evaluation criteria.
The ZPC decided to use an arithmetic model for its evaluation of tenders as a means of securing a fair evaluation with no irrelevant concern for the origin of tender etc. It was
10 decided to start the evaluation process by applying this model and then superimpose on the result non-quantifiable factors such as exterior and interior design, manufacturers past performance and concurrence with ZPC’s proposed contractual arrangements.
The design of ZPC’s tender evaluation model is based on an economic analysis of the impact of deviations from certain performance requirements and of economic parameters other than vehicle price. The analysis uses the quoted vehicle price as its point of departure, and each performance deviation then results in a correction of that price. Similarly, each economic parameter serves as a basis for further correction. The correction formula differs between parameters in a way that reflects their respective impact on life cycle cost. The end result is a fictive price that reflects cost to the purchaser of each tendered vehicle. Taken into account in the evaluation model are the following parameters:
- All performance data that has been qualified by the tenderer in comparison with the corresponding requirement stated in the Invitation to Tender; - Duration of warranty, for the basic vehicle and for the traction batteries; - Price quoted for certain spare parts; - Tenderers stated maintenance preparedness; - Ability to accept fast charging combined with the identification of compatible, commercially available fast or semi-fast charging equipment;
8. Evaluation of tenders
A total of nine tenders had been received when the last deadline (June 25, 1997 ) had passed. Two of these tenders were issued by the same manufacturer, but directed to two different ZPC members, The following table show the number of tenders coming from each manufacturing country (”country of origin”):
~~ Country of origin Number of tenders Denmark 1 Finland 1 France 4 Italy 1 United Kingdom 1
Each tender was subject to an initial check for completeness, compliance with the requirements of the ITT, and need for clarification. As it turned out, all tenders were found to require clarifications, but to different extents. The first step was then to confirm receipt of each tender and specify the need for clarification. One of the tenderers was unable to provide all the needed clarifications in the time requested, and was therefore informed that his tender would be evaluated on the basis of information available to ZPC at the clarification time dead- line. Two of the tenders required visits by a ZPC team for the purpose of clarifying technical and financial capabilities, state of development and technical performance.
11 The second step consisted of a computer-assisted evaluation of each tender based on the agreed arithmetic model, using a tailor-made Excel program. The results of these preliminary evaluations were discussed and analysed by the ZPC Project Group, and it was subsequently decided to let these evaluation results constitute the formal basis for the superimposing of non-quantifiable factors.
ZPC’s Invitation to Tender was issued with the expectation that tenders would direct themselves to all ZPC members, and that negotiations could be limited to one Framework Agreement per each of the three vehicle categories. It turned out that several tenders limited their validity to some but not all ZPC members. The reasons for such limitations were primarily one of the following:
- Vehicles that meet the left-hand steering requirement for the UK could not be supplied; - The maximum ambient temperatures expected for certain ZPC member territories would result in charging difficulties for the kind of traction batteries specified by the tenderer; - The tenderer’s conclusion that sufficient after-sales service could not be economically justified in certain countries.
The following table illustrates the aforementioned limitations of some tenders. Tender code names were used throughout the evaluation and negotiation phases in order to maintain confidentiality.
Tender code Tender for vehicle category Tender for cityhegion
A 2-seat cars, vans All C All All except UK E AI1 All G 2- and 4-seat cars Stockholm J 2- and 4 seat cars UK L 4-seat cars, vans Stockholm N 4-seat cars All P Vans All R Vans Copenhagen
The preliminary evaluation, based on the arithmetic model, together with the limitations imposed by some of the tenders provided clear indications for ZPC’s choice of tenderers for. negotiations for vehicle categories A and B. In the case of vehicle category Cy ZPC concluded that, except for the tender directed to Copenhagen, no tender satisfied ZPC’s requirements. It was decided, therefore, to apply a negotiated procurement procedure in an attempt to satisfy the requirements of Palerrno, Stockholm and the UK members of ZPC. This decision was officially confirmed by a notice in the Supplement to the Official Journal of the European Communities, dated 8 October, 1997 ( 97/S 195 - 125641EN).
9. Resulting framework agreements and supply contracts
Negotiations with selected suppliers were initiated in September of 1997 and have since resulted in four different contracts, the main features of which are summarised below.
12 9.1 Framework ameement with Fiat Auto
The frame work agreement with Fiat Auto will result in deliveries of a new type of car that has been designed, from the outset, to have an electric propulsion system. It has not yet been launched in the open market.
Supplier: Fiat Auto S.p.A., Italy.
Purchasing cities: Amaroussion, Athens, Copenhagen, Palermo, Stockholm.
Contract form: . Framework agreement with attached product specification, supply contract (pre-negotiated, one for each purchasing city), list of option applicants (parties accepted by supplier for transfer of purchase option rights), list of optional deliverables ( deviations from the defined baseline vehicle), and warranty conditions.
Vehicle: Electric car, Fiat 600 Elettra, see Appendix 3 for main data.
Firm purchasing 127 vehicles. commitment by ZPC members:
Total number of purchase option rights: 99.
Deliveries to start: July of 1998.
9.2 Sumlv contract with Citroen Danmark
This supply contract will result in deliveries of a new type of electric vans, the basic platform of which is common for both electric vehicles and those propelled by internal combustion engines. The electric model has not yet been launched in the open market.
Supplier: Citroen Danmark A/S, Denmark.
Purchasing city: Copenhagen.
Contract form: Supply contract with integral product specification, list of optional deliverables and warranty Conditions.
Vehicle: Electric van, Citroen Berlingo Electrique, see Appendix 4 for main data.
Firm purchasing 10 vehicles. commitment by ZPC member:
Total number of purchase option rights: 10.
13 Deliveries to start: March of 1998.
9.3 Framework agreement with Peugeot Motor Company (UK)
The supply contract with Peugeot of UK will result in deliveries of a vehicle that has already proven itself in selected markets, but that has still not been openly marketed in the UK.
Supplier: Peugeot Motor Company, plc, UK.
Purchasing cities: City of Coventry; London Boroughs of Camden, Southwark and Sutton.
Contract form: Framework agreement with attached product specification, supply contract (pre-negotiated, one for each purchasing city), list of optional deliverables ( deviations from the defined baseline vehicle), and warranty conditions.
Vehicle: Electric car, Peugeot 106 Electrique, see Appendix 5 for main data.
Firm purchasing 15 vehicles. commitment by ZPC members:
Total number of purchase option rights: 117.
Deliveries to start: March of 1998.
9.4 Framework Agreement with Automobiles Citroen
This framework agreement will result in deliveries of the same type of electric van as in Section 9.2 above. However, this particular agreement is the result of a negotiated procurement procedure whereas the one referred to in Section 9.2 is the result of a selected procedure based on a tender that was directed only to Copenhagen.
Supplier: Automobiles Citroen S.A., France.
Purchasing cities: City of Coventry; London Boroughs of Camden, Southwark and Sutton; Palermo; Stockholm.
Contract form: Framework agreement with attached product specification, supply contract (pre-negotiated, one for each purchasing city), list of option applicants (parties accepted by supplier for transfer of purchase option rights), list of optional deliverables ( deviations from the defined baseline vehicle), warranty conditions, conditions for rental of traction batteries.
14 Vehicle: Electric van, Citroen Berlingo Electrique, see Appendix 4 for main data.
Firm purchasing 27 vehicles. commitment by ZPC members:
Total number of purchase option rights: 277.
Deliveries to start: April of 1998.
10. Experience of co-ordinated procurement
10.1 General overview
When considering a co-ordinated approach to procurement from a principal point of view, the following advantages should be expected:
- Larger purchasing volume, resulting in lower prices; Greater negotiating strength; - Less need for work by individual purchasers in the preparation of tender documents, evaluation of tenders, and contract negotiations; - An opportunity to share the experience of other purchasers.
A co-ordinated approach should in principal also be expected to have some potential drawbacks:
- Need to compromise regarding performance requirements and evaluation criteria; - Need to keep pace with purchasing colleagues in local decision making;
The experience gained by ZPC shows that a co-ordinated procurement does result in competitive prices, i.e lower than those paid for comparable vehicles purchased individually. However, this conclusion should be drawn with some caution in the case of new, low-volume products like electric vehicles. It is obvious that the general policies and marketing strategies of suppliers tend to have a large influence on price. Suppliers with a real interest in a reasonably quick market penetration tend to be prepared to sacrifice initial profits by lowering their prices and not necessarily require that overheads to pay for all development costs be - applied. ZPC’s experience also tells that suppliers who are just about to launch a new product appreciate the kind of “marketing assistance” that a co-ordinated procurement represents.
Some suppliers apply more strict policies to their marketing than others. This has been reflected in the resistance by one particular supplier to adapt to the contract format proposed and preferred by ZPC. The background for this resistance is believed to be the fact that the car trade is traditionally a producer-dominated business where individual purchasers are rarely allowed to deviate from the rules dictated by the supplier. Most car manufacturers also have agreements with their distributors that limits their freedom to negotiate contracts on a central, co-ordinated level.
15 It is clear from ZPC’s experience that a co-ordinated approach does indeed increase the negotiatine strengths of purchasers. This is demonstrated by the acceptance by suppliers of certain contract conditions that is very uncommon in the automotive trade. Examples of such unusual conditions used in the ZEUS Project are:
Supplier’s specified commitment to maintenance preparedness over time; Supplier’s acceptance of limits to spare parts prices; Supplier’s acceptance of sanctions in case of late deliveries; The aforementioned option rights transfer mechanism.
ZPC’s experience, as seen by the Project Group Chairman, confirms a potential problem, e.g. that of participating cities’ keeping pace with eachother, and with the agreed time schedule. The reason behind this problem may differ from city to city, but is believed to depend primarily on one or more of the following factors:
The city representative in the Project Group has several other duties, and he cannot always give the ZPC Project priority; The city representative relies more or less heavily on the advice or decisions by his colleagues and superiors who may or may not be accessible for the moment; Political and administrative changes, lack of local support, resistance from decisionmakers; The use of a common project language (English) requires more time and sometimes translation for local reviews and discussions.
10.2 ExDectations and exDerience of DarticiDatinn cities.
This section is based on the responses by the ZPC Project Group members to a questionnaire from the Group’s Chairman. When interpreting the response, one should note that the responses were provided in December of 1997, i.e. at a time when the negotiated contracts had not yet resulted in any vehicle deliveries.
The remainder of this section is structured as the questionnaire, i.e. each headline is identical with a question in the questionnaire (all questions in italics ). The following ZPC Project Group members have provided the responses:
Athens & Amaroussion (A&A). Ms. Eleni Maglara; Copenhagen (CPH): Mr. Niels Jensen; Palermo (PAL): Mr. Antonio Mazzon; Coventry & London Boroughs (UK): Mr. Helmut Lusser; Stockholm (STO): Mr. Sven Alexanderson, Mr. Mattias Lundberg.
Each response is represented below by the respective abbreviation used above. As the number of respondents is only five, the answers given does not allow a statistical treatment.
Before joining the co-ordinated (ZPC)procurement, which expectations on its results did you have?
16 UK: Lower prices; accelerated learning curve in terms of identifying best value vehicles; understanding of market opportunities.
CPH: Much better market situation with more makes and models available; a particular car model offered to ZPC at a favourable price, new types of batteries allowing a longer range than 100 km.
STO: Low prices; better technology; better traction batteries.
A&A: To reach the best agreement in technical, financial and operational terms; to acquire the most integrated information about the current situation concerning the EV market in Europe.
PAL: To purchase vehicles with best possible quality-price rate through a transparent and clear procedure.
Before joining the co-ordinated (ZPC)procurement, which major obstacles did you foresee for a successful completion?
UK Instability or unwillingness of motor industry to deliver; problems of agreeing on common specifications.
CPH: Difficulties in securing purchasing commitments within the city due to a change of administration policy by a major city department which backed out from the original ZEUS concept as it appeared in the ZEUS Project application; this limited the number of cars purchased to only 20.
STO: Too many types of vehicles; negotiations with the manufacturers; difficult to agree on one Invitation to Tender due to different standards in the cities; language difficulties; different climate conditions.
A&A: Bureaucratic problems concerning slow information flow between the parties; different opinions about technical requirements and tender evaluation cr iteria.
PAL: The need to find a common solution for the different European cities, as well as the difficulty to work outside the local administration,
Which of the obstacles that you foresaw did actually materialise in the ZPC procurement?
UK: It took a while to agree on common requirements, and this was an interesting learning curve as it required that several parties within the region agreed between themselves. It* is interesting and an indication of the trust and team work that has developed that two of the regional parties were prepared to let two other regional parties lead on the final supplier visits and choices.
CPH: We had to sign contracts with two suppliers before we actually had purchasing commitments from the end users. Because of a reconstructed city administration (new mayors), we experienced problems with the required decision making, especially concerning contractual obligations.
STO: Too many types of vehicles; problems in attracting tenders that are valid for all cities (due to lefdright steering wheel position); different climate conditions (too hot or too cold).
17 A&A: We only faced some bureaucratic problems in signing the necessary documents.
PAL: We think that the representatives of every city have agreed and found good and fair enough solutions for everybody.
What is, in your opinion, the most positive experiencefrom the co-ordinated procurement within the ZEUS Project?
UK The realisation that we can influence the market quite fundamentally, with a relatively modest leverage; the experience of working as a team and building consensus in areas where fleet managers tend to be fairly individualistic.
CPH: That it was possible to agree within ZPC on at least one common vehicle model.
STO: The transfer of different experience within the field; creation of a network; creation of new project ideas; learning by participating in the procurement process.
A&A: City administrations had less workload due to the co-ordinated actions taken by ZPC. Moreover, the best possible terms with less applied effort were obtained in the framework agreement.
PAL: The opportunity to work with civil servants from other European municipalities; the acquisition of a know-how based on the more modern technologies in Europe in the field of electric vehic1es;the opportunity to be in touch with high-level professionals.
What is, in your opinion, the most negative experiencefrom the co-ordinated procurement within the ZEUS Project?
UK: Perhaps the time and effort required - but then it was spiced with all sorts of additives.
CPH: The very few makes and models actually available to the market.It was a major problem to commit to purchasing a particular vehicle before it was available for demonstrations. Today, we would not do the same thing again.
STO: Old technology offered, lack of innovative technology (such as new batteries); few types of vehicles on the market; only a few of the tenderers implied offers to all ZPC cities.
A&A: Cannot think of any experience obtained through this (ZEUS) agreement as a negative one.
PAL: The difficulty to co-ordinate the slowness of the bureaucracy of the municipality with the quickness of the consortium - we hope to be able to develop quicker procedures within our municipality.
Regarding your own city or region: Describe your own role in the co-ordinated procurement and define your own position in your organisation. If you work outside a purchasing cityhorough, please describe the nature of your own organisation and its relation to the purchasing cityhorough.
18 UK My role was that of co-ordinating the efforts of the region’s cities in this matter. I was appointed by the UK co-contractor to carry out this task as part of my UK project co- ordination role.
CPH: I was one of two persons working on procurement matters, I myself in the city’s road department, and my colleague in the city’s central administration, We had no power to force other departments to purchase electric vehicles.
STO: Two persons have been involved one in his capacity as fleet manager, and the other as project manager for the “Horizontal issue co-ordinated procurement”.
A&A I act as an external consultant to the cities concerned in my region, but I am also responsible for the management of incomingloutgoing information concerning the ZEUS Project and the formulation of strategy.
PAL: I am an engineer and work as a civil servant within the “Environment” Group. Regarding your own city or region: Which other organisations and persons within your city administration (inparticular fleet managers, purchasing and contracting departments) did you interact with during the course of the ZPC procurement? UK: I my regional co-ordination role, I interacted with representatives from fleet management and procurement as well as with city project managers as seen below:
Sutton: Officers responsible for fleet management and purchasing; Southwark Chief Purchasing Officer; Camden: Project Manager, with support of Head of Transport Services; Coventry: Project Manager. Merton: Transport Manager
CPH: An initial effort to cooperate with a fleet manager failed because of his unwillingness to support the co-ordinated procurement effort. Later in the project, we have been cooperating with people with a more positive attitude. Interdepartmental contacts have been facilitated by meetings with heads of the various departments concerned. We also made direct contact with prospective vehicle users and gave them an opportunity to try an electric car.
STO: We utilised the expertise of the local utility company in matters relating to energy supply in general and fast charging in particular.
‘ A&A: I contacted two focal points in each of the two cities concerned in order to investigate the objectives and special terms that the cities wanted to achieve, Both of them were interacting with fleet managers and contracting departments and were giving special indications about what should be expected from the framework agreement.
PAL: Fleet managers, civil servants in the European office, engineers from the city-owned enterprises for gas and electric energy.
The ZPC procurement includes efsorts to identify third parties (“option applicants”) to whom purchase option rights might be transferred.
19 (a) In which categories of organisations did you actively search for option applicants? (b) Estimate the number of days or hours that you and your colleagues spent in order to identifr such option applicants?
UK: (a) Other local authorities and public sector bodies including health authorities; local businesses. (b) So far: several hundred hours for running meetings and events, phone calls, supply of information
CPH: We did not search for option applicants, but gave priority to finding users for the vehicles that we were committing ourselves to.
STO: (a) Transport companies, utilities, municipalities, counties, large enterprises. (b) About 5 days. In addition, and in the specific case of electric vans, we received considerable support from a national government agency, one of the missions of which is to promote energy efficiency and environmental protection.
A&A: We did not give priority to finding option applicants.
PAL: (4 Local authorities. (b) 10 days approximately.
In your opinion, have your efforts to identifr option applicants resulted in the generation of an additional market for electric vehicles, or did “your” option applicants already consider themselves as potential EV purchasers?
UK: We have certainly generated interest, given people options to look at and make electric vehicles a potential reality rather than a pipe dream.Some option applicants were already considering how they could get an electric vehicle. It is important to note that the type of good-standard electric vehicles that has been identified as part of the ZEUS Project were not for sale in the UK before.
CPH: As said before, we did not explicitly search for option applicants, but a Danish- Swedish conference, press releases, newspaper articles and TV programs presenting the electric car plans for of our city has done a lot to make the electric car project known and the public interested. Another major Danish city has shown interest as a prospective option applicant, but is likely to purchase directly from the supplier.
STO:
A&A: Not applicable.
PAL: The option applicants were unaware of the opportunities to use electric vehicles as normal transport vehicles inside the town, and now they are aware of the possibility to take advantage of the ZEUS Project.
How many option applicants did you identifr and how many vehicles could be purchased as a result (in addition to firmly committed purchases and your own options) ?
20 UK Electric cars: 19 option applicants corresponding to a purchase potential of 77 cars. Electric vans: 20 option applicants corresponding to a purchase potential of 117 vans.
CPH: 4-seat cars: One option applicant corresponding to a purchasing potential of 3 cars.
STO: 4-seat electric cars: 8 option applicants corresponding to a purchase potential of 8 cars; Electric vans: 120 option applicants corresponding to a purchase potentia1 of 120 vans.
A&A: We did not identify any option applicant, despite our effort.
PAL 4-seat cars: 3 option applicants corresponding to a purchase potential of 33 cars. .
Compared with your experiencefrom similar non-co-ordinated vehicle procurement projects: (a) Did your personal work load increase or decrease as a result of the eo-ordinated procurement approach? (b) Try to quantifi the increase or decrease. (d Indicate which aspects of the procurement that required significantly more or less work on your part.
UK: (a) There is little experience of similar projects, but this project required a lot of time for agreeing with eachother, meeting at various destinations in Europe etc. (b) Assuming that specifications were required in both cases, this project probably saved time; ( c> Travelling, meetings and building consensus required more time.
CPH: We (our City’s representatives in the ZPC Project Group) have no prior experience of the procurement of cars. Such work is normally handled by fleet managers. It is difficult to compare ZPC’s procurement with a regular car procurement process which typically consists of ordering vehicles that are already openly available in the market. This does not require attendance to meetings in other cities or responding to questionnaires, just a call to the local dealer.
STO: (a - c >> No significant difference.
A&A: (a) My personal workload decreased significantly; (b) About 50% decrease; ( c> My workload decreased because I did not have to deal with all operational details of issues such as investigating the European market, finding and contacting suitable suppliers, determining the technical specifications, structuring the framework agreement, getting the best agreement terms, etc:.
PAL: We do not have a previous experience. Our municipality has positively accepted the approach of the co-ordinated procurement, and I think that such a procedure is going to be used in future EU projects.
21 Compared with your experience from similar non-co-ordinated vehicle procurement projects: Did the overall work load on your city administration increase or decrease as a result of the co-ordinated procurement approach? Try to quantify the increase or decrease and provide any comments regarding the diflerence in end results.
UK: There is nothing which quite compares, but there is clearly a saving by not having to go out on tender locally with all the administrative effort that usually entails.
CPH: We have never worked on a similar project, so we cannot compare.
STO: A work load decrease corresponding to a saving of 3 months’ time.
A&A: The overall work load of the municipalities decreased mainly because it was not necessary for them to find tenderers, nor to run the tender procedure. The whole scheme was clear and simple and the work load was reduced by about 70%. The overall results were the best attainable, since our local contracting departments and fleet managers do not have much experience from the European market. In a case where the target product was already available on our local market, then maybe a co-ordinated procurement would seem unnecessary.
PAL:
Provide examples of any transfer of know-how within your organisation that resulted from the co-ordinated procurement (such transfer of know- how may, for instance, relate to specification of technical requirements, to the procurement procedure, to criteria applied for evaluation of tenders, and to the structure and contents of the resulting agreements and contracts): (a)To and frompeet managers; (b)To and from purchasing and contract managers.
UK: (a) Vehicle availability, what the market offers, performance of a wide range of never seen electric vehicles, technical matters to look for in an electric vehicle, European performance standards for electric vehicles. (b) Prices, availability, peculiarity of electric car manufacturing industry.
CPH: (a) Fleet managers convinced us of their interest in vans rather than passenger cars. Fleet managers also helped to qualify the specification of requirements, in particular with regard to concern for the working environment.
STO: (a) Fleet managers contributed the views and experience of vehicle users, mechanics, engineers;
A&A: (a) Fleet managers acquired the best available current information concerning EVs. They had access to price levels and technical specifications of the electric vehicles now for sale in Europe. Fleet managers provided some good clues concerning the required technical specifications in relation to the foreseen use of the vehicles, such as the required autonomy to serve the needs of a common fleet vehicle. (b) Purchasing and contract managers experienced the procedures
22 required for the formulation of a framework agreement between European partner cities and the suppliers. This experience might be proven really valuable in a future relevant activity. Purchasing and contract managers submitted their knowledge of the contractual terms required for similar transactions in our region.
PAL:
Do you have experience from any other co-ordinated procurement project? If yes, how does the ZPC project compare with your previous experience?
UK: No experience from similar projects. CPH: No experience from similar projects.
STO: The ZPC Project appears to be very similar to the procurement of electric vehicles conducted by a consortium of Swedish fleet users. The ZPC Project adds an international dimension.
A&A: No experience from similar projects.
PAL: No experience from similar projects.
What kind of transfer of know-how did you experience within the ZPC Project: (4 From your own city to other particbating cities? (b) From other participating cities to your own? (4 From the project co-ordinator or the project consultant to your own city? (4 From your own city to the project co-ordinator or project consultant?
UK: (a) Only some transfer of the early knowledge from the Coventry EV scheme in terms of potential problems with electric vehicles. (b) Experience of other procurement, experience in using these vehicles. ( c) Developing experience on international procurement. (d) Procedures for expedited procurement.
CPH: (a) Our views on the working environment in vehicles. (b) The experience of the Swedish EV procurement proved to be very useful. ( c) Extensive transfer of know how regarding procurement procedures.
STO: (a) Experience from the procurement, practical use and management of electric vehicles. (b) Other means of solving problems; Increased market knowledge. ( c) Know-how regarding international procurement administration, and regarding technical and economic facts concerning electric vehicles. (d) Experience from practical use and needs of vehicles in daily operation.
A&A: (a) Little transfer of know-how since we did not have much experience from the EV market. (b) Significant input regarding technical specifications.
23 ( c) Significant input concerning the determination of technical specifications and setting up the framework agreement. (d) Know-how concerning the contractual term requirements of our cities.
PAL:
Based on your experience from this co-ordinatedprocurement project, will you encourage your own city to get involved in similar co-ordinated procurement projects (not necessarily directed to vehicles)? If yes or no, why?
UK: Yes, this seems to be an ideal way of pushing the market, especially in the areas of emerging environmental technologies. It does not seem to require that much to create some confidence in the market.
CPH: Do not know.
STO: Yes, because it tends to result in lower price and extended know-how.
A&A Yes, because of the better results obtainable by co-ordinated bargains in comparison with individual actions. It is clear that the negotiating power of a consortium can result in better contract conditions.
PAL: Yes, because of the important experience gained at the international level both on the technical field
If your organisation would be involved in another similar co-ordinated procurement, would you - based on your experience from this project - propose a different approach: (a) In terms of general strategiesfor the overall project? (b) In terms of your own city’s organisation and way of dealing with the project?
UK: (a) I think the strategy is right. (b) Probably not fundamentally different.
CPH: (a) I think the process has been run as well as one could hope for. (b) We would try to secure a better political support in our own city.
STO: (a) We would more seriously consider the procurement time schedule in relation to our need for deliveries. (b) We would form a local reference group of EV users and connect that to the procuring organisation.
A&A: (a) No, I do not believe that any significant modification of procedures or contract terms should be applied. (b) Maybe, in order to obtain swifter procedures, a less bureaucratic administrative framework should be considered.
PAL.,:
24 Any other information or comment that relates to your experience of a co-ordinated procurement?
UK This has been a tremendous learning experience for all of us who have not before been part of a similar consortium. I can see this a model for aggressive introduction of new environmental technology in Europe. The work of the Project Group Chairman as a facilitator, driving the technical aspects has been invaluable and much appreciated.
CPH:
STO: We think that participating cities should put more resources into acquiring and providing information from and to different local administrations and EV users.
A&A: Congratulations to the Horizontal Issue Co-ordinator and Project Consultant for a good job!
PAL:
11. Local (non-co-ordinated) procurement of vehicles and refuelling equipment for the ZEUS Project
This chapter deals with the results of efforts that comes outside the scope of the "Horizontal issue co-ordinated procurement and evaluation of vehicle costs". It is included because it is believed to be of interest for any reader interested in the procurement of emerging- technology-type of vehicles. The information provided is limited to a brief summary of technical and economic data for vehicles and related refuelling equipment that has, so far, been purchased within the framework of the ZEUS Project by the individual cities.
11.1 Vehicles and refuelling. eauiDment Durchased bv Bremen
In Bremen the responsibility for procurement has been split between three city-owned companies, resulting in the purchase of different types of CNG vehicles and related refuelling equipment. Bremen also purchased an innovative diesel-electric hybrid bus. See Apuendix 6 for details.
11.2 Vehicles Durchased bv CoDenhagen
Copenhagen has purchased electric cars on their own, besides participating in the ZPC procurement prpoject. It was considered necessary to establish a a few electric vehicles to demonstrate the performance of modern EVs before committing the city to a co-ordinated procurement of similar vehicles.
See Appendix 7 for details.
11.3 Vehicles uurchased bv Helsinki
Helsinki is having a number of city buses converted for propulsion with LPG fuel.
25 See Apuendix 8 for details.
11.4 Vehicles purchased by Luxembourg
Luxembourg has acquired a number of different types of city buses, all specified for the use of RME as a fuel.
See Appendix 9 for details.
11.5 Vehicles. refuelling: and fast charging equipment uurchased or develoued bv Stockholm
Stockholm has purchased five different types of electric or hybrid-electric vehicles. In addition, the city has purchased a distribution truck for biogas, and entered into a joint development of a fast charging station.
See Appendix 10 for details.
11.6 Vehicles and refuelling equipment purchased bv Coventry and London Boroughs
The London Borough of Merton has purchased a number of CNG vehicles, all as a result of negotiated procurement procedures.
See Apuendix 11 for details.
Other London Boroughs and the City of Coventry are in the process of purchasing another number of vehicles.
12. Co-ordinated procurement for the ZEUS Project in comparison with alternative procurement processes. Attitudes of suppliers.
The co-ordinated procurement process applied by ZPC includes a few features that makes it unique in comparison with other known joint procurement efforts. These unique features are primarily the following:
- ZPC consists of partners from five different countries with as many different native languages of the participants; - One common language has been used in all proceedings and contracts; - The products to be procured are based on technologies that still have not reached a mature stage. They are characterised by a lack of readily available infrastructure for operation and maintenance, and also by lack of well established technical standards for design and performance measurements; In order to reduce the technical and economic risks for the purchasers, more than usually strict contract forms have been applied; In order to increase the purchase volume ( as a means of reducing price) an innovative option rights transfer mechanism has been applieA&A:
26 Two of the ZPC parties - Stockholm and LondodCoventry - had different levels of prior experience of EV procurement. Stockholm had been a member of the Swedish ElectricEybrid Car Consortium (SEHCC) which conducted a government-supported procurement of EVs for its 44 members, most of them municipalities and public utility companies, resulting in the purchase of 152 electric cars. The extensive experience gained from this project served as an extremely valuable base for the planning of the ZPC procurement project. The transfer of that experience was facilitated by the fact the chairman of the ZPC Project Group had previously served as a technical and commercial advisor to SEHCC.
When comparing the SEHCC and ZPC projects, a few differences can be noticed:
- SEHCC is a national consortium of buyers - ZPC is an international one; - An innovative mechanism for the transfer of purchase option rights to third parties has been introduced in the ZPC project; - In the case of ZPC, draft contracts were introduced already at the stage of invitation to tender as a means of reducing the time needed for negotiations.
Chapter 10 of this Report summarises the experience gained from a pioneering effort to co- ordinate vehicle procurement over national borders - several advantages as well as a few drawbacks. Chapter 11 exemplifies that some vehicles may lend themselves better to individual procurement. A few cautious conclusions could be drawn, based on these two chapters:
* A co-ordinated procurement approach offers more advantages than drawbacks when the product to be purchased and related conditions are characterised by most of the following factors: - new or emerging technology, - immature market, low purchasing volume per individual purchaser, - essentially same performance requirements for all prospective participants; - lack of prior experience of the type of vehicle in question, on the part of individual purchasers, - insufficient negotiating power of individual purchasers.
* An individual procurement approach is likely to be more cost-effective when most of the following conditions prevail: - products that are readily available on the local market, - mature market, - unique performance requirements, - need to standardise choice of equipment as a means to simplify maintenancPAL:
It takes at least two parties to enter into a contract: a supplier and a purchaser.It is interesting, therefore, to try to analyse the attitude of suppliers to a co-ordinated procurement - in particular on an international basis - and to the kind of contractual arrangements that ZPC set out to realisPAL: A few conclusions can be drawn in this respect from the experience gained by ZPC:
27 The automotive industry is a mature industry with a rather firm structure. The roles of manufacturers and importers/distributorsare since long well defined, and it takes some effort to convince the supplier side to adapt to a new concept, such as the use of a framework agreement with several purchasers, and the application of the option rights transfer concept.
The attitudes of suppliers differ from case to casPAL: Suppliers have been found to be more flexible when negotiating contracts for a new model of vehicle - where they can clearly see the advantages for themselves of a process that increases volume - to facilitate an early market penetration and at the same time helps to establish an infrastructure.
Certain contractual terms that are regarded as common practice in other markets are very foreign to vehicle manufacturers. Examples of such terms are detailed performance requirements, sanctions for delay of delivery, and detailed warranty clauses for complex items such as a traction battery for an electric vehicle. It often takes a considerable negotiating power to convince the supplier to accept such contractual terms. This is one of the inherent advantages of a co-ordinated procurement
13. The tendered vehicles - experience and reflections
One may argue that that the considerable efforts put into the co-ordinated procurement did not result in any considerable raise in performance or technology of the tendered vehicles. Such a statement is generally true but requires some qualification and considerations.
The by far most important performance parameter for an electric vehicle is its range between charging. This procurement project will result in deliveries of vehicles with a range - when measured in accordance with a standardised procedure - of about 80 km.Such a range is considered sufficient for the majority but not all of the applications desired by the ZPC members. An additional 20 kilometres or so would certainly have been welcome. However, this ”performance deficit” is in a way compensated by the ability of all vehicles purchased to accept fast or semi-fast charging. This is the case for all the vehicles purchased by ZPC. The remaining problem then is to have access to a reasonably cost-effective charging equipment. This is a need that generally remains to be satisfied. Semi-fast charging equipment, enabling the addition of about 20-30 km in 30 minutes’ time, appears to be the most attractive means. Discussions with one of the suppliers, Fiat Auto, will result in Fiat’s making such equipment available to the vehicle purchasers. Regrettably, the Fiat semi-fast charging equipment will be compatible only with Fiat cars.
The range of any electric vehicle is limited by the energy-weight ratio of the traction battery useA&A: The vehicles offered in tenders to ZPC are equipped either with lead-acid batteries or nickel cadmium batteries, resulting in the aforementioned range limitation. At the present stage, it appears that major suppliers are not prepared to offer vehicles with advanced batteries - such as the frequently heard about nickel metal hydrid type - on realistic commercial terms. The manufacturing cost still appears to be prohibitive. In addition, the timing of ZPC’s procurement may have been too early in relation to the vehicle maturity and the marketing plans of some prospective suppliers who elected not to tender.
28 In the view of the author, the application of advanced technologies is desirable only if it results in desired higher performance or lower life cycle cost for the vehicle user. For that reason, it is not considered to be fundamentally important if, for instance, a vehicle comes equipped with a direct current (DC) motor or one for alternating current (AC).One of chosen vehicles - the Fiat 600 Elettra - comes with an AC motor, and it will be interesting to find out to which degree this technology will result in lower energy consumption which is presented as a basic advantage of AC propulsion systems.
14. Conclusions.
The first phase of a pioneering, co-ordinated international procurement of electric vehicles has been completed.The strategy envisioned at the start of the project has proven itself as realistic, and three framework agreements involving more than one purchaser has resulted.
For most of the participating regions, the co-ordinated procurement by ZPC has significantly contributed to the creation of a market for electric vehicles. This has been achieved by making prospective users'aware of the performance of presently available EVs and at the same time demonstrating that they can be purchased with a controlled risk.
The subject vehicles represent proven, state-of-the art technologies in terms of propulsion systems and traction batteries. It is worth noting that no tenders were based on the more advanced types of batteries, such as nickel metal hydride, which have recently attracted a lot of technical interest. It is concluded that these batteries have not yet reached the stage where they can be sold on strictly commercial terms without a considerable rise in price of the vehicles.
It should be stressed that, at this stage, we have not seen the end of the project. No vehicles have yet been delivered as a result of the aforementioned contracts, and consequently, we do not yet know to what extent the process has helped to reduce the technical and economic risks normally associated with the purchase of a new type of product like an electric vehicle. This is intended to be dealt with in the foreseen Part 2 of this report.
29 VZEUS *** European cities cooperate to buy electric vehicles in first European electric vehicle procurement
Electric cars and vans can cost no more than petrol driven cars!
The cooperation of five European cities has resulted in contracts with three European automakers - Fiat, Citroen, and Peugeot - for the purchase of several hundred electric cars and vans. The contracts include both firm orders and option rights for the purchase of additional vehicles at the contracted price, which may be transferred to third parties upon the agreement of the vehicle manufacturer and the purchasing city. Participating cities are Stockholm (coordinator), Palermo, Copenhagen, Athens and Amaroussion, and a consortium of five London boroughs and the City of Coventry.
This initiative is part of the European project ZEUS - Zero and Low Emission vehicles in Urban Society, a consortium of eight European cities who will purchase and use over 1200 electric, hybrid, biofuelled, and natural gas vehicles over a three year period. ZEUS also includes a large investment in complementary urban mobility measures and infrastructures to support low emission, low energy vehicles. The project has been running since September 1997 and will be complete in the year 2000.
The procurement programme, coordinated by the city of Stockholm, has resulted in purchase prices far below that expected for quality electric vehicles. Gustaf Landahl, coordinator of the ZEUS project, noted, ”We decided to purchase electric vehicles together in order to negotiate a better price, since purchase price is a major obstacle to market for electric vehicles. What we didn’t expect was that we would be able to purchase vehicles for prices competitive with petrol driven cars. Suddenly, electric vehicles are a real alternative to petrol driven cars.”
A call for Tenders was issued in April 1997 and final selections were made by October 1997. Contract negotiations have been completed for the following models:
Fiat Seicento Elettra, 127 firm orders and 99 option rights . Citroen Berlingo Electrique, 27 vehicles and 277 option rights Peugeot 106 Electrique, 15 vehicles and 117 option rights
Purchase prices for some vehicles are competitive with gasoline vehicles in part because batteries are leased separately at an additional cost. However, cost savings through using electricity instead of gasoline or diesel are expected to make electric vehicles competitive in price to conventional vehicles, for vehicles which drive over 58 km/day.
Said Paul Burstow, Member of Parliament, UK, ”The international procurement by the ZEUS partners has been an excellent way to stimulate the European market for electric cars. This type of international partnership between purchasing organisations could become a model to help introduce widely new environmental technology.”
Vehicles will be delivered to the five participating cities in the Summer and Autumn of 1998.
Contact:
ZEUS Project: Gustaf Landahl, coordinator, tel+46 8 616 9650, fax +46 616 9632, email [email protected] Fiat Press Office: Edourado BUS,tel +39 11 686 3088, fax +39 11 686 3798 Automobiles Citroen: Bernad Sure, tel+33 147 48 5752, fax +33 147 48 6363 Peugot Press Office: Colin Lewis, tel+44 1203 88 4216, fax +44 1203 88 4122 .**** * ** ** THERMIE***
CmOF STOCKHOLM(COORDINATOR) CITY OF ATHENS MUNICIPALITYOF AMAROUSSION FREEHANSEATIC CITY OF BREMEN Crry OF PALERMO HEEINKICm TRANSPORT LONDONBOROUGH OF SWON LONWN BOROUGHOF SOUTHWARK LONDONBOROUGH OF CAMDEN LONDONBOROUGH OF MERTON CmOF COVENTRY CITY OF LUXEMBOURG CmOF COPENHAGEN ZEUS PROCUREMENT CONSORTIUM FACT SHEET
A considerable number of electric vehicles will be purchased by seven European cities who have joined in the ZEUS procurement Consortium, an entity created for the sole purpose of purchasing electric vehicles through a common tender. The five cities are Amaroussion and Athens (Greece), Copenhagen (Denmark), Coventry and London (UK), Palermo (Italy), and Stockholm (Sweden).
A joint Invitation to Tender, including a detailed Specification of User Requirements and proposed contractual forms was issued in April 1997 and forms the basis for this procurement. Existing and forthcoming framework agreements and supply contracts will call for a certain number of vehicles to be purchased under fmly committed orders. In addition, the ZEUS cities will have option rights for the purchase of an additional number of vehicles. Two kind of electric vehicles will be purchased by the ZEUS cities: a four or two-seat car and a medium sized van, the latter with a payload of about half a tonne.
The following table is a summary of the purchasing volume for electric vehicles within the ZEUS project: I Electric cars I Electricvans Firm orders I142 I47 Option rights (approx) I190 I230
The first contract for electric cars was issued to Fiat Auto. Fiat will provide up to 226 of the SeicentoElettra to Athens, Amaroussion, Copenhagen, Palermo, and Stockholm, of which over half are f%m orders and half options. The ZEUS UK Consortium will also buy electric cars hmPeugeot, the 106 Electric. A major contract for the purchase of electric vans has been fmalised between Stockholm, Palermo, the UK consortium, and Automobiles Citroen for the Citroen Berlingo Electrique Van, 27 vehicles and 277 options. Contract provisions will permit the ZEUS cities to transfer some of these option rights to third parties, thus facilitating an even more widespread introduction of electric vehicles in Europe. A report detailing the procurement process is available to public authorities and fleet managers interested in the ZEUS experience with coordinated procurement of low emission, low energy vehicles. Public authorities and private companies in participating countries may have the option of purchasing electric vehicles through the transfer of Consortium options. For more information, including a copy of the Invitation to Tender or a copy of the report, please contact Amy Rader Olsson at tel +46 8 737 2703, fax +46 8 737 44 60, e-mail [email protected]..
ZEUS ZEROAND LOW EMISSIONVEHICLES IN URBAN!%CElY ENVIRONMENTALAND HEALTHPROTECTION ADMINISTRATIONBox 380 24 0 100 64 STOCKHOLM SWEDEN TEL: +46 8 616 9600 0 FAX +46 8 616 9632