BOARD MEETING DATE: March 5, 2004
AGENDA NO. 6

Execute Contracts to Develop and Demonstrate Hydrogen Internal Combustion Engine Vehicles

SYNOPSIS:

On July 11, 2003, the Board approved the release of an RFP to design and demonstrate a fleet of hydrogen internal combustion engine (ICE) vehicles with corresponding hydrogen fueling stations at five cities within the South Coast Air Basin. Three proposals for the vehicles and nine proposals for the fueling stations were received, subsequently reviewed, and scored by two separate panels of outside experts. This action requests award of the contract to develop and demonstrate the hydrogen-ICE vehicles. A separate request on fueling stations will be forwarded for consideration in a future Governing Board meeting. Staff recommends $2,280,000 funding from AQMD to develop and demonstrate 30 hydrogen-ICE vehicles or $2,030,000 if Department of Defense, National Automotive Center provides $500,000 co-funding for engineering costs and an additional five vehicles, for a total of 35 vehicles.

COMMITTEE:

Technology, February 27, 2004, Recommended for Approval

RECOMMENDED ACTION:

1. Authorize the Chairman of the Board to execute an agreement with the Department of Defense, National Automotive Center (DOD-NAC) to co-fund the development of five additional hydrogen-ICE vehicles for $500,000.
    
2. Recognize $500,000 in revenue from the DOD-NAC and appropriate $500,000 from the Undesignated Fund balance to the Clean Fuels Fund upon execution of the agreement.
    
3. Authorize the Chairman of the Board to execute a contract with Quantum Technologies for the development and demonstration of 35 hydrogen-ICE vehicles in an amount not to exceed $2,530,000 or alternatively to develop 30 hydrogen-ICE vehicles in the event that DOD-NAC funding is withdrawn in an amount not to exceed $2,280,000 from the Clean Fuels Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The AQMP has identified the use of alternative clean fuels in mobile sources as a key air quality attainment strategy. Hydrogen fuel cell vehicles are near zero-emission vehicles but currently have limited availability, high costs, and short warranty periods. Hydrogen-fueled internal combustion engine (ICE) vehicles show promise as a bridge technology between fuel cell vehicles and conventional vehicles and have the potential to significantly reduce VOC, NOx, CO and air toxic emissions as well as greenhouse gas emissions. Furthermore, hydrogen-fueled ICE vehicles will utilize the developing hydrogen infrastructure initiated by the AQMD and help to expedite the expansion of hydrogen infrastructure across the South Coast Air Basin.

At its September 13, 2002 and June 6, 2003 meetings, the Board previously authorized funding for five and three hydrogen fueling stations, respectively. Hydrogen refueling stations are necessary to facilitate the introduction of fuel cell vehicles throughout the AQMD. At this early stage, as hydrogen vehicles and the required infrastructure are being introduced, the demonstration of a variety of methodologies and systems will help determine the most effective and efficient methods for hydrogen generation, fueling, and vehicle design. Hydrogen fueling can be accomplished via on-site production, bulk deliveries from an industrial hydrogen plant, or even direct connection to the Los Angeles Hydrogen Pipeline.

At the July 11, 2003 meeting, the Governing Board approved RFP #P2004-01 to design, engineer, convert, test, certify, demonstrate, and maintain for 60 months hydrogen ICE vehicles. In support of these hydrogen vehicles, this RFP also includes a component for five hydrogen fueling stations within the South Coast Air Basin, capable of fueling up to 10 vehicles per day and with potential expansion to fueling 20 vehicles per day. Staff has been actively working with local cities within the Basin interested in hydrogen ICE vehicles and infrastructure. The cities of Burbank, Ontario, Riverside, Santa Ana, and Santa Monica agreed to participate with the AQMD on developing infrastructure and demonstrating hydrogen ICE vehicles. Staff continues to assess the interest of other local cities in an effort to expand the hydrogen infrastructure program. Additionally, the DOD-NAC is interested in demonstrating hydrogen ICEs and would like to receive five of the vehicles. Staff believes it is necessary to support the development of a Basinwide hydrogen fueling network in the near term to ensure a smooth transition to hydrogen fuel cell vehicles as well as various hydrogen/CNG fuel mixtures for other mobile applications in the South Coast Air Basin.

Outreach

In accordance with the AQMD’s consulting and contracting policies, a public notice advertising the RFP and inviting applications was published in the following publications on two separate days:
 

1.	Antelope Valley Press	10.	La Opinion	19.	Precinct Reporter
2.	Black Voice News	11.	La Voz	20.	Rafu Shimpo
3.	Chinese Daily News	12.	Los Angeles Daily News	21.	Riverside Press Enterprise
4.	Eastern Group Publications	13.	Los Angeles Sentinel	22.	San Bernardino Sun
5.	El Chicano	14.	Los Angeles Times	23.	Santa Clarita Signal
6.	Excelsior, The	15.	M/W/DVBE Source	24.	State of California Contracts
7.	Inland Empire Hispanic News	16.	Orange County Register		Register
8.	Inland Valley Daily Bulletin	17.	Palm Springs Desert Sun
9.	Korea Central Daily	18.	Philippine News

Additionally, potential vendors were notified utilizing the Los Angeles County MTA and Cal Trans Directories of Certified Minority, Women, Disadvantaged and Disabled Veterans Business Enterprises; the Inland Area Opportunity Pages Ethnic/Women Business & Professional Directory; AQMD’s own electronic listing of certified minority vendors; AQMD Purchasing’s mailing list; and various consultants from Technology Advancement's database. Notice of the RFP was mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations; and placed on the Internet at AQMD’s Web site [http://www.aqmd.gov, "Business and Job Opportunities" icon] and AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Selection Process

Three proposals were received in response to development of the hydrogen-ICE vehicles portion of the RFP. All three proposals included converting existing pick-up truck platforms to hydrogen, and one of the three also included the conversion of an existing hybrid-electric sedan from gasoline to hydrogen. Pursuant to the Procurement Policy and Procedure, the RFP identified 80 possible points for the technical score and 25 possible points for the cost score. Within the 25 points for cost, 15 points were for the lowest cost in terms of absolute dollars, with additional points assigned based on the level of cost share. An evaluation team with strong expertise in alternative fuels, vehicle conversions, and on-board hydrogen storage and safety issues was assembled. Comprising the panelists were staff from CARB’s Branch for On-Road Control Regulations, an expert in hydrogen from U.C. Davis, and technical staff members from the Department of Energy, National Renewable Energy Laboratories, Sandia National Laboratory, and an expert in vehicle conversions. (Five males and one female, comprising six Caucasians).

The results of the panel evaluation are listed in Attachment A.

There was a separate panel of outside experts that evaluated the nine proposal received for the five hydrogen fueling stations. Staff is continuing to discuss the panel results with the five cities involved to identify the best suited technology for each of the fueling stations. Staff is also working with potential co-sponsors for the project to ensure the AQMD hydrogen infrastructure network is a collaborative and model effort for the state and federal hydrogen programs. Staff will develop a proposal for the Board’s consideration at a future Board meeting.

Proposal

Based on the Panel’s evaluation, staff recommends awarding a contract to Quantum Technologies (Quantum) to convert 35 Model Year 2004 Toyota Prius vehicles, with delivery of all 35 vehicles within 12 months of contract execution. In addition to five vehicles to be demonstrated at each of the five cities, the AQMD and DOD-NAC will each receive five converted vehicles. In the event that DOD-NAC funding is withdrawn, the award will be to convert 30 vehicles.

Quantum, with headquarters in Irvine, California, is the established world leader in the design, development, manufacturing, and commercialization of gaseous fuel management systems and alternate fueled vehicles. Since 1997, Quantum has produced over 16,000 alternate fueled vehicles. Quantum is the manufacturer of record with the California Air Resources Board (CARB) for GM’s CNG powered Chevrolet Cavalier, full size Van and medium and heavy-duty CNG powered Silverado and Sierra pickup trucks. Quantum’s Advanced Vehicle Concept Center (AVCC) in Lake Forest is a recognized state-of-the-art engine and vehicle development facility by automobile manufacturers worldwide. Quantum has the unique capability to develop, validate, certify, and commercialize specialty vehicles from the design stage to mass production. The Lake Forest facility has the latest engine and chassis dynamometers commercially available, and the only SULEV emissions laboratory on the west coast, recognized by CARB. Quantum has also produced hydrogen fuel cell powered Neighborhood (NVs) and All Terrain Vehicles (ATVs) in 2002 and 2004 respectively. The latter is currently in production for the U.S. Army. In 2003, Quantum developed a hydrogen fueled 2002 Toyota Prius, equipped with compressed hydrogen and metal hydride storage systems. The hydrogen powered Prius prototype produces comparable power to the gasoline version, along with increased fuel efficiency and almost zero emissions, the latter consistent with CARB’s current partial zero emission standards. Quantum also supplies hydrogen storage systems to many OEMs worldwide and has extensive experience with hydrogen vehicle integration requirements, including crash, durability, regulatory, and service interface. Current storage systems produced by Quantum meet TUV and German Pressure Vessel codes, United States NGV-2-2000, European Hydrogen Integrated Program and Japanese KHK requirements. Quantum had annual sales of 25 million dollars in 2002-2003 and has 150 employees.

The cities, DOD-NAC, and the AQMD are all paying for the base cost of the vehicle. The cost of this project to the AQMD shall not exceed $2,530,000, which includes the $500,000 from the DOD-NAC. The cost of the project, in the event that DOD-NAC funding is withdrawn, will be $2,280,000. Total cost of the proposed project is estimated to be $4,050,780, with cost-sharing summarized in the table below:
 

Benefits to AQMD

The AQMP relies on the expedited implementation of advanced technologies and clean-burning fuels in southern California to achieve air quality standards. This project will further develop technology for light-duty alternative fuel vehicles, and is expected to reduce NOx, CO and PM emissions to SULEV Standards. The projects will demonstrate that hydrogen powered vehicles equipped with internal combustion engines are a commercially viable bridge to hydrogen fuel cells, as well as utilize the emerging hydrogen fueling station infrastructure. Furthermore, the variable gaseous fueled engine project will further develop technology that is capable of running on fuel mixtures, adding to the use of the hydrogen fueling station infrastructure.

Resource Impacts

The 2003 Update of the Technology Advancement Plan for the Clean Fuels Program includes Proposed Project 2003 CFM6-3 – Development and Demonstration of Light- and Medium-Duty Hybrid-Electric Vehicles and Systems, which calls for significant emission reductions through the use of hybrid electric technology with performance comparable to conventional vehicles. The total cost to the AQMD for the development of 35 hydrogen-internal combustion engine, hybrid-electric 2004 Toyota Prius vehicles is not to exceed $2,530,000. The cost of the project, in the event that DOD-NAC funding is withdrawn, will be $2,280,000.

Sufficient funds are available from the Clean Fuels Fund, established as a special revenue fund resulting from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code Sections 40448.5 and 40512 and Vehicle Code Section 9250.11, establishes mechanisms to collect revenues from mobile sources and stationary sources to support projects to increase the utilization of clean fuels, including the development of the necessary advanced enabling technologies. Funds collected from motor vehicles are restricted, by statute, to be used for projects and program activities related to mobile sources that support the objectives of the Clean Fuels Program.

Attachment

Evaluation Scores
 

Attachment A
Results of Panel Evaluation of Proposals received in Response to RFP #2004-01

Three proposals were received in response to the RFP. One proposal was for the development of hybrid-electric small sedans or a truck platform, whereas the other two proposals were for the development of truck platforms only.
 

Of the three proposals received, and based on the scoring presented below, the ISE Research proposal was not technically qualified since the average technical score was below the required 80 points. ETEC and Quantum Technologies were both technically qualified with an average technical score of 84.2 and 93, respectively. The following table summarizes the individual technical scores by each of the review panelists.
 

/ / /