BOARD MEETING DATE: June 2, 2006
AGENDA NO. 8

Issue Program Announcement and Approve Sole-Source Award as Part of MSRC’s Second Phase FY 2005-06 AB  2766 Discretionary Fund Conceptual Work Program, and Approve Two New Contracts and Two Modifications as Part of MSRC's First Phase FY 2005-06 Work Program

SYNOPSIS: 

The MSRC developed a two-phase FY 2005-06 Work Program.  Phase I was approved by the Board September 9, 2005, and included $2.5 million for alternative fuel infrastructure and $2 million for CNG school bus incentives. Phase II was approved by the Board April 7, 2006, and included $1 million for a Local Government Match Program and a $2 million set-aside for a conceptual Advanced Natural Gas Heavy‑ Duty Engine Program, plus an additional $2 million for school bus incentives. On April 27, and then again on May 25, 2006, the MSRC met to consider two additional applications received for infrastructure funding under Phase I, a Program Announcement and sole-source award under Phase II, and two modification requests for additional dollars for CNG school bus incentives. Currently, the MSRC requests approval of these awards/modifications and to issue the Program Announcement as part of FY 2005-06 Work Program. The MSRC also requests authority to adjust contracts up to five percent and authority for the Board Chairman to execute agreements.  

COMMITTEE: 

Mobile Source Air Pollution Reduction Review, April 27 and
May 25, 2006

RECOMMENDED ACTIONS:

1. Approve a contract with Clean Energy in an amount not to exceed $250,000 under the Alternative Fuel Infrastructure Funding Opportunities Program, for construction of a new publicly accessible CNG refueling station, as part of Phase I of FY  2005‑ 06 AB  2766 Discretionary Fund Work Program, as described in this letter;
2. Approve a contract with Clean Energy in an amount not to exceed $150,000 under the Alternative Fuel Infrastructure Funding Opportunities Program, for construction of a limited access CNG station in Baldwin Park, as part of Phase I of FY  2005‑ 06 AB  2766 Discretionary Fund Work Program, as described in this letter;
3. Approve a sole-source contract with Westport Innovations Inc. and their local distributor(s) in an amount not to exceed $2,000,000 for implementation of the Advanced Natural Gas Heavy‑ Duty Engine Incentives Program, as part of Phase II of FY  2005‑ 06 Work Program, as described in this letter;
4. Approve the issuance of a Program Announcement (attached) for the Local Government Match Program, providing funding up to $1.0 million, as part of Phase II of FY  2005‑ 06 Conceptual Work Program;
5. Approve an augmentation of an award in an amount not to exceed $1,020,000 to California Bus Sales under the CNG School Bus Incentives Program, as part of FY 2005-06 Work Program ($260,000 from the monies set aside in Phase I for this Program plus $760,000 from the monies set aside in Phase II), as described in this letter;
6. Approve an augmentation of an award in an amount not to exceed $660,000 to BusWest under the CNG School Bus Incentives Program, as part of Phase II of FY 2005-06 Work Program, as described in this letter;
7. Authorize MSRC the authority to adjust contract awards up to five percent, as necessary; and
8. Authorize the Chairman of the Board to execute new and modified contracts as part of Phases I and II of FY 2005-06 AB  2766 Discretionary Fund Work Program, as described above and within this letter.

Gwenn Norton-Perry
Chair, MSRC

Background

In September 1990 Assembly Bill 2766 was signed into law (Health & Safety Code Sections 44220-44247) authorizing the imposition of an annual $4 motor vehicle registration fee to fund the implementation of programs exclusively to reduce air pollution from motor vehicles. AB 2766 provides that 30 percent of the annual $4 vehicle registration fee subvened to the AQMD be placed into an account to be allocated pursuant to a work program developed and adopted by the MSRC and approved by the AQMD Governing Board.  For FY  2005‑ 06, the MSRC developed a two-phase Conceptual Work Program.

First Phase FY 2005-06 Work Program

Phase I of the FY  2005‑ 06 Work Program was approved by the AQMD Board on September 9, 2005.  It includes $12.875 million in solicitations and projects, including $2.5 million for an Alternative Fuel Infrastructure Funding Opportunities Program and $2.0 million to continue the CNG School Bus Incentives Program.

The Alternative Fuel Infrastructure Funding Opportunities Program Announcement (PA), #2006-07, provides funds for new and upgraded or expanded alternative fuel stations as well as facility modifications. New publicly accessible stations are eligible for 50 percent of project costs up to a maximum of $250,000 to $350,000 depending upon station type. New limited access stations are eligible for 25 percent of project costs up to a maximum of $150,000.  Upgrades/expansions are eligible for 50 percent of costs up to $150,000 for public access and 25 percent up to $75,000 for limited access.  Maintenance facility modifications are eligible for 50 percent of project costs up to $50,000.  The MSRC’s award combined with any AQMD cost-sharing may not exceed 50 percent of the total project costs.  The maximum funding for any one entity cannot exceed 60 percent of the total funding in this work program category.  The extended application period for the Alternative Fuel Infrastructure Funding Opportunities Program is October 4, 2005 through June 30, 2006.  The MSRC and AQMD Board previously approved six applications totaling $1,333,981 under this Program. Two more applications were considered by the MSRC at its April 27 and May 25, 2006 meetings; details are provided in the Proposals section.

The MSRC also allocated $2 million to continue the CNG School Bus Incentives Program as part of Phase I of their FY 2005-06 Work Program.  To implement the program, the MSRC augmented and extended existing sole-source contracts with A‑ Z Bus Sales, California Bus Sales, and BusWest.  These vendors had previously qualified under a Request for Quotes process to implement a similar MSRC program in previous years.  Initially each vendor was awarded $360,000, while the remaining $920,000 was retained to augment the vendor contracts based on sales performance, subject to review and approval by the MSRC.  At its April 27, 2006 meeting, the MSRC considered a request from California Bus Sales for an additional $1,020,000 for a new purchase order, and at its May 25, 2006 meeting, ratified that action, and then considered another request this time from BusWest for an additional $660,000 for two new purchase orders; details are provided in the Proposals section.

Second Phase FY 2005-06 Work Program

The MSRC initially approved the framework for the second phase of its FY  2005‑ 06 Work Program on March 23, 2006.  This incorporated commitments of $1 million for a Local Government Match Program and a $2 million set-aside for a conceptual Advanced On‑ Road Natural Gas Heavy‑ Duty Engine Program, the details of which were subject to later approval, as well as $2 million to continue the CNG School Bus Incentives Program.  The AQMD Board approved the Phase II FY  2005‑ 06 AB  2766 Discretionary Fund Conceptual Work Program, including the targeted funding contributions for the Local Government Match and Advanced On‑ Road Natural Gas Heavy‑ Duty Engine programs, with the understanding that the MSRC would take further action when program details were more defined and bring them forward to the AQMD Board for consideration at that time. On April 27, 2006, the MSRC considered the specifics of the two programs, and then ratified those actions on May 25, 2006; details are provided in the proposals section.

Outreach

For the Alternative Fuel Infrastructure Funding Opportunities Program Announcement described above, in accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the Program Announcement and inviting bids was published in the Los Angeles Times, the Orange County Register, the San Bernardino Sun, and Riverside County Press Enterprise newspapers to leverage the most cost-effective method of outreach to the entire South Coast Basin.

The funding solicitation was placed on the internet on the MSRC's website at http://www.msrc-cleanair.org and on AQMD’s website (http://www.aqmd.gov/ where it can be viewed by making menu selections “Inside AQMD”/“Employment and Business Opportunities”/“Business Opportunities” or by going directly to http://www.aqmd.gov/rfp/index.html). Information was also available on the AQMD’s bidder’s 24-hour telephone message line (909)  396‑ 2724. A press release on funding opportunities available in the FY 2005-06 Work Program was issued and placed on the MSRC’s website.

In addition to the AQMD's standard practices, a postcard announcing the FY 2005-06 funding opportunities was mailed to nearly 1,800 interested parties on the MSRC's mailing list, as well as to the Black and Latino Legislative Caucuses and various chambers of commerce and business associations. Notice was also mailed to local legislators, mayors, city council members and city managers in the four counties.

For Program Announcement #PA2006-10 for the Local Government Match Program, the above outreach will also be conducted, with the exception of the postcard mailing.  Instead a targeted mailing will be performed to AB 2766 Subvention Fund city administrators and Public Works directors.

Bidders’ Conferences

A non-mandatory Bidders’ Conference was conducted on September 28, 2005 at AQMD headquarters for the Alternative Fuel Infrastructure Funding Opportunities Program.  A Bidders’ Conference will not be convened for the Local Government Match Program since it is similar to last year’s program.

Proposal Evaluation and Panel Composition

The MSRC’s Technical Advisory Committee (MSRC‑ TAC) formed an evaluation subcommittee to review the application received to determine eligibility, using the criteria within the Alternative Fuel Infrastructure Funding Opportunities Program Announcement.  The MSRC-TAC is a diverse group of individuals appointed by participating members as prescribed in the Health & Safety Code.  At its April 27, 2006 meeting, the MSRC considered the MSRC‑ TAC’s recommendations.

Proposals

On April 27, 2006, and then again on May 25, 2006, the MSRC considered several FY  2005‑ 06 Work Program recommendations from its Technical Advisory Committee. On April 27, 2006, the MSRC met as a committee of the whole, due to lack of a quorum. While they unanimously agreed upon various recommendations in a 4-0 vote, those recommendations were not brought forward to the AQMD Board at that time. On May  25, 2006, a quorum of the MSRC met, ratified the actions taken at the last meeting by the committee of the whole, and then considered additional recommendations by its Technical Advisory Committee. As a result, the MSRC unanimously approved two contract awards, one sole-source contract award, issuance of one Program Announcement, and two contract modifications as part of the FY 2005-06 Work Program, under Phases I and II. The MSRC actions and recommended contract awards are detailed below:

1.      Alternative Fuel Infrastructure Funding Opportunities Program

As mentioned in the Background section, the MSRC set aside $2.5 million as part of Phase I of its FY 2005‑ 06 Work Program to provide funds for new and upgraded or expanded alternative fuel stations as well as maintenance facility modifications.  The MSRC and AQMD Board previously approved six applications totaling $1,333,981 under this Program.  The MSRC approved two additional awards to Clean Energy, one in an amount not to exceed $250,000, for construction of a new publicly accessible CNG refueling station to be located in Newport Beach, on property owned by the City of Newport Beach, and a second in an amount not to exceed $150,000, for a limited access CNG station to be located in Baldwin Park.

This Program Announcement remains open until June 30, 2006.  Since this Program was allocated $2.5 million, funding remains available under this Program.  Thus, future awards are anticipated, and will be subject to MSRC and AQMD Board approval as part of the FY 2005‑ 06 Work Program.

2.      Advanced Natural Gas Heavy‑ Duty Engine Incentives Program

As mentioned in the Background section, on March 23, 2006, the MSRC set aside $2 million as part of Phase II of its FY  2005‑ 06 Work Program for an Advanced On‑ Road Natural Gas Heavy‑ Duty Engine Program, with details to be considered at a later meeting. On April 27, 2006, the MSRC considered several options for implementing such a program. The MSRC determined that the best approach would be to offer a “buy-down” incentive in an amount up to $50,000 per engine for the Westport ISX HPDI engine.  This 15‑ liter engine is the only large displacement engine available for 2006 which is certified below the CARB optional NOx + non-methane hydrocarbon (NMHC) standard.  Prior to the certification of the ISX HPDI engine, no large displacement, low‑ emission engines have been available for several years.

The program would be implemented through a sole-source contract between the MSRC and Westport Innovations, Inc. Qualifying fleet customers would be able to purchase the ISX HPDI engines at a reduced price, realizing 100% of the benefit of the MSRC incentive. Westport and its distributor(s) would be responsible for submitting all required documentation to MSRC staff.

3.      Local Government Match Program

As mentioned in the Background section, on March 23, 2006, the MSRC set aside $1 million as part of Phase II of its FY  2005‑ 06 Work Program for a Local Government Match Program, with details to be considered at a later meeting.  On April 27, 2006 the MSRC approved Local Government Match Program #PA2006‑ 10 ($1 million), providing matching funds dollar for dollar to AB  2766 City/County Subvention Funds and/or local matching funds for the purchase of alternative fuel heavy‑ duty vehicles and infrastructure, including new stations, station upgrades and expansions, and facility modifications.  The Program Announcement will be open for an extended period beginning July 6, 2006 and ending October 6, 2006.  Funds will be distributed on a first‑ come, first‑ serve basis, although applications received on the first day will be considered equal and funding will be pro-rated if first‑ day applications exceed the funding target, unless the MSRC chooses to augment the Program with turn-back funds.  There is also a geographic minimum of $125,000 for each county.  If applications totaling the entire geographic minimum have not been received from local governments within a particular county by the closing date, the funds may be used for applications from local governments within other counties on a first-come, first-serve basis.

4.      Modification for CNG School Bus Incentives Program

Also mentioned in the Background Section, California Bus Sales requested additional funding under the CNG School Bus Incentives Program.  The MSRC allocated $2 million to continue this Program as part of Phase I of its FY  2005-06 Work Program, and another $2 million as part of Phase II of its FY  2005‑ 06 Work Program.  The AQMD Board has previously authorized the MSRC to augment vendors’ contracts based on sales performance. Through orders both in process and fulfilled, California Bus Sales had expended all $780,000 of their existing contract value. Subsequently they received an order from Student Transportation of America for 17 full‑ sized CNG school buses.  At $60,000 per bus, $1,020,000 would be needed to provide the full buydown incentive for this order.  On April 27, 2006, the MSRC awarded an additional $1,020,000 to California Bus Sales to ensure that Student Transportation of America could receive the $60,000 buydown for each bus.  The allocation of funding would be $260,000 from Phase I and $760,000 from Phase II, leaving a balance available for future allocation of $1,240,000 from Phase II.

As also mentioned in the Background Section, BusWest also requested additional funding under the CNG School Bus Incentives Program. BusWest has expended all $1,020,000 of its existing contract value. Subsequently, they received orders from Jurupa Unified School District for three mid-sized buses and Student Transportation of America for eight full‑ sized CNG school buses. At $60,000 per bus, $660,000 would be needed to provide the full buydown incentives for these orders. On May 25, 2006, the MSRC awarded an additional $660,000 to BusWest to ensure that Jurupa Unified and Student Transportation of America could receive the $60,000 buydown for each bus.  

In some cases the full amount requested in an application or proposal is not recommended for funding or the proposed scope of work has been modified. This is consistent with the MSRC's administrative policies, which allow the MSRC to approve a portion of a proposer’s scope of work and/or funding request. In those cases where the proposed funding level or scope of work has been modified by the MSRC, and the proposer cannot perform the project as approved, the MSRC may rescind the funding commitment and retain the funds in the Discretionary Fund for future work programs.

The MSRC respectfully requests the AQMD Board’s approval of the above contract awards and modifications, and to issue the Program Announcement attached to this Board letter, as part of the FY 2005-06 AB 2766 Discretionary Fund Work Program, both Phases I and II. The MSRC also requests authority to adjust the funds allocated to each project specified in this Board letter by up to five percent of the project's recommended funding. The Board has granted this authority to the MSRC for all past work programs. Finally, the MSRC requests the Board authorize the AQMD Chairman of the Board the authority to execute all agreements described in this letter.

Sole-Source Justification

As an element of Phase II of its FY 2005‑ 06 Work Program, the MSRC allocated $2 million for an Advanced On‑ Road Natural Gas Heavy‑ Duty Engine Program.  As discussed in Proposals above, the MSRC determined that the best approach would be to offer a “buy-down” incentive, not to exceed $50,000 per engine.  While the MSRC and AQMD strive to retain technical services and award contracts through a competitive bid basis, the AQMD’s Procurement Policy recognizes that at times circumstances exist which make a competitive bid process invalid.  Therefore, the request for a sole‑ source award is made under provision B.2.c.2.: The project involves the use of proprietary technology; and B.2.c.3.: The contractor has ownership of key assets required for project performance.  For 2006, Westport Innovations is the only manufacturer producing large-displacement engines (10 liters or larger) which are certified below the CARB optional NOx + NMHC standard.  In addition, there are no other alternative fueled engines in this size category certified for sale in California.  It is the intent of the MSRC to execute a sole-source contract in the amount of $2 million with Westport Innovations, Inc. and their local distributor to provide buy‑ down incentives on a reimbursement basis.

Resource Impacts

The AQMD acts as fiscal administrator for the AB 2766 Discretionary Fund Program (Health & Safety Code Section 44243). Money received for this program is recorded in a special revenue fund (Fund 23) and the contracts will be drawn from this fund. These contracts will have no fiscal impact on the AQMD’s operational budget.

Attachment (DOC 737.5 KB)

Local Government Match Program #PA2006-10
FY 2005-06 WP Awards Infra-School Bus May-06 BL.doc