Meeting_Body
OPERATIONS, SAFETY, AND CUSTOMER EXPERIENCE COMMITTEE
NOVEMBER 19, 2020
Subject
SUBJECT: NEAR ZERO NATURAL GAS FUELED ENGINES
Action
ACTION: AWARD CONTRACT
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer to award a five-year, indefinite delivery/indefinite quantity Contract No. MA67067000 for Near Zero Emission Natural Gas Fueled Heavy Duty Engines to Cummins Pacific, LLC for a not-to-exceed amount of $55,716,263, inclusive of sales tax.
Issue
ISSUE
This procurement is for the acquisition of Cummins L9N “Near Zero Emissions” engines, which will be installed as part of the Central Maintenance Shops (CMS) bus midlife engine replacement program over the next five fiscal years. The Cummins L9N near zero engines will operate on Renewable Compressed Natural Gas (RCNG) and replace the older Cummins ISLG engines that are currently installed in the New Flyer Xcelsior 40-foot buses.
The CMS engine replacement program is coordinated with Metro’s strategic plans for lowering greenhouse gas emissions on the current bus fleet and transitioning to Zero Emission Buses for future bus procurements. This procurement is required to ensure the current bus fleet is properly maintained and that the engine replacement program continues without delays and with no impact on revenue service.
Background
BACKGROUND
In October 2016, Metro staff responded to a Board request to provide a comprehensive plan to further reduce greenhouse gas emissions. The report to the Board identified a comprehensive approach to reducing greenhouse gas emissions that included both the procurement of zero emissions buses and the use of Low NOx “Near Zero” CNG engines operating on RCNG for midlife engine repowers beginning in FY18.
In August 2017, Metro entered into a contract with Cummins Pacific LLC for the purchase of up to 395 near zero emissions engines for the midlife refurbishment program. The Air Quality Management District (AQMD) provided $1.875 million in grant funding for 125 of the near zero emissions engines, and Metro has received $9.6million of $12.6 million in pending reimbursements for vouchers submitted to the California Air Resources Board (CARB) Hybrid and Zero-Emissions Truck and Bus Voucher Incentive Project (HVIP) to offset the cost of the near zero emissions engines.
The remaining task orders for purchase of new near zero emissions engines under the existing contract were issued in October and this new contract is needed to support the midlife near zero engine replacement program.
Discussion
DISCUSSION
CMS staff identified the need to purchase up to 800 natural gas fueled heavy duty engines to replace the Cummins ISL-G 280 hp engines that are currently installed in the New Flyer Xcelsior 40-foot buses during the period FY21 through FY24. The Cummins L9N Near Zero Emission engines delivered under this procurement will be installed by Metro mechanics as part of the midlife engine replacement program.
The Cummins L9N Near Zero natural gas engine reduces NOx emissions by ninety percent (90%) and greenhouse gas emissions by nine percent (9%) compared to the standard ISL-G CNG powered engine currently installed in this bus fleet. The Cummins L9N Near Zero Emission engine is currently the only CNG mid-range engine to receive emissions certifications from the Federal Environmental Protection Agency (EPA) and California Air Resources Board (CARB) for meeting the 0.02 g/bhp-hr optional Near Zero NOx emissions standard. These engines are designed to be operated on either pipeline CNG or bio-gas/RCNG.
The Cummins L9N Near Zero natural gas engines are warranted to be free from defects in design and materials for two-years with unlimited mileage with full parts and labor on all warrantable failures.
The contract to be awarded is a “requirements type” agreement in which we commit to order only from the awardee, up to the specified quantity for a specific duration of time, but there is no obligation or commitment for us to order any or all of the Cummins L9N Near Zero engines that may be anticipated. The bid quantities are estimates only, with deliveries to be ordered and released as required. The Diversity and Economic Opportunity Department (DEOD) recommended a two percent (2%) DBE goal for this solicitation.
The Cummins L9N Near Zero natural gas engines will be purchased, maintained in inventory, and inventory managed by Material Management. As the engines are issued to buses being refurbished in the midlife program, the appropriate budget project numbers and accounts will be charged.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
The award of this Contract will result in a positive impact on safety by reducing NOx emissions by ninety percent (90%) and greenhouse gas emissions by nine percent (9%) from Metro buses. The installation of these new engines will also ensure that buses are maintained in accordance with Metro Maintenance standards and improve on-road performance and reliability, with beneficial impact on system safety and reliability.
Financial_Impact
FINANCIAL IMPACT
The total contract value is not-to-exceed $55,716,263. The funding of $3,830,475 for the additional engines required during the current fiscal year is included in the FY21 budget in cost center 3366, Central Maintenance Shops under project 203024, Bus Midlife Program and line item 50441, Parts- Revenue Vehicle. Since this is a multi-year Contract, the project manager, cost center manager and Chief Operations Officer will be accountable for budgeting the cost in future fiscal years.
As noted above, Metro has been successful in obtaining additional funding in the past for the installation of the Cummins L9N near zero engines. Grant funding in the amount of $1.875 million was awarded to Metro by the MSRC, and Metro has received $9.6million of $12.6 million in pending reimbursements for vouchers that have been submitted to the CARB HVIP program to offset the cost of the near zero emissions engines. Metro staff met with regulatory agencies and has identified other potential funding opportunities to pursue to offset the incremental cost for the procurement of the new near zero emissions engines identified in this contract.
Impact to Budget
The source of funds for this procurement will come from Federal formula funds and local Proposition C 40%. Using these funding sources maximizes the allowable project funding designations given approved provisions and guidelines.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The procurement of the Cummins L9N Near Zero Emissions engines supports Strategic Goal 1: Provide high-quality mobility options that enable people to spend less time traveling. The installation of the Cummins L9N Near Zero Emissions engines will maintain the reliability of the bus fleet and ensure that our customers are able to arrive at their destinations without interruption and in accordance with the scheduled service intervals for Metro bus operations.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The alternatives to awarding this Contract for near zero emissions natural gas fueled heavy-duty engines includes procuring the engines on an as-needed basis, using the traditional "min/max" replenishment system method. The "min/max" replenishment system method calculates minimum and maximum inventory levels. This strategy is not recommended since it does not provide for a commitment from the supplier to ensure availability, timely delivery, continued supply and a guaranteed fixed price for natural gas fueled heavy-duty engines.
A second alternative would be to discontinue the purchase of near zero emissions natural gas fueled heavy-duty engines and rebuild the older Cummins ISL-G engines removed from the buses during the midlife process. This strategy is not recommended since the Cummins L9N near zero emissions engines reduce NOx emissions by ninety percent (90%) and greenhouse gas emissions by nine percent (9%) below that of the Cummins ISL-G engine removed from the buses during the midlife process. Additionally, the internal wear of parts and components in engines that have operated for about 300,000 miles in a heavy-duty, stop-and-go transit environment results in a lower level of performance and reliability for rebuilt engines, while the new Cummins L9N near zero emissions engines come with a two-year manufacturer’s warranty to protect Metro from cost associated with any premature engine failures. Finally, the cost of rebuilding the Cummins ISL-G engines is about $35,000, and Metro would not be eligible for any incentive programs from Local, State, or Federal sources to support the reduction in exhaust emissions. Since this is an indefinite delivery/indefinite quantity contract, Metro could elect to forgo purchase of the Cummins L9N near zero emissions engines at any time in the future after purchase of the minimum order quantity of 200 engines.
Next_Steps
NEXT STEPS
Metro’s requirements for Cummins L9N engines for the bus midlife refurbishment program will be fulfilled under the provisions of the contract, and the refurbishment of the New Flyer Xcelsior 40-foot bus fleet will continue in accordance with Operations Support Services bus mid-life and engine replacement program.
Attachments
ATTACHMENTS
Attachment A - Procurement Summary
Attachment B - DEOD Summary
Prepared_by
Prepared By: James D. Pachan, Superintendent of Maintenance, (213) 922-5804
Reviewed_By
Reviewed by: Debra Avila, Chief, Vendor/Contract Management (213) 418-3051
James T. Gallagher, Chief Operations Officer (213) 922-4424
