Procurement

Overcoming the Challenges of Green Fleet Procurement

October 2015, Government Fleet - Cover Story

by Shelley Mika - Also by this author

As part of its greener fleet purchases, the City of Glendale, Calif., replaced a larger diesel chassis with a smaller, gasoline-powered Ford F-550. The fleet plans to equip its next aerial trucks with a battery pack for the boom so operators won’t need to run the truck’s engine while the boom is in use.
As part of its greener fleet purchases, the City of Glendale, Calif., replaced a larger diesel chassis with a smaller, gasoline-powered Ford F-550. The fleet plans to equip its next aerial trucks with a battery pack for the boom so operators won’t need to run the truck’s engine while the boom is in use.

As much as fleet managers might wish, when a green fleet policy is enacted, the fleet doesn’t magically change overnight to align to it. Instead, many areas of the fleet experience a ripple effect of change. Perhaps one of the biggest is vehicle procurement. To green their operations, fleets must rethink what types of vehicles they will now add to the fleet — and how to do it.

At A Glance

Fleets adopting greening plans must change their procurement practices by:

  • Considering charging/refueling infrastructure
  • Rethinking vehicle specs
  • Working with new vendors
  • Considering additional up-front costs
  • Evaluating alt-fuel vs. high-efficiency vehicles

Along the way, there are challenges: what to do first, what vehicles to acquire and where, and how to pay for it all. And then there is the people factor — how to convince others that what you’re doing is worthwhile, and that it won’t impede their ability to do their jobs.

Although these obstacles exist, fleets have found ways to overcome them. Several fleets share their challenges — and how they have found success despite them all.

The Chicken or the Egg?

For Cobb County, Ga., simply getting started was the fleet’s biggest green fleet procurement challenge.

The county adopted its green fleet policy six years ago. This affected the procurement of vehicles, equipment, parts, chemicals, building supplies, and more. Since then, Fleet Management has deployed four alternative-fuel options to be used by county vehicles and equipment.

When seeking to add electric vehicles to its fleet of more than 2,000 units, the county pondered whether to first acquire the vehicles or install the infrastructure with which to charge them.

“We knew we wanted to implement electric vehicles throughout our fleet, but where would we start?” said Al Curtis, Cobb County fleet director. “If we were to get the cars first to create charging station demand, the cars would have just sat unused until the infrastructure could be implemented. Conversely, what if we were to install the charging stations but could not get approval on the purchase of the electric vehicles?”

The answer came in the form of a state-funded grant. The county applied and received funding to begin building charging stations. From there, the county took cautious steps toward acquiring alt-­fuel vehicles, first adding hybrids, then eventually moving on to all-electric units.

“Initially, we started with hybrids, as that particular technology seemed to be a good combination of existing and new technology,” said David George, Cobb County fleet administrator. “That immediately provided fuel and cost savings. This opened the door for the procurement of the Nissan Leaf.”

New Vehicles, New Specs

When it comes time to purchase greener fleet units, fleets have to rethink specs. Oftentimes greening the fleet means purchasing not just a different model, but a different make entirely.

Since putting a green fleet policy in place in 2010, John Scharffbillig, director, Fleet Services, City of Minneapolis, said his team spent more time researching the vehicles and equipment available when writing specifications for new equipment. “We have to make sure to include language that helps ensure our vendors are supplying the most efficient and green vehicles that are available at the time of purchase,” Scharffbillig said. “We work much closer with our suppliers to make sure that if there are greener units, we are aware and work to balance cost, type, and city standards.”

Minneapolis’ green fleet includes these Polaris low-speed electric vehicles used by the Police Department.
Minneapolis’ green fleet includes these Polaris low-speed electric vehicles used by the Police Department.

The composition of the Washington, DC Department of Public Works (DPW) fleet has changed a great deal since its green fleet policy was enacted in 2000. Charged with ensuring fleet vehicles averaged no less than 22 miles per gallon — and that none would be sport utility vehicles — today the fleet consists of more than 2,400 green vehicles, including hybrid and electric vehicles and those that run on biodiesel, E-85, and compressed natural gas (CNG).

“Upon developing an approved list of [green vehicles], DPW researches the market for vehicles that are consistent with its specifications for mileage, durability, functionality and a proven record of dependability,” said Christopher Shorter, interim director, DC Department of Public Works. “DPW’s purchase of alternative-­fuel vehicles starts with the functional requirements a vehicle must meet to accomplish its mission, and if the market has a vehicle that can function in the urban environment where DC government delivers its services to the public. In some cases, DPW has to wait for the technology to catch up with a particular requirement when making a decision to acquire [these vehicles].”

For the City of Glendale, Calif., new specs meant offering users a smaller, more fuel-efficient option. “In the past, the aerial trucks used by our Forestry section have been large Commercial Driver’s License (CDL)-type diesel chassis,” said Karl ­Vogeley, City of Glendale fleet manager. “In order to conform to the Greener Glendale plan and to improve user efficiencies, we have stepped down in size to the Ford F-550 chassis with a gasoline engine.”

Although new specs meant new vehicles, it turned out fuel efficiency wasn’t the only benefit of the change. “The upside is that the crews have a more easily deployed truck, the replacement cost is actually lower than the equipment that is being replaced, and the operating cost is lower,” Vogeley said.

Vetting Vendors

Procuring new makes and models of vehicles triggers another set of changes. Over the years, fleets build relationships with dealers they can trust. But when the vehicle roster changes, that can mean the dealership must, too.

This was the case for the City of Glendale. As a result of its ­Greener Glendale initiative, purchasing alt-fuel vehicles meant purchasing from different dealers. For instance, before Greener Glendale, the Parks Department’s low-speed utility carts were Cushman gasoline-powered carryalls. The City now buys John Deere electric Gators.

“The major equipment providers all offer some form of green equipment, but finding credible products and vendors that fit our needs was a challenge. Many equipment providers are jumping into electric-powered vehicles, but much of the equipment offered is of dubious practicality and with questionable logistical support,” Vogeley said. “We do our homework for all potential ‘green’ equipment suppliers and select those who have a credible national presence and a long-term commitment to the green fleet business. This eliminates the companies that have no real staying power in the market.”

Cobb County encountered a similar challenge. “In the past, government agencies relied heavily on the Big Three American automakers. This is slowly evolving from that point of view as more agencies are utilizing the traditionally named ‘imports’ in their fleets,” said Ahsan Rafay, business manager for Cobb County. “We had to establish and create new ­relationships within the local dealers like Honda, Nissan, Kia, Hyundai, Toyota, Mazda, etc.”

Although finding new dealers to meet green fleet specs took legwork, it also turned out to be a benefit. “We now consider alternative manufacturers whom we may not have previously. This brings a whole new variable of procurement of parts and processes which have helped us gain valuable knowledge,” George said.

Finding the Green

Regardless of where green fleet vehicles are purchased, the budget dollars have to be there to do so. Going green often means more costs up front. Of course, many fleets find that over time green vehicles save them more in fuel efficiency and reduced maintenance than the initial investment, but what happens in between?

“The higher cost of non-traditionally­ fueled and/or powered equipment is a difficult issue, as the replacement reserve funds set aside for new vehicles are adversely impacted by the higher cost of green vehicles,” Vogeley said. “To compensate for these costs, fleet reductions eliminated the need to replace 83 vehicles over the last three years. This freed up replacement funds to help cover the incremental costs of green vehicles.”

Instead of greening the fleet by purchasing alt-fuel vehicles, the City of Glendale also took a “green-lite” approach. In doing so, it replaced older, large diesel-powered equipment with smaller, high-efficiency gasoline powered equipment that use less fuel and emit fewer greenhouse gases — but fit into the budget. “While not as dramatic as purchasing an alternative-fueled vehicle, it still works to reduce our overall greenhouse gas emissions,” Vogeley said.

Cobb County, Ga., has deployed four alternative-fuel options to be used on fleet vehicles, which includes this propane autogas-powered truck.
Cobb County, Ga., has deployed four alternative-fuel options to be used on fleet vehicles, which includes this propane autogas-powered truck.

The same was true for the City of Minneapolis. Prior to the green fleet policy, the city was overspending on high-cost green fleet units that couldn’t provide return on investment during their lifecycles because of lower utilization. “We now focus on purchasing smaller vehicles that meet green specifications; it has had a positive effect on the budget,” Scharffbillig said. “It is important to keep in mind that due to government regulations on fuel and emissions, every new vehicle replacing a 10- or 15-year-old vehicle is going to reduce fuel costs and carbon footprint and could be considered a green purchase.”

For Washington, DC, the costs of purchasing alt-fuel vehicles were less of a concern than was maintaining the infrastructure to fuel them.

“The impact has not been in acquisition costs of the vehicles but in associated infrastructure costs of adding additional fueling outlets and charging stations and the identification of real estate to put these stations,” Shorter said. “Trying to expand our CNG fleet while dealing with an aging infrastructure that has limited capacity for new and larger vehicles has been a challenge. DC installed its fast-fill CNG station in 1999 and since then, the technology in CNG infrastructure has advanced by leaps and bounds. Since CNG infrastructure is so expensive, DPW has been looking at ways to upgrade or install new infrastructure while keeping day-to-day operations running.”

Overall, Rafay says fleets should be patient. Cobb County also faced the challenge of higher costs up front. It chose to lease electric vehicles and is now reaping the benefits. “You may have to allow some time to pass in order to get a return on investment; but in the long run, it just makes sense to our department to make this transition and become proactive,” he said. “Green fleet procurement has had a positive impact on our budget lines. We are now providing more for much less compared to previous situations, as we now lease new electric vehicles. This combined with fuel cost savings, operations savings, and other efficiencies realized save Cobb County several hundred thousand dollars over just a period of three years, the period of our initial lease agreement.”

Beyond Buying

You have the specs, you have the dealers, you have the funds, and you have the vehicles. The challenges aren’t over. Several fleets said gaining buy-in from customers was their greatest challenge.

The City of Glendale met with resistance from drivers who were concerned that green or downsized equipment wouldn’t meet their operational needs. “Over the last couple of years, the users have come on board with selecting greener equipment and support procurement of this equipment, as Fleet can demonstrate that they will be able to successfully complete their daily mission with the equipment,” Vogeley explained.

The same was true for DC. Its challenge was justifying to customers why they should accept the increased cost of alternative-fuel vehicles when compared to non-alternative-fuel vehicles, when fuel efficiency is not a significant factor. These agencies saw new technology as a risk, and the DPW had to work to gain their buy-in.

“We researched industry best practices and consulted with other jurisdictions on their approach,” Shorter said. “The department also strategically planned new green vehicle rollouts through collaborative workgroup sessions with key stakeholders (agencies, fleet repairers, fuel managers, parts managers, and technology supporters) to ensure synergy of efforts, supportability, and maintainability of the new fleet.”

The Cobb County fleet department experienced similar resistance when incorporating Nissan Leafs into the fleet. “People’s perceptions as a whole are a daily challenge when you strive to implement green technology,” Curtis said. “Range anxiety was used heavily as a negative aspect. We assured our departments that we were implementing the infrastructure to support the vehicles and strived to keep a positive opinion in moving these cars out into the field.”

The fleet has turned this skepticism around. Through research, fleet team members sourced vehicles they were confident would fit the applications of the various users. It paid off.

“I believe that if you can put an employee in a vehicle that they really like and it fits their daily need, there is potential that the vehicle will be well taken care of,” George said. “Many departments are requesting these as future replacements once their current vehicles reach the end of their life cycle. Between significant cost savings, carbon reduction, and general efficiencies based on much lower operational costs, we can project that the comfort level with the newer technology continues to rise with departments and individuals.”

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