Current Government Fleet and Procurement Practice

1 Executive Summary

2 Background to Report

3 Summary of Report Findings and Baseline

4 Improving Performance

5 Data Analysis

6 Survey and Phone Interviews

7 Vehicle Costing and Fuel Consumption Data

8 Case Studies

Appendix A: List of Organisations and Key Groupings

Appendix B: Survey Questionnaire

Appendix C: Organisations Surveyed

Appendix D: Detailed Data Analysis

Appendix E: Detailed Survey Results

Appendix E: Detailed Survey Results

12.1 Survey response

The response rate to the survey was high, with 28 of the 33 surveyed organisations responding. These 28 organisations contribute 12,545 vehicles, making up 59 percent of the total government fleet, based on vehicle numbers taken from LANDATA.

Table 12-1 summarises the total size of the fleets owned or leased by those that responded to the survey. These fleet sizes have been grouped into the same six categories that were used to summarise the LANDATA information:

• public service department
• non--public service department
• Offices of Parliament
• Crown entities
• district health boards
• territorial authorities and regional councils.

Table 12-1: Summary of survey participants, shown in key organisation categories

Organisation	Total number of vehicles within the fleets of participating organisations [Based on Ministry of Transport database information for total fleet size (manually sorted and counted by URS using the database field filters).]	Proportion who responded to survey
Public service department	3,047	55%
Non-public service department	5,803	100%
Offices of Parliament	0
Crown entities	694	92%
District health boards	1,367	39%
Territorial authorities and regional councils	1,011	18%
Total number of vehicles in sample population	12,022	59%

Table 12-1 is based on fleet sizes compiled from the Ministry of Transport (MoT) database, by manually sorting and counting the database values. The survey also asked respondents for their total fleet size, as a check against the interpreted MoT data. In most cases the total fleet sizes provided from the database and the surveyed organisation were similar. However, in some cases, such as the New Zealand Fire Service, the two values were markedly different. For the analysis of the quantitative questions discussed in the remainder of this section, the fleet sizes used are those provided by the survey respondents, rather than from LANDATA information. This is considered more accurate as value sources are consistent.

Further description of the survey results is provided below for the three focus areas of fleet characteristics, procurement practices and fleet management/reporting.

12.2 Fleet characteristics

Fleet numbers and type

The selected organisations were asked to provide details of the fleet size and the proportion of vehicles owned and leased. The fleet sizes given in the survey responses were compared with the fleet sizes given by LANDATA. This provided a simple check of the accuracy of the database and identified the surveyed organisations where there was a significant discrepancy between the two sources of information.

As discussed above, fleet numbers generally correlate with MoT information. It was found that on average, 85 percent of fleet vehicles are owned by the organisation. The average portion of the fleet that is leased is 33 percent. [The average proportion of the fleet that is owned plus the average proportion of the fleet that is leased do not equal 100 percent, as the parameters have been averagedbetweenorganisations rather than relative to one another ie, it is the average of proportioned values rather than the total number of leased vehicles vs the total number of owned vehicles.]

Fleet engine size

The survey asked the selected organisations to estimate the percentage of their fleet spread across seven broad engine size categories, ranging from 1000 cc to greater than 10,000 cc. [LANDATA information was categorised into eight broad engine size categories, including a 4000 to 10,000 cc category and a greater than 10,000 cc category. But due to the relatively small number of vehicles in the 4000 to 10,000 cc category, this distinction was seen as unnecessary. Many of the vehicles with an engine size greater than 4000 cc were also purpose-use, heavy vehicles in fleets such as the New Zealand Defence, and largely irrelevant to most of the surveyed organisations.] This information was requested, not only because fuel use has a crucial impact on the environmental and economic impacts of a vehicle fleet, but also to provide a check against the data recorded in LANDATA.

The data show that vehicles with smaller engines (less than 2500 cc) have been procured for the public service department organisations, Crown entities, district health boards and, in part, by territorial authorities and regional councils. Vehicles with larger engine sizes (greater than 2500 cc) tend to be found within non-public service department organisations and the territorial authorities and regional councils; and both categories have vehicles with very large engine sizes (4001 to 10,000 cc and greater than 10,000 cc).

Around 5 percent of the vehicles have an engine capacity of 4000 cc and greater. The larger vehicles are mainly vans, trucks and utilities, such as those owned or leased by the New Zealand Police and Fire Service. [Defence Force vehicles were not included in the engine size data analysis as the figures provided in the survey response did not add to 100 percent. This was explained as being due to the remainder of the fleet being trailers. However, after further analysis the data was considered to be too subject to error and was excluded from the analysis of question 5 of the Fleet Composition section of the survey.] This information validates the LANDATA information on vehicle engine size.

Age of vehicles

The survey results show that, on average, 82 percent of fleet vehicles for surveyed organisations are five years old or newer. (It is assumed that these are New Zealand-new vehicles, rather than used, imported vehicles.) The rest of the vehicles were registered in 1999 or earlier. These figures support the age distribution presented by the MoT data.

The percentage of the fleet that is five years or less is shown by key organisation in Table 12-2. The older age of the non-public service department vehicles is largely affected by specialised vehicles that tend to remain within the fleets for much longer. A key example is the specialist vehicles required by the New Zealand Fire Service and the New Zealand Defence Force. Territorial local authority fleets have a number of older vehicles, which needs to be addressed to optimise fleet performance, as newer vehicles are likely to perform much better than older ones in terms of economic, environmental and safety aspects.

Table 12-2: Proportion of fleet five years old or newer

Organisation	Proportion of the fleet that is five years old or newer [Based on Ministry of Transport database information for total fleet size (manually sorted and counted by URS using the database field filters).]	Proportion who responded to survey
Public service department	91%	55%
Non-public service department	58%	100%
Offices of Parliament	-
Crown entities	100%	92%
District health boards	88%	39%
Territorial authorities and regional councils	77%	18%
Averaged proportion of the fleet that is five years old or newer	82%	59%

Figure 12-1 shows that vehicles registered pre-1995 are mainly registered to non-public service departments and to territorial and regional councils. However, a few vehicles registered pre-1995 also make up the district health board and public service department fleets. Again, this information validates the analysis conducted from the LANDATA information on the age of vehicles.

Make of vehicle

The survey asked organisations to list the three most dominant vehicle makes within their fleet. The most dominant vehicle make identified was Toyota (23 percent), followed by Ford and Nissan (both 12 percent), and Holden (11 percent). Nissan, Hyundai and Mitsubishi combined equalled 30 percent. This information is consistent with trends identified from the LANDATA analysis, where Toyota and Nissan were the most strongly featured vehicle makes.

The top three makes were identified by organisation category and are shown in Table 12-3, while Figure 12-2 shows the distribution of vehicle makes among the total portion of the government fleet represented by the surveyed organisations.

Toyota, Nissan, Mazda, Hyundai and Mitsubishi vehicles feature strongly in the public service department, district health boards and crown entities, while Ford and Holden also feature in the non-public and regional and territorial authority. These findings validate the analysis conducted from the LANDATA information on the common vehicle makes. Figure 12-2 shows that Toyota is the most common vehicle make within the surveyed government organisations, comprising nearly a quarter of the surveyed fleets. Mazda, Holden, Mitsubishi, Ford, Hyundai and Nissan contribute to similar portions of the fleet, and 69 percent of the sample population fleet.

Table 12-3: Top three vehicle makes, by organisation category

Organisation	Ranking of most dominant vehicles (1 = most common)
	1	2	3
Public service departments	Toyota	Nissan Ford	Hyundai
Non-public service departments	Ford	Toyota Holden	Mitsubishi
Crown entities	Toyota Nissan	Mazda	Hyundai Mitsubishi
District health boards	Toyota Hyundai	Nissan	Mitsubishi
Regional councils and territorial authorities	Holden Mazda	Toyota Ford	Honda Mitsubishi

12.3 Procurement practices

The survey included a number of questions on procurement practices, some direct questions requiring yes and no responses and some asking for ranking of indicators or qualitative answers. Table 12-4 summarises the responses to questions 3, 5, 9, 10, 12 and 13 of the procurement section.

Table 12-4: Responses to yes/no questions in procurement section of survey

Survey question	Yes	No	Unsure, not applicable or no response
3. Is information gathered about vehicles prior to procurement process?	23	4	1
5. Is a process in place to review fleet size?	21	7	0
9. Do you have a specific vehicle procurement policy?	18	9	1
10. If a vehicle is supplied within the remuneration package, is procurement policy adhered to?	15	3	10
12. Is environmental impact criteria incorporated into procurement decisions?	14	11	3
13. Do you incorporate health and safety considerations into procurement decisions?	22	5	1

Key decision-maker

The key decision-maker when selecting and/or purchasing fleet vehicles can hold a range of positions within the organisation. Figure 12-3 shows that the key decision-maker is frequently the chief executive officer, general manager or the fleet or departmental manager of an organisation, followed by the chief financial officer or accountant, the vehicle user themselves or the procurement manager.

The 'other' category consisted of:

• human resources manager
• regional advisory group
• manager of financial operations
• road policing manager
• national manager of corporate region.

The key decision-maker would depend on a number of factors, such as whether or not vehicles are allocated as part of an employee salary package (leading to a greater influence from the vehicle user), or the size of the organisation (fleet managers are likely to be employed only in larger organisations, with fleets large enough to create this role).

Information gathered before purchase

Over 90 percent of the surveyed organisations said they gathered information on vehicles before vehicle selection (including safety, environmental and cost considerations). Table 12-5 summarises the key sources of this information. Please note that more than one method may apply and therefore the total is greater than the number of organisations (28).

The ‘other’ category included the following information sources:

• industry publication
• internal expertise and other government agencies
• general knowledge
• Turners Auction and resale value.

Table 12 5: Information sources

Vehicle information sources	Number of organisation
Local dealers	12
Vehicle manufacturers	12
Lease providers	4
Consultants	4
Fleet management companies	9
Websites	5
Other	6

Determining fleet size

Table 12-4 shows that 21 out of 28 organisations have a process to review fleet size, while seven organisations do not. Generally, the responses indicated that fleet size review was conducted as part of the organisations’ financial controls. Most of the surveyed organisations also have a process to review vehicle utilisation (25 out of 28 organisations) and this information was often noted as feeding back to the fleet size review process.

Price negotiation and vehicle selection

Table 12-6 summarises the way in which the surveyed organisations negotiate vehicle purchase prices and which parties are involved in the negotiations. More than one method may apply so the total is greater than the number of organisations (28).

The ‘other’ category included the following methods for price negotiation:

• tender evaluation
• Government Supply Brokerage contract
• Vehicle Supply Corporation.

Table 12 6: Vehicle purchase method of negotiation

Method of purchase price negotiation	Number of organisations
Directly with local dealers	10
Directly with vehicle manufacturers	11
Through lease providers	2
Using a fleet management company	2
Other (eg, brokers/consultants)	12

Key influencing factors in vehicle selection

Figure 12-4 shows the key drivers behind the selection of fleet vehicles. The results of the survey show that the top considerations when selecting vehicles were:

• vehicle safety features (15 percent)
• fit for purpose (14 percent)
• environmental considerations (11 percent)
• operating costs; whole-of-life costs (10 percent each)
• capital costs (9 percent).

Comfort and residual value were also key influencing factors. An important observation from these results is the wide range of considerations that apply when procuring vehicles. This is reflected in the challenges experienced by procurement people in organisations when looking for ways to incorporate all their needs into the decision-making process.

Replacement practice

All surveyed organisations said they had some form of replacement strategy, although for organisations with specialised vehicles (such as the New Zealand Fire Service and the New Zealand Defence Force) there may be exceptions to this policy, where vehicles remain in the fleet for many years. The policies for vehicle replacement varied, ranging between three years or 80,000 kilometres and six years or 120,000 kilometres. However, based on the age distribution of vehicles from both the survey responses and LANDATA information, it seems that replacement policies/standard practices are not always adhered to.

12.4 Procurement policy and practice

Approximately two-thirds of the survey respondents said they did have a procurement policy or procedure, either a general procurement policy or one specifically for vehicle purchases. The survey listed a number of considerations that could be contained within a procurement policy and asked respondents to tick those applying to their organisation’s policy.

The responses to this question are presented in Figure 12-5. More than 80 percent of the survey responses included capital cost, the replacement schedule and safety ratings in the organisation’s vehicle procurement policy (or practice). In terms of environmental considerations, only 30 percent of the organisations currently include emissions criteria within their policy. However, twice that number of organisations consider the fuel economy rating of their vehicles. Similarly, around 60 percent consider operating costs and/or whole-life costing.

Acting in accordance with policy

It seems that 18 of the 28 surveyed organisations offer vehicles as part of staff remuneration packages (interpreted from responses to survey question 9). Similarly, 18 organisations also answered yes to having a specific vehicle procurement policy. However, 15 of those 18 organisations said this policy was adhered to when selecting vehicles as part of a remuneration package. Conversely, three organisations stated that their vehicle procurement policy was not typically followed in this situation.

Incorporating environmental considerations

Of the 28 responding organisations, 14 (50 percent) actively aim to incorporate environmental considerations into their vehicle procurement decisions. Sections 12.6 and 12.7 summarise the feedback provided by those respondents on the challenges, barriers and desirable tools related to this task.

The case studies in Section 8 illustrate how a number of the respondents have built environmental considerations into their fleet procurement and management practice.

Incorporating health and safety considerations

Feedback from the survey respondents on health and safety considerations shows that this is generally a key issue for vehicle selection. Comments were also made that in many cases the vehicle can be the place of work and the safety of the staff member(s) is therefore very important. In some cases, organisations specify that vehicles must attain a certain score, such as four stars from the Australian New Car Assessment Programme guidelines (refer to Section 5 for further details of these safety guidelines, available through Land Transport New Zealand). However, in most cases health and safety requirements were based on the requirement for certain minimum features, generally front airbags and ABS breaking. In some survey responses, air conditioning was also considered an important safety consideration. For organisations where staff conduct roadside inspections, the ability to move quickly back into the traffic stream was considered a key health and safety consideration. Further detail was provided on this requirement and the organisation’s view was that automatic, powerful vehicles are desired.

The Ministry of Education case study included in Section 8 shows how this organisation has built safety environmental considerations into their fleet procurement practice.

12.5 Fleet management

The fleet management section of the survey included a number of questions on management and reporting practices, some of which required yes and no responses and some that required ranking of indicators or qualitative answers. Table 12-7 summarises the responses to questions 2, 3, 5, 8, 9 and 10 of the management and reporting section.

Table 12 7: Responses to yes/no survey questions on fleet management and reporting

Survey question	Yes	No	Unsure, not applicable or no response
2. Do you track vehicle utilisation?	25	3	0
3. Do you have a regular maintenance policy?	26	0	2
5. Are there specific terms or conditions in your fleet contract or tender document related to environmental considerations?	5	12	11
8. Does your fuel supplier provide monthly updates?	25	2	1
9. Do you have a vehicle booking system	24	2	2
10. Do you have a process in place to track fleet efficiencies?	18	10	0

Overall responsibility

Figure 12-6 summarises the results from the fleet management part of the survey, showing the person in the organisation responsible for the ongoing management of the vehicle fleet. The ‘other’ category included the following:

• fleet coordinator
• regional manager.

The survey results show that many organisations have a nominated person within their own organisation who is responsible for management of the fleet, either at a management level or a clerical role. However, it is not known if management of the fleet is a key aspect of that person’s role, or whether it is more minor compared with other duties.

Utilisation and fuel usage

Over 80 percent of survey respondents track vehicle utilisation. However, descriptions of the processes used show there is no standardised approach. Methods seem to vary between organisations and, in some cases, within organisations. Vehicle utilisation does seem to be determined mainly from fuel usage records and vehicle booking sheets. These records are established and reviewed either manually or from electronic sources. Fuel usage information is typically supplied by fuel card suppliers in an electronic format, either downloadable from websites or supplied in a paper or electronic form on a regular basis, with nearly 90 percent of organisations supplying this fuel usage data on a monthly basis.

Vehicle use appears to be a key parameter for organisations surveyed, with responses indicating that many have investigated or trialed improved processes for gaining this information.

End-of-life and disposal issues

Typically, where vehicles are leased or managed by a third party, the disposal of tyres, parts or waste oil replaced during maintenance is considered the responsibility of the lease or fleet management company. Similarly, leased vehicles are returned to the lease company at the end of the lease period. Purchased vehicles are typically auctioned to the public, although in some cases employees are given first option. The general indication was that the end of the life of both vehicles and parts are not currently considered to be a responsibility of the organisation utilising the fleet.

Some respondents did recognise a need or indicated a desire to address this environmental aspect further but did not appear sure of what approach to take.

Terms and conditions in contracts and tenders

Only five of the 28 organisations have specific terms and conditions within their contracts and tenders relating to environmental considerations. However, the need to do so was also noted in some surveys that answered no to this question.

A general comment in the surveys, particularly from smaller district health boards, was that the organisations do not have the resources or expertise to prepare such clauses. It seemed that most of the organisations with these environmental-based terms and conditions have introduced them only fairly recently.

In the case of the New Zealand Police Force, a request for tender that included environmental specifications was recently put out into the market. Further details of the approach taken by the Police are summarised in a case study in Section 8. The Police contract is particularly important as a number of other government organisations can use this contract through a multi-agency purchasing arrangement.

Pool vehicle booking, maintenance and tracking of performance

More than 80 percent of survey respondents have a vehicle booking system in place for pool vehicles.

More than 80 percent of survey respondents have a vehicle maintenance policy in place. Typically, the details provided indicate that maintenance was carried out in accordance with manufacturers’ specifications.

The survey asked if organisations had a process in place to track fleet efficiencies; for example, actual fuel consumption, emissions reporting and vehicle utilisation. Slightly more than half of the respondents said that such reporting was undertaken for their fleet.

Feedback into procurement practices

For organisations with effective and detailed fleet monitoring and reporting systems in place, reporting does seem to be fed back into the procurement process, either for benchmarking or to provide recommendations for future purchases.

However, a number of organisations did not consider that the results of their fleet reporting had a significant influence over the procurement process. This finding seemed to come from organisations that tended to monitor and record only the minimum data, such as fuel usage.

12.6 Feedback on barriers to implementing best practice

Survey responses show that some organisations do not have a vehicle procurement policy or detailed management strategy in place, or do not follow the strategies they have. Some responses also show a level of frustration, saying that their organisations faced a number of barriers when attempting to incorporate sustainable practices into their fleet procurement and management processes.

It may be useful to highlight some of these comments to give feedback on where resources could be provided to aid government organisations in improving performance and reducing the negative impacts of their vehicle fleets.

Comments are summarised anonymously.

• Difficulty has been encountered in sourcing vehicles that meet business requirements, are environmental friendly and are cost effective.
• Analysing fleet management data may require resources and expertise not held by the organisation.
• Difficulty has been encountered in obtaining sound and proven information, which preferably has been independently verified, on the environmental performance of vehicles. Challenge raised by many respondents.
• The influence of different driving habits and conditions on environmental performance is an added complexity and information is difficult to obtain.
• There may be difficulty encountered in overcoming drivers’ preference for powerful vehicles, above other considerations.
• Environmental considerations may not been a concern for the organisation and are perceived as adding cost. Similarly, safety features for a vehicle may also be perceived as an additional cost. (However, it should be raised that the cost of providing safety features was only raised in one survey, and many respondents rated safety as a key concern during vehicle selection.)
• There are no easily available guidelines on how environmental considerations should be weighted compared to other factors.
• While often aware of environmental considerations, many agencies lack specific knowledge and experience in assessing environmental standards, and so on. This information needs to be made available to all government agencies by central government organisations such as the Ministry for the Environment for inclusion in future procurement (across all elements of government procurement rather than just vehicles).
• It is difficult to quantify the benefits such as improved safety features or lower emissions. This then creates difficulty in presenting a business case for such vehicles, should the capital costs (or other operating costs) be higher than other, lower-performing options.
• Policy may mention environmental considerations but they may not be enforced. (This challenge is related to most of those on this list and may be a result of the other challenges/barriers raised.)
• More clarity, detail and direction is needed around government expectations; that is, how are hybrids viewed? What level of support and funding will be made available to departments and agencies to pursue more environmental solutions – will there be any incentives for those who do?

12.7 Tools to assist with sustainable vehicle procurement

The survey included a qualitative question on the types of information and tools that fleet managers or procurement managers might find useful when considering environmental and safety factors in vehicle procurement. Responses to this question are summarised below, also anonymously.

• A process/database/website is needed to give organisations emissions ratings and fuel consumption figures for new vehicles, as in some cases they found it difficult to get this information from vehicle suppliers.
• Some organisations considered that actual test results for emissions and fuel economy were needed, rather than those conducted in a laboratory or other form of a controlled environment.
• Clear guidelines to benchmark fleets against would be useful, as would whole-of-life costings information down to a vehicle make and model level of accuracy.
• There is a need for ways to quantify the benefits of having a safe fleet, including some rudimentary calculations that support health and safety from a financial perspective.
• New Zealand should introduce a requirement to provide standard fuel consumption and emissions levels for vehicles sold new in New Zealand.
• An example must be set and enforced by senior management within organisations, which may require a culture change. Alternatives to this ‘lead by example’ approach, such as issuing a Cabinet directive, were also suggested.
• Information on what other organisations are doing would be useful.
• A tool, such as a database, that organisations could use to enter vehicle specifications into, would be useful (for both manufacturers’ data collected during the selection process and for actual data from monitoring of the existing fleet).
• Template clauses specifically written for government agencies to include in their motor vehicle contracts would be useful. These templates could be written to include Govt³ environmental and social objectives for sustainable vehicle procurement.