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

3 Summary of Report Findings and Baseline

3.1 Introduction

This summary is pulled together from various information sources to give a picture of the government fleet baseline - its fleet characteristics, procurement practices, fleet vehicle costing and, to some degree, fleet management practices. Information sources include the Land Transport Database (LANDATA) maintained by the Ministry of Transport, questionnaires completed by various government organisations as part of this study, results of vehicle FleetCheck [Fleet audit method established by EECA (Energy Efficiency and Conservation Authority).] assessments previously undertaken for government organisations, and information supplied by FleetSmart (an independent fleet management company).

3.2 Fleet characteristics

Summarised fleet data by organisational category

Table 3-1 summarises fleet data for the key organisations, based upon LANDATA. The survey information and fleet check audit findings were in the main consistent with these findings.

A more detailed discussion of the fleet data follows Table 3-1.

Table 3-1: Summary of fleet information

View summary of fleet information (large table)

Number of vehicles

The government fleet, as recorded in LANDATA, is just over 21,000 vehicles. The economic, social and environmental efficiency of the fleet could be improved through a reduction in fleet size, 'fit for purpose' assessments of vehicles during the procurement process, and by improved fleet management and data collection.

Vehicle size

About half the fleet vehicles are 1000-2000 cc with 28 percent in the 1600-2000 cc range. This is consistent with FleetCheck audit findings that show an average engine size of 1700 cc. Except for the district health boards, there is significant potential to reduce vehicle size across the fleet. The EconoDrive (2001) recommendations should be followed to reduce vehicles used mainly by one or two occupants to no more than 1300 cc for city driving and no more than 1600 cc for open road driving.

Fuel type

About 75 percent of the government fleet vehicles are petrol driven and 25 percent are diesel. A small number of hybrid vehicles is now entering the fleet. The environmental benefits associated with fuel type are generally heavily influenced by technology advancements in the vehicle and fuel industries. Legislative requirements for fuel are a key influence on the environmental impacts associated with vehicle fuel type. Those responsible for procurement should keep up with technology and legislative developments in this area.

Fuel consumption

Fuel consumption levels for the government fleet are not well recorded, as the information has only been required from manufacturers since early 2005. LANDATA information shows the average combined fuel consumption rating over all government organisation categories (excluding the Offices of Parliament) is 9.2 l/100 km for petrol vehicles and 9.6 l/100 km for diesel vehicles. Data from FleetCheck audits (average fuel consumption of 10.06 l/100 km) and from FleetSmart-managed fleets (which vary across vehicle makes and models) are likely to be more accurate, as these are based on actual kilometres travelled and also incorporate older vehicles.

The potential to improve fuel efficiency of the fleet is closely related to using smaller vehicles or using hybrid vehicles. Although non-public service departments and territorial local authorities may need larger vehicles for some jobs, a significant portion of these fleets could still be downsized to reduce fuel use. Improved fuel economy is a key consideration across the entire fleet, both for environmental benefits and to save costs. The most significant improvements are likely to result from appropriate vehicle selection, but implementing regular and more frequent vehicle maintenance and replacement programmes will also help.

Emissions levels

Emissions levels have only been recorded for vehicle fleets since March 2005. However, current LANDATA information shows that the majority of vehicles are in the Euro II [Emissions ratings are usually stated as codes that reflect emission standards typically developed by Australia, Europe, USA or Japan. European emissions codes may be indicated by a 'Euro' number. A higher number indicates lower emissions of carbon monoxide, hydrocarbons, nitrous oxides and particulate matter. A table of emissions levels related to the Euro standards can be found at Appendix D, Table 11-11.] or equivalent category. As few low emissions vehicles may currently be available in New Zealand, vehicle maintenance becomes a key factor in reducing the environmental impacts of emissions from the government fleet. Older vehicles are also likely to be high emitters and should be replaced.

Carbon footprint

Using an estimation method provided by Land Transport New Zealand, a baseline value for carbon dioxide emissions from the total government fleet is 112,000 tonnes/annum. This estimate was calculated from a derived relationship between fuel consumption and carbon dioxide production (taking into account differing factors for petrol and diesel vehicles). It combined fuel consumption figures obtained from LANDATA and averaged over each organisation category (public service departments, non-public service departments, and so forth).

The calculated mass of carbon dioxide emissions produced per vehicle per kilometre was multiplied by the total number of vehicles within each organisation category and average annual mileage figures for a range of fleet sizes. [Information obtained from Table 6 of the report titled Light Vehicle Fleet - Energy, prepared by Transport Engineering Research New Zealand (TERNZ) for EECA in September 2005.] The accuracy of this estimate can be refined as more data becomes available.

Vehicle safety

Vehicle safety is a key consideration in government fleets, with a number of surveyed organisations identifying this as their top priority. Australian New Car Assessment Programme (ANCAP) ratings are available for 17 of the 31 most common vehicle makes and models. One scored five stars, eight scored four stars, seven scored three stars, and one scored a two-star rating. Vehicle safety ratings are available for 24 of the 31 most common vehicle makes and models. Ten of these have passenger protection ratings of either better or significantly better than average, 12 have average passenger protection ratings and two have worse or significantly worse ratings.

The used-vehicle safety guide also gives ratings for the amount of harm a vehicle causes other vehicles in a crash, and this information is available for 23 of the 31 most common vehicle makes and models within the government fleet. Of those 23 vehicles, six have been rated as causing less or significantly less harm than average to other vehicles, 10 are rated as causing an average amount of harm and seven have been rated as causing more or significantly more harm than average to other vehicles.

The top makes of vehicles purchased by government agencies are Toyota, Ford, Nissan, Hyundai, Holden and Mazda.

3.2.1 Knowledge gaps

Reported fleet data collected through the survey - numbers of vehicles, makes, engine size and vehicle age - are generally consistent with the LANDATA information.

Key knowledge gaps tend to be data that would best be captured at an individual organisational level rather than via the Ministry of Transport database. This includes information such as:

• odometer readings/kilometres travelled
• vehicle use (preferably also including the number of passengers within a vehicle).

Gaps within the Ministry of Transport database are likely to narrow with time, as more information is collected on factors such as fuel economy and emissions ratings for new vehicles. The Ministry of Transport could consider collecting safety ratings for each new vehicle. This information could be linked to LANDATA to minimise data entry requirements.

Although this report attempted to provide an overview by estimating the carbon dioxide emissions generated from the overall government fleet, this type of detailed assessment is best conducted at an individual organisational level. The results are better supported by actual data, particularly actual fuel usage, and are also more meaningful and likely to have a greater impact to the individual organisation, particularly with ongoing monitoring.

A directive and/or commitment from government to require all associated organisations to collect specific data from their fleet performance, or a requirement such as monitoring annual carbon dioxide emissions, would help close some of the knowledge gaps identified here. But this would need to be supported by tools such as readily available information on vehicles (to a make and model level) and a universally used database to record and/or calculate required data.

3.3 Vehicle procurement practices

3.3.1 Current practices

Those responsible for fleet procurement generally come from within an organisation (in management, finance or procurement departments) and negotiate directly with local dealers or manufacturers. Only two organisations say they use external fleet managers and two use lease providers. A number of organisations also refer to a Government Supply Brokerage (GSB) contract or syndicated contracts.

Around 85 percent of vehicles are purchased either directly by organisations or through GSB or other purchase arrangements. A number of organisations see the benefits of a syndicated or group purchasing arrangement to get better terms.

Safety, 'fit for purpose', environment, operating costs, whole-of-life costs, and up-front capital costs are the top six drivers for fleet vehicle selection.

A number of organisations consider operating costs and whole-of-life costing in their procurement decisions, but it is hard to judge the level of detail considered. Examples of option analysis provided by FleetSmart illustrate the value of 'fit for purpose' assessments and whole-of-life vehicle analysis in procurement decisions.

Safety considerations rank highly, and safety rankings are commonly referred to within vehicle procurement policies. Some features selected for safety purposes such as air conditioners and automatic transmission can have an environmental cost. The challenge with environmental considerations comes in the practical implementation, with only half the surveyed organisations stating that environmental considerations are incorporated into vehicle procurement decisions:

• Survey results show that 18 organisations have a specific vehicle procurement policy. These policies tend to focus on capital costs, operating and whole-of-life costs, residual value, replacement schedule, safety ratings and fuel economy. A number of these factors will affect the environmental performance of a fleet - replacement policy, whole-of-life costing, fuel economy. (Note: In some cases respondents were not confident that vehicles procurement policies were adhered to when vehicles were part of staff remuneration packages rather than pool vehicles.)
• Environmental factors such as energy efficiency, vehicle emissions and recyclability are specifically considered by just a small number of organisations.
• Only half the respondents indicate that environmental considerations are incorporated into procurement decisions. While this seems to contradict the earlier indicator that environmental considerations are a driver in vehicle selection, it is assumed that this refers mainly to fuel economy rather than other issues such as emissions or energy efficiency.
• Waste oil, parts and end-of-life disposal are not currently considered by respondent organisations, although a few respondents say they are aware of these issues and would like to find ways to manage these impacts in the future.
• While five out of the 28 respondents incorporate specific terms and conditions relating to environmental considerations in procurement tenders and contracts, a number of others say they would like to but don't know enough to do so.

The survey results and associated case studies of selected government organisations show a high level of emerging practice in the area of incorporating sustainability considerations. The results of these improving practices are likely to be seen in future fleet audits and baseline studies.

3.3.2 Knowledge gaps and barriers

Vehicle procurement practices traditionally focus on economic considerations and, potentially, a lesser consideration of vehicle safety. Survey responses identified several requirements that would need to be fulfilled to better incorporate environmental and social considerations into vehicle procurement practices:

• a change in staff attitudes, both management and users, to recognise the value of improved emissions and fuel economy performance
• adequate expertise to deal with environmental issues
• a better understanding as to whether there is a business case for more environmentally responsible choices and identify how best to present that business case
• reliable information on the environmental and safety performance of vehicles and how best to use this information within the procurement process
• comparable information on vehicles in New Zealand across a range of sustainability factors
• balancing environmental and safety performance with specific needs for vehicles ('fit for purpose' criteria) and with cost, and determining how these competing factors should be weighted.

A key issue is also how to consistently apply and adequately assess such sustainability criteria once they have been incorporated into a vehicle procurement policy.

3.4 Fleet management practices (measurement and reporting)

3.4.1 Current practices

Survey results show that government organisations generally record parameters such as mileage and fuel use, and also keep maintenance records as part of the general finance and administration process. However, few organisations currently collect detailed information relating to the environmental and safety performance of their fleet. In spite of this current lack of information, many organisations recognise they need to know more about their fleet, so they can form a benchmark and identify ways in which they can improve fleet performance.

3.4.2 Knowledge gaps and barriers

Specific environmental factors such as energy efficiency, vehicle emissions and recyclability are typically not well recorded by fleet managers. Waste streams associated with vehicle fleets (such as tyres, waste oil and end-of-life vehicle disposal) are not being dealt with, and little is known about how these waste streams should be managed.

Collecting and reporting fleet information generally seems to be driven by financial and administration requirements, rather than by a more overarching approach such as assessing the fitness for purpose (including the sustainability) of a vehicle fleet. But there are signs that this is changing. In many cases, bridging the gap between these two levels of fleet measurement and reporting may be difficult, without clear guidelines and the resources to do so. Refer to Section 4 for further discussion of tools that could be provided to help with the measurement and reporting of fleet performance.

3.5 Vehicle costing and fuel consumption comparisons

Analysis on life-cycle costing of vehicle makes and models commonly selected as fleet vehicles and hybrid vehicle versus standard fleet vehicle comparisons show the value of full-life costing of vehicles as part of vehicle procurement decision-making. This type of analysis also offers a mechanism for ongoing fleet management and for informing future decisions based on organisational fleet data.

Actual fuel consumption data for common fleet vehicles as well as hybrid vehicles provides useful information for procurement managers in making fleet vehicle decisions.

3.6 Case studies

Seven case studies were prepared, each focusing on a particular aspect of fleet procurement practice:

1. Accident Compensation Corporation. The Accident Compensation Corporation's vehicle procurement policy refers to whole-of-life costs, disposal and residual value, replacement schedule, safety rating, fuel economy rating, energy efficiency and vehicle emissions standards.
2. Ministry of Education. The Ministry of Education prioritises vehicle safety during the procurement process, and requires fleet vehicles to have a safety rating of four stars (or better).
3. The New Zealand Police. The New Zealand Police uses nearly 2900 fleet vehicles. Sustainability measures have been incorporated into the recent procurement process, including specific contractual clauses relating to vehicle environmental and safety performance.
4. Bay of Plenty District Health Board. The Bay of Plenty District Health Board has amended its vehicle procurement and fleet management processes in recent years, taking back management of its own fleet rather than using an external company.
5. Waitakere City Council. Waitakere City Council did a FleetCheck audit in 2004, which assessed fleet characteristics, management processes, costs and environmental impacts (including emissions and fuel usage). Since that audit, Waitakere City Council have done a number of things to improve its fleet procurement and ongoing management.
6. Auckland City Council. The Auckland City Council did a FleetCheck audit in 2003 and has since reduced the overall fleet size, established a written vehicle procurement policy, improved monitoring and record keeping for the actual performance of the fleet, and reduced fuel consumption.
7. Fleet Management initiatives for district health boards. The Crown Health Financing Agency (CHFA), district health boards (DHBs) and others identified that the DHBs may not be maximising fleet cost and efficiency potential, mainly because of a fragmented approach to fleet procurement, management and disposal of vehicles. As a result, FleetSmart and a national purchasing consolidator were engaged by the CHFA to review the fleet procurement and management practices for a sample group of DHBs. Four DHBs were included in the study.