Cost effective vehicle purchases

Introduction

The decision to purchase a vehicle requires careful consideration of up-front vehicle acquistion costs, and later vehicle operations and maintenance costs. With the increase in the costs of fuel and maintenance labor, fuel efficient, reliable vehicles are now more valuable than in the past. Cost-effective vehicle procurement is an important part of maintaining a reliable fleet that can run efficiently and for long hours. The problem of ‘peaking’ adds to these problems. Peaking refers to the high number of vehicles needed to accommodate the high numbers of passengers that converge on the system during morning and evening rush hours. This means that transit systems have to obtain and maintain more vehicles than are needed during off-peak hours.

State and local governments are eligible to receive funds for capital costs, like vehicles, from the federal Department of Transportation through several programs, like the Surface Transportation Program, the Bus and Bus Facilities Program, and others, though they must follow certain guidelines and meet eligibility requirements. This is important to note because the availability of capital funding is the best predictor of the age at which transit agencies retire vehicles. Another important resource for California's transit providers is the California Transit Association. The Association's mission is to advocate for public transit and share resources, including research and surveys, among member organizations.

A hybrid Los Angeles Metro bus in 2009. Photo by Mike Bottone, via Flickr user Metro Transportation Library and Archive.

Regulations Affecting Procurement

One study by the Federal Transit Administration found that several federal and state policies and regulations affect procurement and service-life length. For example, the Americans with Disabilities Act has had an effect on the technology sought in vehicles, including on-board annunciators and reliable lifts. The FTA’s own minimum requirements for the span of time a vehicle must be in service before it can be retired without a penalty was also found to alter expectations for service-life of vehicles among practitioners. Most importantly, they found that these regulations have a relatively minor effect on service-life of vehicles, especially when compared with the low-bid procurement process. Accepting a low bid should not be prioritized over obtaining high-quality, long-lasting vehicles.

Emissions Regulations

The SAFETEA-LU transportation legislation specifically names diesel retrofits as a cost-effective method for reducing emissions to meet federal air quality standards, and this method has been studied by the EPA and the Transportation Research Board. New transit vehicle purchases may even be eligible for Congestion Mitigation and Air Quality Improvement funds (CMAQ).

California’s air quality goals also affect the parameters that transit providers have to work within when procuring vehicles. The California Air Resources Board requires that fleets reduce their overall emissions, including particulate matter and nitrous oxide from fleet vehicles. The Air Resources Board also has specific requirements for urban buses, separate from an agency’s average fleet emissions. Additionally, the South Coast Air Quality Management District (SCAQMD) has separate, specific requirements for Southern California transit agencies and other government agencies that manage fleets of 15 or more vehicles. It requires that new vehicle purchases must be lower emission vehicles or vehicles that use alternative fuels.

Buy America Requirements

Agencies receiving funds from the Federal Transit Administration must purchase vehicles that are made up of 60 percent domestic parts and assembled in the United States under the US Department of Transportation’s Buy America requirement. There are three possible reasons for the FTA to waive this requirement: if the requirement is not in the public interest; if the parts or components are not produced in a sufficient enough quantity; and if fulfilling the requirement would add over 25 percent to the cost. Although waivers are available for this requirement, one study found that many small, rural providers had difficulty fulfilling it when procuring paratransit vehicles.

Case Studies

German Case Study

Professors Buehler and Pucher examined the elements of a successful increase in transit efficiency in Germany. They found that purchasing new vehicles, and sharing them among transit agencies, was a part of improving the financial sustainability of Germany's transit system, along with reducing labor costs and fare reform.