BOARD MEETING DATE: November 5, 2010
AGENDA NO. 10

PROPOSAL:

Execute Sole Source Contract for Buy-Down Incentive Program for CNG Home Refueling Appliance

SYNOPSIS:

Since May 6, 2005, the AQMD has implemented a buy-down incentive program for the Phill natural gas home refueling appliance (HRA) manufactured by FuelMaker Corporation to broaden the consumer base of light-duty natural gas vehicles. In April 2009, FuelMaker Corporation filed bankruptcy and was acquired by Fuel Systems Solutions, Inc. In July 2010, sale of the HRA in California resumed through an exclusive distributor, Gas Equipment Systems, Inc. (GESI). This action is to execute a sole source contract with GESI for an amount not to exceed $60,000 from the Clean Fuels Fund to provide a buy-down incentive of $1,000 per HRA.

COMMITTEE:

Technology, October 15, 2010, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Chairman to execute a sole source contract with Gas Equipment Systems, Inc. in an amount not to exceed $60,000 from the Clean Fuels Fund (Fund 31) for a buy-down incentive program for the purchase and installation of a home refueling appliance (HRA) at $1,000 incentive per HRA.
 

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In May 2005, the AQMD and MSRC started a buy-down incentive program for consumers to purchase or lease, and install within the jurisdictional boundaries of the AQMD, the CNG home refueling appliance manufactured by FuelMaker Corporation, and marketed under the name Phill. Overwhelming response to the buy-down incentive and the purchase of the Phill, resulted in the Board reapportioning and approving additional funds in February 2007 and July 2008. More than 260 consumers purchased and installed the Phill with AQMD sponsored buy-down incentives as of April 2009. In April 2009, the buy-down incentive program was unexpectedly interrupted when FuelMaker Corporation filed bankruptcy. FuelMaker was acquired by another company and production was moved from Canada to Italy. Production of the Phill was resumed under the new owner, Fuel Systems Solutions, Inc., and reintroduced to the market in the latter part of July 2010. The contract between the AQMD and FuelMaker Corporation to implement the purchase buy-down incentive program was subsequently closed leaving a balance of $60,000 in contract funds for the incentive program. There have been general interest and inquiries from the public regarding the buy-down program after the reintroduction of the HRA into the California market.

Proposal

Staff is requesting the Board’s approval to reinstate the buy-down incentive program for purchase of the compressed natural gas (CNG) home refueling appliance, marketed under the name Phill, and enter into a contract with Gas Equipment Systems, Inc., the exclusive dealer for the HRA in California for an amount not to exceed $60,000. Staff is proposing the buy-down incentive program provide $1,000 per HRA customer to purchase and install a Phill within the jurisdictional boundaries of the AQMD. The objective of the buy-down program is to facilitate the expansion and use of alternative fuel vehicles in the general consumer market.

Benefits to AQMD

Gasoline and diesel fueled mobile sources are a significant source of emissions in the AQMD and alternative fueled vehicles are a means of reducing these emissions. This project will continue the momentum for the expansion of natural gas home refueling appliances and passenger car alternative fuel vehicles.

Sole Source Justification

Section VIII.B.2 of the Procurement Policy and Procedure identifies four major provisions under which a sole source award may be justified. This request for a sole source award is made under provision c (3) “the contractor has ownership of key assets required for project performance”. Gas Equipment Systems, Inc. is the sole distributor of the home refueling appliance in California.

Resource Impacts

In July 2008, the Board awarded $146,000 to the HRA purchase incentive program from the Clean Fuels Fund (31) through a contract modification with FuelMaker Corporation. FuelMaker Corporation subsequently changed ownership which resulted in closing out their contract with a balance of $60,000. Staff is requested this amount of $60,000 funded from the Clean Fuels Fund (31) be applied to a new contract with Gas Equipment System, Inc. to continue the incentive program.