DIVISION OF VEHICLE POLICY
OFFICE OF GOVERNMENTWIDE POLICY
GENERAL SERVICES ADMINISTRATION
BEFORE THE
COMMITTEE ON GOVERNMENT REFORM
AND THE
UNITED STATES HOUSE OF REPRESENTATIVES

MARCH 12, 2003

Mr. Chairman and members of the Committee: Thank you for inviting us here this morning to discuss the experience of Federal agencies with the laws and Executive Orders mandating energy efficiency in Federal motor vehicles.

My name is William Rivers, from the General Services Administration (GSA), Office of Governmentwide Policy, where I am the Director of the Federal Vehicle Policy Division. Also here from GSA is Mr. Barney Brasseux of the Federal Supply Service, where he is the Assistant Commissioner for the Office of Vehicle Acquisition and Leasing Services.

GSA offices share several areas of responsibility in the area of fuel efficiency in Federal vehicles. The Federal Supply Service includes GSA Automotive, which is the mandatory source of supply for all Federal agencies purchasing commercial-design, non-tactical vehicles. GSA Automotive buys about 60,000 vehicles annually on behalf of Federal agencies. Since 1991, we have purchased over 65,000 alternative fuel vehicles (AFVs) for our Federal customers. The Federal Supply Service also includes GSA Fleet, which is a non-mandatory source for Federal agencies that wish to lease vehicles rather than purchase them. GSA Fleet leases about 190,000 vehicles to Federal agencies, which is about one-third of the total Federal fleet; the Postal Service also has about one-third, and the remaining third are owned by the various agencies.

GSA's Office of Governmentwide Policy is responsible for establishing the regulations under which all Federal fleets must operate. We also serve as an information clearing-house and spokesperson for the Federal fleet community, and we collect data on Federal agencies' vehicle inventories and fleet characteristics. We also coordinate the response of Federal fleet managers to issues of common concern. We work with the Department of Energy (DOE) and the Federal fleet community to enhance and improve the use of AFVs.

Finally, GSA operates a small fleet of about 2,000 vehicles for its own internal use, most of which are leased from GSA Fleet.

The requirements of statutes and Executive Orders in the area of vehicle fuel efficiency apply to all Federal executive departments. GSA is primarily a supplier of vehicles to Federal agencies, and a coordinator of agencies' efforts to manage those vehicles effectively. In that role, GSA has some experience with the operational aspects of fuel efficiency mandates, as well as some insight into the policy implications faced by Federal agencies generally. However, on matters of governmentwide compliance with energy efficiency, we defer to our colleagues at the DOE, which has the statutory authority to monitor compliance of executive agencies with energy efficiency requirements.

GSA involvement with the Federal Government's Alternative Fuel Program

GSA Fleet has been involved in the Federal government's alternative fuel program since the enactment of the Alternative Motor Fuels Act of 1988 (AMFA). The purpose of the AMFA and the AFV program has been to introduce AFVs into the Federal fleet, demonstrate their effectiveness, and encourage the use of both AFVs and alternative fuels. We have purchased more AFVs produced by the automotive manufacturers than any other single organization in this country. In fact of the 65,000 AFVs purchased by GSA Automotive, GSA Fleet has acquired 58,000 AFVs at a cost of $900 million for our customers to use. Today, we have 30,000 AFVs operating in our fleet. We are very proud of our AFV accomplishments.

AFVs use various types of fuel such as methanol (M85), ethanol (E85), compressed natural gas (CNG), liquid propane gas (LPG), and electricity. AFVs are available as flexible fuel, bi-fuel or dedicated models. The flexible fueled vehicle can use either unleaded gasoline, or some alternative fuel, such as ethanol in the same tank. However, these fuels cannot be used simultaneously. The bi-fueled vehicle is configured with two tanks, to allow the driver to switch fuels, such as gasoline and compressed natural gas. Dedicated vehicles operate on a single fuel or electricity.

GSA Fleet has extensive experience in the day-to-day operation of AFVs. Many of the issues that we all face today concerning AFVs have changed little since the Federal government's program started under the AMFA. Issues such as vehicle type, fuel type, purchase price, resale value, limited driving range, limited infrastructure, incremental costs and the impact of these issues on our customer agencies' budgets and missions have changed little over the years. For example, dedicated AFVs continue to have limited range and limited refueling and maintenance infrastructure while bi-fuel and flexible fuel vehicles are using gasoline, because the alternative fuel is either not available, or it is not economical to use.

Manufacturers have not always offered suitable AFVs. Typically, manufacturers introduced AFV configurations in a small sample of their models. It has taken many years to get the full range of AFVs available today that can satisfy the Federal agencies' missions. The AFVs offered for sale by the manufacturers are primarily flexible fueled E85 vehicles, fueled with ethanol. Federal fleets for the first time were able to acquire E85 compact AFV sedans in 2003. For nearly a decade, agencies acquired larger sedans in significant numbers to meet AFV mandates because cost effective compact AFV sedans were not available. DaimlerChrysler recently announced they would not offer the E85 flexible fuel minivan for model year 2004 and beyond. The decision to discontinue this model is a major disappointment since we buy thousands of these vehicles annually.

While the auto manufacturers are generally trying to expand their AFV product lines, we have been advised that the overall demand for higher cost and dedicated fuel AFVs continues to be low. Federal Government purchases alone are not enough for manufacturers to realize the economies of scale that they enjoy for conventionally fueled vehicles. The 60,000 vehicles purchased annually by GSA account for less than 0.36% of the over 16 million vehicles sold in the United States each year. To put this in perspective, the entire Federal fleet including the Postal Service has 579,500 vehicles or about 0.27% of the 217 million vehicles registered in the United States.

Another issue confronting fleet managers is the cost of AFVs. AFVs generally cost more than their conventional counterparts, especially dedicated and bi-fuel models. In the early nineties Congress provided the funding to pay the incremental cost of AFVs through DOE. This worked well, as DOE and GSA partnered to acquire AFVs for the Federal Fleet. However, beginning in FY1996 and beyond the incremental funding was no longer available, and agencies were directed to fund the incremental costs of AFVs without additional appropriations. This has affected agencies' ability to acquire AFVs.

Many of our Federal customers have made significant strides to comply with AFV minimum fleet requirements through the GSA Fleet program. But, the private sector has not put in place sufficient infrastructure, such as maintenance/repair facilities and refueling facilities, nor developed a mechanism to capture alternative fuel use data to support the AFV fleets. The Federal Government has had limited success getting the private sector to develop the infrastructure to support AFVs in this country. In the early years we partnered with DOE, and many fuel providers such as Sunoco, Conoco, Methanex and others to provide a concentration of AFVs in certain areas as an incentive for the fuel providers to develop the necessary infrastructure. In addition, we worked very closely with the Natural Gas Vehicle Coalition, the National Corn Growers Association and many others to help support the development of alterative fuel infrastructure. However, since we support so many agencies, GSA Fleet's vehicles are, by necessity, widely spread over the country. This decentralization makes it difficult for GSA to generate adequate demand for AFV refueling sites. By contrast, gasoline powered vehicles have a network of over 180,000 locations that sell fuel in this country. We are continually working with the AFV industry to focus their employees' attention on the need to utilize alternative fuel where it is available. In addition, as new technologies enter the market, the infrastructure must be there to support it. Most of the successful AFVs have been flexible fuel, and to a smaller extent, bi-fuel vehicles. This is because these vehicles can operate on gasoline when the infrastructure is not available. The dedicated vehicles are more suited for base-type operations where they do not leave the facility, and AFV refueling is provided at the site.

As new technologies, such as gasoline-electric vehicles and diesel-electric hybrid vehicles, come to the market, AFV acquisition goals may become more difficult to reach. For example, agencies do not receive AFV credits for their purchase and use of hybrids under the AFV mandates, nor should they, because hybrids can contribute to Federal fleet goals for reduced petroleum consumption and increased fuel economy under Executive Order 13149. In light of the potential benefits of hybrids, it may be appropriate to revisit AFV acquisition goals, but we would not want to complicate further the accounting of AFV and AFV credits.

In his State of the Union address, the President has announced an exciting new initiative, the Hydrogen Fuel Initiative, to complement work on-going under the Department of Energy's FreedomCAR partnership with the U.S. auto industry. These initiatives aim to conduct high-risk research and development that may hasten the introduction of advanced automotive and fuel cell technologies. Federal fleet managers are excited about the possibilities, and eager to participate. We look forward to working with you and other interested parties to review the applicable AFV authorities to develop a cohesive AFV policy.

Thank you for the opportunity to testify today Mr. Chairman, and I look forward to answering any questions you may have.