State and Local Contracting Trends in Smarter, Sustainable and Efficient Fleets

Posted by Paul Irby on March 4, 2020

The GovWin research team of more than 150 federal and state, local and education (SLED) market analysts provide in-depth research reports, timely articles, webinars, presentations and consultations to help clients build business development plans and navigate the government market effectively.

In our February 2020 SLED analysis review, we take an in-depth look at current trends in vehicle purchasing and efficient fleets, with an excerpt of an interview our researchers conducted with noted expert Paul Lauria, president of Mercury Associates, Inc. This excerpt is drawn from GovWin’s recent report, the State and Local Procurement Snapshot for Q4 2019.

GovWin: Describe how government fleets have been making greater use of technology and innovation. 

Paul Lauria: Since the end of the Great Recession, the fleet industry has seen a dramatic increase in the types and quantity of information technology solutions available to facilitate fleet management. This includes the areas of vehicle utilization, vehicle operation and vehicle maintenance and repair. The most prominent of these has been telematics solutions. While telematics has been around for almost 20 years, it is mainly in the last five years or so that many fleet-owning organizations have begun to think seriously about how to actually use the information they produce to improve fleet performance and reduce fleet costs.

Fleet owners are using telematics and other connected vehicle solutions to manage certain types of fleet operations, such as snow clearing, solid waste collection, public transit, and, to a lesser extent, K-12 student transportation. These types of fleet operations tend to feature well-defined service areas, street networks, routes and schedules – which makes them easier to size properly and operate efficiently.


 
 

 

GovWin: What are some of the challenges or obstacles to further adoption of data-driven fleet management?

Paul Lauria: One of the greatest challenges is the unpredictable or flexible nature of many of the vehicle trips taken by government workers every day. The majority of vehicles and other types of fleet assets that state and local government jurisdictions own do not operate on fixed routes or predictable schedules. In fact, the primary use of many fleet assets is having them available for use on short notice and for specialized purposes – for example, to repair a water main break or respond to a medical emergency, a car crash or a fire. Other types of vehicles typically found in government fleets may have fairly predictable levels of use in terms of annual miles driven or hours operated, but somewhat unpredictable usage needs in terms of trip purposes, origins, destinations, frequencies and durations.

Think, for example, of a social services case worker, a parole officer, a computer technician in a public library system, an electrician in a facilities management division or a parks and recreation department director. All of these employees’ vehicle needs tend to vary from day to day or even hour to hour. It is the management of these types of vehicles – their assignments, domiciles, fueling, maintenance and repair, etc. – that stands to benefit the most from connected vehicle solutions. The difficulty lies in the fact that these are normally government employees whose vehicle usage is secondary to the performance of their job duties; they have little time or appetite for rethinking the way they use vehicles (whether their employers’, car-sharing services’ or their own) – to meet their mobility needs. For many of them, the full benefits of vehicle connectedness probably won’t be realized for many years to come.

The growing interest in innovation has been accompanied by a variety of other industry trends that not only demand fleet owners’ and fleet managers’ time and attention, but in many cases are creating headwinds against the adoption of true data-driven fleet management practices. These include:

  • The migration of fleet management information systems from client-server to cloud platforms;
  • The replacement of purpose-built fleet management information systems with generic (i.e., less functional) enterprise resource planning and enterprise asset management systems;
  • Stiff competition for system administration and data analysis talent that is needed to turn terabytes of raw fleet-related data into comprehensible and actionable information;
  • Growing interest in fleet electrification;
  • Reduced pressure to justify, and continually search for ways to cut, fleet costs; and
  • The scramble to make up for the loss of practical experience and technical expertise in automotive technology as veteran mechanics, supervisors and fleet managers retire.

Thus, while there is a clear recognition in the fleet management profession that technological innovation holds tremendous promise to improve fleet management effectiveness and fleet operations efficiency, sustainability, and so forth, the array of changes buffeting fleet owners is making the process of leveraging innovation painfully slow for many organizations. For them, many of the benefits of innovation are more theoretical than actual at this point.

GovWin: In an era of increasingly “smart” fleets, talk about the challenge of maintaining high-tech efficient fleets in-house versus outsourcing them.

Paul Lauria: Traditional thinking about and methods of maintaining and repairing (M&R) government fleets is changing for several reasons:

  • Experienced maintenance technicians are retiring and being replaced by entry-level technicians in equivalent numbers. The resulting loss of practical troubleshooting and problem-solving experience is significant for many fleet owners.
  • Vehicle technology is changing, particularly the level of computerization of vehicle systems and components; this creates ongoing training challenges for fleet owners who wish to continue performing most M&R work in-house.
  • Vehicle and equipment dealerships are trying to drive more business to their service departments, which tend to be more profitable than their showrooms. This affects in-house fleet maintenance programs both by increasing competition for a dwindling pool of skilled maintenance technicians, and encouraging dealerships to pursue more service business with their fleet customers.
  • Embedded sensors in newer vehicles assist dealerships in alerting fleet owners when services or repairs are needed. Vehicle manufacturers – not just their distributors – recognize that maintaining and repairing vehicles is often more profitable than selling them.
  • Heightened expectations of senior decision makers for data driven and fact-based practices are calling into question the cost effectiveness of performing all M&R work in house. As more jurisdictions implement cost charge-back systems and rate structures which increase the transparency of and accountability for fleet M&R costs, it is becoming more difficult for in-house fleet management programs to avoid answering questions about the optimal mix of insourced and outsourced services.

Although there has been stability in outsourcing in the most recent years, the net effect of these various phenomena is that government fleet owners’ reliance on external service providers for fleet M&R work will likely increase over time.

You can access more of the analysis produced by both our Federal and SLED Market Analysis teams using the following link: In-depth federal and SLED market analysis

To read the full version of this special feature, and to gain insights into the current state and local contracting environment as well as to uncover SLED contracting trends by type of government, you can click the button below.


 

State and Local Procurement Snapshot for Q4 2019


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