Newspapers across the USA today featured pretty pictures of New York City\u2019s \u201cTaxi of Tomorrow\u201d unveiled yesterday. While that is cute news, there actually was quite a significant amount of procurement work that led up to NYC\u2019s public relations spectacle.<\/p>\n
Don\u2019t miss updates on Procurement & Supply Chain, Subscribe here!<\/p>\n
According to a press release on the city\u2019s official website, there was a \u201ctwo-year-long Taxi of Tomorrow procurement process\u201d that eventually resulted in the selection of Nissan North America, Inc. as the supplier of these taxis. The two categories for supplier selection were \u201cthe qualifications and ability of the proposer to deliver on the various aspects of the agreement and\u2026how the proposed vehicle interacts with its passengers and operators.\u201d<\/p>\n
According to the press release, \u201cIn the first category, evaluators considered the organizational capability of the proposer and relevant experience of the proposer. In the second category, evaluators reviewed such areas as the proposed vehicles\u2019 safety, ergonomics, average cost to the taxi industry to purchase and total lifecycle costs to operate the vehicle as a taxi, internal air\/environmental quality (HVAC), overall ride quality (noise or vibration), the vehicle durability, the design elements, and warranty and service provision, as well as proposers\u2019 plans for stakeholder outreach to help provide input on the final design.\u201d<\/p>\n
Strangely enough, the criteria for total lifecycle costs did not include fuel efficiency. I don\u2019t know how fuel can not<\/span> be factored into the total lifecycle cost of operating a vehicle \u2013 especially this week, when gas prices are expected to crest above $4 per gallon and continue to rise \u2013 but, fortunately, the Nissan option offered the best fuel efficiency of all competitors. (I am betting that there is a procurement director breathing a sigh of relief at that fact\/coincidence!)<\/p>\n There are a couple of other interesting things about this procurement.<\/p>\n First, the press release states that \u201c the NV200, designed by Nissan North America, Inc., has been chosen as the winner of the Taxi of Tomorrow competition. The City now will enter into final negotiations with Nissan.\u201d<\/p>\n Really? It is almost impossible to negotiate with a supplier who thinks that they have the deal in their pocket. NYC didn\u2019t just create the perception that Nissan is a front runner. They held a freakin\u2019 press conference in which the mayor told the entire country that Nissan won the business!<\/p>\n If NYC expects to have any negotiation leverage, they are sorely mistaken. Nissan will certainly know that it would be incredibly embarrassing for Mayor Bloomberg to publicly change his mind on the supplier selection.<\/p>\n Second, is NYC getting the best deal it can get? An article on Comcast.net says that this procurement is a deal \u201ccity officials estimated at around $1 billion.\u201d But the article later says that \u201cNissan officials said they expected to provide up to 26,000 taxi cabs over the lifetime of the contract starting in 2013, with a manufacturer\u2019s suggested retail price (MSRP) of about $29,000.\u201d<\/p>\n I\u2019m hoping my calculator is on the fritz. But 26,000 x $29,000 = $754 million. I would never pay MSRP for a vehicle. That\u2019s way too high. But NYC is paying like 33% more than MSRP?<\/p>\n Hm.<\/p>\n Did Nissan leave the meter running when it prepared its proposal or something?<\/p>\n","protected":false},"excerpt":{"rendered":" Newspapers across the USA today featured pretty pictures of New […]<\/p>\n","protected":false},"author":12,"featured_media":4004,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3051","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-procurement"],"yoast_head":"\n