How will the story end?  Stay tuned.  And, no this is not a comedy...

I wrote these meanderings (as comments on cleveland.com) this evening after seeing Mark Gillispie's article of today that followed our hearings earlier in the day.  The hearings were somewhat un-eventful.

REF:  Case Western Reserve University officials tell Cleveland council members about the benefits of LED lights, By Mark Gillispie, The Plain Dealer, July 07, 2010
http://blog.cleveland.com/metro/2010/07/case_western_reserve_officials.html
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We'll be continuing hearings on Monday (7/12) at 1:00 pm and then we expect a vote on the ordinance on Wednesday (7/14). The authority for what could be a 10-year single-source exclusive contract is not approved yet. This second ordinance, although requiring the contract to be competitively bid still is very flawed having little credibility to the promises of 350 jobs (within 5-years).

See the new ordinance at:
http://realneo.us/system/files/Ord._829-10_-_Mayor_Jackson__Req_K_LEDs.p...

The basics of the deal are:

1) First 18-months after signing; initiate an assembly facility – no specific job requirements but 50 to 80 could potentially be created, all relatively low skilled, low pay. First order for product is made. No quantities will be provided to Council before a vote so we do not know what the cost will be for the first to last order for the 10-year period. We’d be giving the Administration a blank check for ten years for these products. LM79 testing (light performance, efficacy and efficiency) is required within this time but there are no specific standards to meet in the current ordinance. We’re working to try to include some minimum generally accepted standards for each product. LM80 testing (lumen depreciation – how long will the product last for) is not required to be completed until the 24th month; the test can take 8-months, and even then like the other test there is no minimum standard to meet, so even if a product tested poorly we could purchase it.

2) Within 36-months (3-years) manufacturing of lighting products is required by the winning bidder. This will prove challenging as manufacturing of LED with few exceptions takes place in China and other parts of Asia where labor rates are as low a $1/hr compared to US labor wages of $17/hr. No specific job requirements kick in yet.

3) By the 60th-month 350 jobs are required to be generated and Research and Development should also be taking place in Cleveland. 20% of the jobs are required to go to Clevelanders and 25% of the product’s components should come from within the region.

Some of the amendments we’re working on are requirements to have the City review pricing and product quality and performance specifications for comparable products on a minimum of an annual basis but preferably every 6 to 8 months. LED products continue to make steady gains in efficacy, efficiency and quality ratings and prices continue to drop. The administration was suggesting reviewing this every two years. Also, some form of minimum technical standards or reference to nationally recognized industry standards

Due to the evolving market and the fact that each product (street lights, linear replacements for fluorescents), bulb replacements and traffic lights) is in a different stage of development with often unique design challenges, I would prefer to have a bidding process whereby any company could competitively bid on a single or multiple products, but not be required to bid on all four.

The main reason for this is that linear replacement lights for fluorescents are generally recognized by the US industry as not being ready for widespread usage (the return-on-investment calculation does not make sense yet) and the bid requirement to offer this product will likely inhibit competition – companies will not submit bids because they won’t be able to realistically offer that product with confidence in the next 18 months.

Many companies in the industry make claims of having this product available currently but the Department of Energy (DOE), as recently as June 11, 2010 has issued warnings that as much as 2/3rds of the products they have test in this class have failed to meet their manufacture’s claims. The Administration is claiming they’ve seen products in this class ready now and that companies have made large advances in the last year.

The products they reviewed from Sunpu-Opto in the last go-around were rated by the company as having roughly half the lumen output and none of the products had been tested or sold in the USA. Meanwhile the DOE is stating generally that all products in the industry are continue to make modest gains in advancements and this contradicts what the Administration here in the City of Cleveland is saying.

This current ordinance, although requiring bidding looks very much like the old Sunpu-Opto ordinance and one can not help but wonder if it is not just a re-set for clearing-up some process concerns but still written so that it is ripe for a company like Sunpu-Opto, with their un-proven claims to come Cleveland and get their toe hold in the USA. In fact this new ordinance actually gives the Administration even broader authority than before in terms of having fewer details as to quantity of products planned for purchase. Once Council signs off on this there is no oversight and control on millions of potential planned purchases for a ten-year period.

In addition, this contract would not make any requirement for the products to actually attain the DOE’s Energy Star rating – this gets back to the lack of any meaningful technical standards requirements.

Getting back to an alternative strategy, by allowing companies to bid on a single or multiple product class, they could still be asked to quantify potential job creation numbers. Who knows what could result in terms of multiple companies being able to competitively win bids and then provide some level of jobs creation. It would likely be lower than the 350 the Administration is trying to create, but it could be possible the payroll amounts could be relative, so not all jobs are created equally.

Another change to consider would be dropping the ten-year contract and breaking it down to a 3-year with 2, 3-year renewable terms. If the company(ies) do well with job creation and quality and competitive products there would be no reason to not provide renewals.

See other arguments against the current ordinance and calls to work more collaboratively with our existing businesses in the region as well as our non-profit regional development agencies at:

New legislation introduced for LED Lighting Procurement for City of Cleveland, Brian Cummins, June 7th, 2010
http://www.brewedfreshdaily.com/2010/new-legislation-introduced-for-led-lighting-procurement-for-city-of-cleveland

Brian Cummins
Cleveland City Council, Ward 14
bcummins[at]clevelandcitycouncil.org