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The National Academies

NCHRP 13-09 [Pending]

Maximizing Proceeds from the Fleet Asset Disposal Sales Process

  Project Data
Funds: $300,000
Contract Time: 22 months
Staff Responsibility: Ann M. Hartell

BACKGROUND
 

Every state department of transportation (DOT) owns and manages a fleet of vehicles and equipment. An important part of fleet management is the process of disposing fleet assets once vehicles and equipment age or otherwise reach the end of their useful economic life. Some states require disposal of state DOT assets to be done by another state agency while other state DOTs perform this function internally. In either case, once the decision is made to dispose of fleet assets, an important objective is to maximize proceeds from the sale.


State DOTs dispose of fleet assets in various ways. Live auctions can be held at a centralized location, with a large number of items transported from across the state to be sold at a specific date and time. Alternatively, auctions can be held at regional or local venues with limited or even specialized offerings. Such auctions can be annual events, held quarterly, or on some other schedule. On-line auctions can be held on a continuous basis, allowing the state DOT to list and sell items at any time and potentially reaching buyers from anywhere, even when travel to or gathering at a public venue may be restricted as occurred in 2020.
 
The process used for bids and pricing can also vary. Bids can be open and public or sealed from other bidders. The selling agency can establish a reserve or minimum bid. These options affect the information that bidders have, which, in turn, affects sales prices. Time of year for a sale is a further consideration because the seasonal nature of construction activities and macro-economic cycles can affect the number of buyers and the prices they will pay.
 
State DOTs also need to consider how best to market and present fleet assets. Reconditioning, repairing, or painting equipment to prepare it for sale can increase sales prices, but that increase must be balanced with the preparation costs. Some buyers may be attracted to sales where equipment is bundled into larger lots. Other types of buyers may be interested only in certain categories of equipment or vehicles (e.g., light-duty vehicles, heavy-duty vehicles, or non-self-propelled assets). Understanding the interests, preferences, and needs of buyers is important to ensure a state DOT is effectively marketing and conducting disposal sales so as to maximize proceeds.
 
Some state DOTs use alternative methods to manage fleet disposal including asset trade-in programs, guaranteed buyback programs, and guaranteed trade-in programs. These programs can help offset new equipment purchase costs and avoid the need for marketing to buyers. For state DOTs that use another state agency for disposal, these programs can also reduce charge back rates, potentially supporting additional highway maintenance for the same amount of dollars spent by the state DOT. However, these programs can be affected by tax requirements and other regulations that reduce their overall cost effectiveness. 
 
Previous research has addressed the issue of timing the decision to dispose of fleet assets, based on equipment lifecycle considerations. Once that decision is made, the disposal sale process used can significantly affect sales prices, whether the process is managed by the state DOT or by another state agency. Research is needed to provide state DOTs with practice-ready guidelines on how to manage the sales process to maximize sale prices.
 
OBJECTIVE
 
The objective of this research is to develop a manual for state DOT fleet managers for selecting effective strategies for preparing, marketing, and selling surplus equipment and vehicles to maximize proceeds. The manual will be accompanied by a decision support matrix with a graphical presentation of options and considerations for the disposal sales process to guide the selection of specific strategies. The matrix should also be publishable as a stand-alone document.
 
RESEARCH PLAN
 
The NCHRP is seeking the insights of proposers on how best to achieve the research objective. Proposers are expected to describe research plans that can realistically be accomplished within the constraints of available funds and contract time. Proposals must present the proposers' current thinking in sufficient detail to demonstrate their understanding of the issues and the soundness of their approach to meeting the research objective.
 
The research plan will be divided into phases and each phase divided into tasks. The research plan should build in appropriate checkpoints with the NCHRP project panel, including a web-enabled kick-off meeting, a face-to-face interim report review meeting, and additional web-enabled meetings tied to panel review and/or NCHRP approval of key deliverables as appropriate.
 
Phase I
 
Anticipated activities and deliverables in Phase I include but are not limited to:
  • A state-of-practice review of fleet asset disposal practices by fleet organizations, including state DOTs, other large public-sector organizations, appropriate private companies, and national equipment auction or marketing companies. Information for the review may be collected from surveys, interviews, documents, research literature, and other sources. Disposal practices of interest include but are not limited to:
    • Local, regional, state-level, and national auctions
    • Online auctions
    • Guaranteed buyback and trade-in programs 
  • Documentation and synthesis of the characteristics and considerations for disposal sales methods that affect sales price including but not limited to:
    • Bid processes (e.g., sealed bid, reserve, no reserve) 
    • Timing and seasonal considerations (e.g., new model year, summer paving season)
    • Frequency of auctions (e.g., annual, quarterly, or continuous/ongoing) 
    •  Auction location (e.g., centralized or satellite locations across the state)
    • Bundling and separating attachments
    • Bundling equipment types
    • Investment in reconditioning or repairs prior to sale
    • Partnering with another state agency to increase disposal sale prices 
    • Sales tax and other sales-related costs or requirements
Note: Phase I will culminate with an Interim Report documenting the activities and findings of Phase I along with a detailed plan for Phase II and a proposed outline of content for the manual and a design mock-up for the decision support matrix.

Phase II
 
Phase II will focus on developing the final deliverables. Anticipated deliverables include but are not limited to:
  • Manual
  • Decision support matrix  
Note: The decision support matrix will be in a downloadable digital format using software that is readily available to state DOT staff such as Microsoft Excel or Word. The development of a web-based tool or software is not requested.    
  • Technical report documenting the research
  • Stand-alone Executive Summary of the research findings
  •  Fact sheets on essential findings and concepts suitable for state DOT leadership
  •  Presentation slides with speaker notes in PowerPoint format summarizing the project
  •  A stand-alone technical memorandum that identifies implementation pathways, key implementers of the results, and well-defined scopes of work for pilot implementations of the guide. The technical memorandum should provide adequate detail on timelines, budgets, and staff resources needed for specific activities to implement the results of NCHRP Project 13-09. Potential implementation activities include evaluating practices at a state DOT and identifying opportunities for improvement or developing and delivering a training workshop for fleet managers.  
Note: Conducting implementation activities is not anticipated as part of NCHRP Project 13-09.
 
Status: Proposals have been received in response to the RFP. The panel will meet to select a contractor to perform the work
 

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