International Experience and Best Practices - Clean Air Initiative

little treatment in the I/M literature, and the conclusions below should be taken as
preliminary.
2.3.1. In Pursuit of Quality
As documented throughout this report, it takes significant technical and managerial
skills to operate a sophisticated I/M program. Policymakers should set tough minimum
qualifications for bidding firms to ensure that the winning contractor can deliver the
needed quality. Widespread adoption of I/M in the industrialized world has led to a
global market in the supply of I/M services. Firms with this specialization include ESP,
SGS, and Agbar/Applus+ Technologies. 45 Experts frequently cite the advantages of
inviting international firms to bid on I/M contracts in the developing world, both in terms
of experience and skill and ability to provide capital. The investment needed up front
to launch an I/M program using test-only centers is substantial, typically running in
the millions of dollars. Firms can also be required to implement a quality management
system that meets the International Organization for Standardization (ISO) standard for
“inspection body accreditation”—ISO/IEC 17020 (or alternatively ISO 9003). 46
In general, opening up government contracting to non-domestic firms often raises
concerns, e.g., foreign firms will charge too much and/or economic development, jobs,
and profits should be kept “at home.” These concerns can be addressed in part in the
I/M context by requiring that international firms ally themselves with local firms in bidding
to operate I/M test facilities.
2.3.2. Single Versus Multiple Contractors
Policymakers face a difficult trade-off in deciding whether to aim for a single versus
multiple contractors in the I/M market they aim to create. A firm granted a monopoly
on I/M services for an entire state may be able to spread its fixed costs over a large
volume of sales, and thus offer a low price for inspections. On the other hand, there may
be value in having more than one firm providing I/M services. Multiple firms may give
policymakers better benchmarks with which to assess performance and quality. If a firm
is providing poor service, policymakers may have the option of quickly terminating its
contract if other firms are operating and can increase their market share. 47 In the U.S.,
the experience with multiple firms supplying test-only services is limited to one state
(Florida), and a USEPA expert described the lessons learned as follows:
26
It costs more to have multiple firms; it is extremely difficult to create
consistency among the differing firms products; it is much more difficult for
government to oversee multiple firms; and it is harder to institute changes
when dealing with multiple firms, etc. The big danger of multiple firm awards
is that the firms will then compete with each other for customers by passing
vehicles that should fail. 48
45 See www.esp-global.com, www.sgs.com, and www.agbar.es or www.applustech.com. (Applus+
Technologies is the new name for the firm that includes Agbar Technologies inspection services.)
46 The Geneva-based International Standards Organization (ISO), with 148 member countries, sets
standards for a broad array of equipment and practices, each given an ISO number.
47 Weaver, C. and L. Chan, op. cit., advocates multiple operators whenever feasible (p. 26).
48 Gene Tierney, personal communication.