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| FOCUS ON TECHNOLOGY |
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| Adding Flexibility to System Procurements |
| BY CURTIS PIERCE and BRIN OWEN, Lead Associates, Booz Allen Hamilton Transportation Practice, San Francisco, CA |
As the business of transit becomes more dependent on information technology, transit agencies are required to procure more complex technical systems. Typically, these systems are procured as a unit, including all hardware and software components and both customer facing and back-end elements. For complex technical systems such as modern fare collection systems, passenger information systems and vehicle location systems, this procurement method has drawbacks.
Many times procuring the system as a unit limits the choice of suppliers. There are few suppliers able to provide both hardware rugged enough to withstand a transit vehicle environment and software scalable enough to handle the volume of transactions required of many of today’s modern systems used in transit operations. Additionally, procuring from a single vendor means that the agency is wholly reliant upon that vendor’s ability to provide system enhancements, replacements, and spare parts.
To add more flexibility and competition to procurements, transit agencies have begun to split large procurements into separate components. A common separation point is between the front-end (on-vehicle and customer facing) and the back-end systems. This strategy is supported by the technical approach of using Application Programming Interfaces (APIs) to link the two parts of the system. The publication and use of an API allows the agency to broaden its ability to source the needs of the program.
Two Case Studies of Non-Bundling
San Francisco Municipal Transportation Agency (SFMTA) recently replaced its paratransit payment system using this approach. SFMTA needed to replace a paper based “scrip” system of paratransit payments with an electronic fare collection system to reduce fraud and handling costs. SFMTA relies on taxi companies to provide a large portion of its paratransit service and one of the requirements of the project was the need for the taxi companies to be given a choice of on-vehicle equipment suppliers.
SFMTA procured the new system in two stages. First a back-end system or Paratransit Debit Card Central System (PDCCS) was procured in a competitive procurement. There were numerous bidders on the system, including companies that did not manufacture on-vehicle equipment and would not have been able to compete had the system been bundled with the on-vehicle equipment. A requirement of the PDCCS RFP and first deliverable of the subsequent contract was the development and publication of an API that allowed on-vehicle equipment to send transactions to and receive authorization from the PDCCS.
After the API was delivered, SFMTA let a second competitive procurement for the front-end on-vehicle equipment. Under this procurement, SFMTA qualified multiple suppliers, which the cab companies could then select among. Again, many suppliers bid in this procurement that would otherwise not have been able to in a bundled procurement.
The system has been fully operational for nearly a year with mobile data terminals furnished by multiple suppliers interfacing through the API with the PDCCS. The supplier choice provided to the cab companies is a critical component of the new system. “Providing San Francisco’s taxi companies with a choice of mobile data terminal suppliers was absolutely critical to the success of the paratransit debit program,” said Fariba Mahmoudi, SFMTA project manager.
St. Louis Metro had a similar experience as it sought to procure a smart card fare payment system for use on its buses and light rail routes. Based on the experience of other agencies, Metro was concerned it might receive few competitive bids if it sought a single vendor for the entire system.
Metro therefore conducted a two-stage procurement. The first RFP was for the back-end software and the APIs needed to communicate with the field equipment. After the supplier for the back-end software was under contract, the supplier published the APIs that were then included in the second RFP, which was for the on-vehicle equipment. Not only did different suppliers win the two contracts, there were responses by firms that would have been unable to bid had the procurement required the delivery of an entire system. “By splitting our procurement into two parts we were able to choose the best suppliers for each component and have more suppliers bid as well,” said Tom White, St. Louis Metro project manager.
These two agencies are good examples of the benefits of a split procurement approach. Additionally, by requiring one of the suppliers to develop and publish the APIs needed to tie the elements together, the agency can be assured that the various components will function well together. Further, this approach can lead to more bids received, greater competition, and the implementation of the strongest solution at every level. |
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