STEP 4 – PROCUREMENT
The objective of Step 4 is to procure the work zone ITS. This requires first considering a number of options, based on the type of deployment being procured. Sub-steps to developing the plan are depicted in Figure 18.
4.1 Overview of procurement approaches
In many ways, the procurement options available for work zone ITS depends on the characteristics of the ITS needed. Traditionally, ITS procurement for work zone applications has primarily been for either COTS or customized ITS solutions. An agency or contractor would obtain the equipment, software, and operational expertise to gather, process, and use data to monitor conditions, measure performance, disseminate information to drivers, and otherwise manage traffic through and around the work zone. However, the potential now exists for agencies and contractors to purchase data collected by private-sector data providers for similar purposes.
An agency can directly procure ITS equipment, services, and/or data for its own use and dissemination as part of work zone safety and mobility management efforts, or can procure these items indirectly through specification of the ITS needs as part of the roadway construction or maintenance contract. A number of alternatives then exist within these two basic approaches. These approaches and alternatives are described in the following sections. It is important to realize that the type of work zone ITS selected will influence the procurement options, which will impact the choices for procurement award mechanisms in the next step, as shown in Figure 19.
which could impact the type of procurement method and award mechanism that are used.
Procuring private-sector data
The procurement of private-sector data is a relatively new approach for agencies. Two types of private-sector data providers exist:
- Private-sector information providers that supplement their motorist travel time information to meet agency needs; or
- Vendors who install, operate, and maintain sensors for the agency and provide the data from the sensors to the agency in the desired format.
The first type is the private-sector information service providers who focus on providing real-time travel time information to drivers on an ongoing basis. These providers typically rely heavily on probe-based travel time data sources, and have developed sophisticated data fusion and travel time and congestion location dissemination capabilities. Recently, these providers have begun marketing their data to agencies who wish to establish or supplement traffic condition monitoring or performance measurement capabilities on various routes in their jurisdiction. In essence, these companies license the data to the agencies rather than sell the data, as restrictions often exist in how the data can be used or distributed by the agency.42 As of 2013, the number of contracts (non-work zone) established to obtain this type of data has been limited and is generally negotiated between the data provider and the agency. In one example, the agency paid $800 per mile per year for access to the data in real time (plus an initial $200 per mile the first year).43 If the agency is only interested in historical data (for computing a priori work zone performance metrics as an example), it is anticipated to cost less to have access to the data.44
The second type of private-sector data availability involves the installation, operation, and maintenance of sensors at locations requested by the agency. This type of private-sector data allows the agency to leverage private-sector experience, supplement existing resources, and lower agency risk. One vendor offered bi-directional spot speed data to agencies for $110 per location per month in 2012, providing all installation, operation, and maintenance of the sensors, and providing the data in the format designated by the agency.45
|Key Point: Procurement of ITS need not conform to a traditional approach.|
|The Minnesota DOT issued a stand-alone, design-bid-build, best-value contract to facilitate work zone ITS for a set of three simultaneous construction projects with separate contractors on a single stretch of highway. This mechanism helped assure contractor qualifications and expertise for designing, deploying, and operating a single, quality ITS, along with performance-based considerations for the projects.
The Minnesota DOT has also discussed issuing a general contract to have an ITS contractor on call. The ITS contractor would engage stakeholders and provide input and recommendations for work zone ITS early on for selected projects the agency believes will require it, stay abreast of rapidly changing technologies, and help the agency use ITS to its maximum potential.
4.2 Deciding between direct or indirect procurement
Direct Work Zone ITS Procurement Approaches
An agency has the option of directly purchasing work zone ITS from a vendor or consultant, or leasing it. The difference between these two approaches is in the duration of availability of the equipment/service/data and who owns it, and in the operations and maintenance responsibility.
Purchase: The agency owns the equipment/service provided/data and is free to use it for as long as deemed necessary. An agency typically also has the responsibility for maintenance of the system, and replacement of any components that become inoperable due to accidents, wear, or neglect. This maintenance could be performed by in-house staff if properly trained, or purchased from a service consultant.
Lease: The vendor owns the equipment/services provided/data, and the agency obtains the equipment/service/data for a predetermined length of time (i.e., the term of the lease). When that term is completed, the vendor retains ownership of the equipment and access to the services/data end. Maintenance, and possibly operations, efforts are handled by the vendor and incorporated into the lease price.
In determining whether to purchase or lease work zone ITS, an agency must consider the following:
- Anticipated duration of usage;
- Whether the agency expects to use similar equipment on future projects and when;
- Expertise on staff to operate, troubleshoot, and maintain the system;
- Reliability of the equipment hardware and software being considered;
- Source of funds to be used; and
- Agency policies and regulations.
Purchasing work zone ITS is sometimes an agency’s preferred approach. Longer duration work zones, or the desire to use ITS on multiple work zones that are scheduled in sequence, often make purchasing more cost-effective than leasing. Similarly, purchasing is usually more appropriate for deployment of equipment that is integrated into a permanent regional ITS and will remain as part of that system after the work zone is completed.
For other situations, leasing work zone ITS is the preferred option. The procurement of private-sector traffic data by an agency will almost always be a leasing arrangement unless already available for use through existing contracts for permanent applications. Agencies that do not have expertise on staff to support the operation and maintenance of a work zone ITS deployment may be better served by leasing it and relying on the vendor to provide that expertise. These contracts can specify and restrict allowable downtime when issues with the system arise, levying fines or reduced reimbursement if the ITS deployment has not resumed operations by a certain time. For COTS deployments, leasing does appear to be the preferred method of most vendors and many agencies. Maintenance and removal by a vendor puts the responsibility for proper operation, quality control, and updating of equipment/using newer technologies on the vendor.
Most agencies allocate their available transportation funds into different categories for different purposes, with restrictions on how those funds can be used (much of the federal funding received by state agencies has restrictions on how it can be used as well). Some funds may only be used for capital equipment purchases, for example, whereas other funds may be designated for operations and maintenance purposes with a restriction that such funds cannot result in agency ownership of any capital equipment.
Agencies typically also follow different procedures depending on how the specific work zone ITS deployment is categorized. For example, it may be feasible to either purchase or lease a COTS system because it can be procured through a traditional low-bid process. However, a customized deployment that requires system design support as well as software design and integration, could be categorized as an information technology project and be subject to additional procedures and regulations and may not be suitable for low bid.
Indirect Work Zone ITS Procurement Approaches
In addition to the approaches available for agencies to directly procure work zone ITS, there exist a number of approaches where agencies can indirectly procure it. With indirect procurement, in most cases, the actual procurement (purchase or lease) is done by the construction contractor rather than the agency, and thus the agency would not be directly responsible for the later substeps in the procurement process, or even in Step 5 for the system deployment or Step 6 for system operations. Instead, for an indirect procurement approach the primary responsibility of the agency will be in oversight of the work zone ITS and evaluation of the system both throughout and at the conclusion of the project. The indirect procurement methods include the following:
- Line item specification or special provision of the desired ITS functions or components in the original bid documents;
- Change order addition during the project to achieve the desired ITS functions or components (via specification or special provision);
- Assigned additional value to work zone ITS components included within best-value bid proposals (such as for design-build projects); and
- Incorporation of traffic performance requirements into the bid documents that could be monitored through the incorporation of work zone ITS.
The first two approaches above would ensure that ITS is deployed, while the latter two approaches may (but not necessarily) result in an ITS deployment.
One of the most common ways for ITS to be indirectly incorporated into a work zone project is for the agency to specify through a line item in the bid documents that it be provided as part of the contractor requirements for performing the work. This approach requires a specification or special provision outlining the purpose, functions, and possibly operational requirements of the system (e.g., messages to be presented on PCMS, speed thresholds at which different messages are to be displayed, response time and maintenance requirements such as allowable downtime before penalty when issues arise, etc.). The contractor has the option for either purchasing or leasing the system. Overall, vendors prefer for specifications or special provisions to be very precise in the types and amount of equipment to be procured, as it allows them to be competitive when providing bids. However, agency personnel tasked with establishing the specification or special provision often do not have the technical expertise to create such a precise specification without unduly biasing it towards a particular type of technology or vendor. The actual system to be procured by the contractor and the amount to be paid by the agency to the contractor may be accepted initially by the agency, or may be part of negotiations between the agency and the contractor selected. Agencies should also be aware that if a project is delayed that specifications may need to be updated prior to issuing a request for bids to ensure it addresses current needs and system options.
Another way for ITS to be indirectly procured by an agency is by issuing a change order to an existing contract to add the system. This approach is used when the need or value of an ITS deployment is identified after the initial construction contract has been awarded. A change order may also be needed to further enhance the equipment or capabilities of ITS that have already been deployed. Like a line item bid approach, a specification or special provision is needed for bidding purposes. Both purchase or lease options are again possible, and different approaches can be used even if the change order is an addition to an already-deployed system (e.g., a system initially purchased could be enhanced through the leasing of additional equipment procured through a change order). This approach can result in slightly higher costs than those obtained during the initial project bid, as the contractor attempts to account for the additional time and cost to his or her operations in executing the change order.
A third indirect method of work zone ITS procurement is through the assignment of value to ITS deployments proposed as part of a design-build or best-value bidding process. (Note that the fourth method, the specification of performance criteria, may be included in a design-build process also.) For this approach, a consultant-contractor team develops needs, objectives, and methods for deploying work zone ITS and incorporates a proposed plan for the ITS deployment into their bid. The agency then considers the value of the proposed work zone ITS deployment, typically using a point system and assessment process. Ideally, the value and scoring criteria that the agency uses in proposal evaluation would be based on the agency’s assessments of expected impacts that could occur during the project and the potential for the proposed ITS deployment to mitigate those impacts. It is important to note that this approach may not result in an actual ITS deployment, since a winning contractor or contract team may not be one that actually proposes the use of ITS.
The fourth and final method of indirect work zone ITS procurement involves specification of performance criteria in the construction contract alongside a requirement for the contractor to verify said performance. In this case, the contractor (or subcontractor) determines the best approach to meet and verify performance requirements. Although this approach would not specifically require that ITS be used, the contractor could decide that an ITS solution is the best or only approach towards meeting the requirement of monitoring performance. This method would be best suited for well-defined mobility measures, such as maximum travel times or delays allowed. Agencies would designate any incentives to be awarded if monitored impact thresholds are maintained, as well as any penalties that will be incurred if such thresholds are exceeded.
A listing of the key advantages and disadvantages of each of the procurement approaches are summarized in Table 9. Theoretically, indirect procurement could involve equipment/COTS systems, data from third-party vendors, or a combination of both. To date, indirect procurement has involved mainly ITS equipment, particularly COTS systems. However, a more complex approach is certainly possible. For instance, a contractor could, in cooperation with the highway agency, choose to purchase travel time data from a third-party data provider in real time with the intent to disseminate that information via portable or permanent CMS in advance of the work zone. Dissemination could involve manual monitoring of the data coming in from the third party and creation/posting of the travel times, or could potentially even be automated.
|Method Type||Method||Key Characteristics|
|Direct Agency Procurement||Purchasing||
|Direct Agency Procurement||Leasing||
|Indirect Agency Procurement||Specific requirement for ITS in bid documents||
|Indirect Agency Procurement||Change order to add ITS for existing construction contract||
|Indirect Agency Procurement||As a value-added element||
|Indirect Agency Procurement||To measure performance criteria requirements in a contract||
4.3 Determining the procurement award mechanism
Historically, ITS procurement has been accomplished through various award mechanisms, depending on the type of system needed. These mechanisms include:
- Low bid selection (commonly referred to as sealed bidding);
- Negotiated selection (based on evaluation of a technical approach, qualifications, and experience submitted as a proposal);
- Sole source selection (to obtain services or equipment when no competitors exist); and
- Best value selection (a weighted combination of the low-bid and negotiated selection mechanisms).
Often, direct procurement of COTS systems can be safely awarded through low-bid mechanisms, whereas more complex customized solutions and private-sector data are usually procured through one of the other mechanisms. The effectiveness of low-bid selections depends significantly on the quality of the bid specification itself. As noted previously, specifications that are too prescriptive technology-wise can result in only a single bidder (if the bidder is aware that they are the one, this can result in a higher bid price). On the other hand, specifications that are too general can result in procurement of lower-quality, less durable equipment or systems.
For indirect procurement through line item project bids or change orders, however, a COTS procurement will often be a negotiated or best-value selection. In some instances, a contractor may simply identify a work zone ITS vendor they prefer to work with, which could be considered a type of sole-source procurement. However, most agencies will include provisions in the bid documents to approve the system and vendor, as well as to limit the amount by which the contractor can increase the bids for profit purposes. The proposal of a work zone ITS as a value-added feature for a particularly large complex design-build project has occurred in a few instances in recent years, and may become more commonplace in the future as agencies develop procedures on how to objectively consider the value of these features in the overall bid package. Theoretically, the project bid document could require a contractor to provide multiple bids from work zone ITS vendors and to select the low-bid option. To date, however, it does not appear that many agencies are willing to be so prescriptive, relying instead on the contractor to work up their best price with a vendor they feel gives them the best opportunity at being successful and profitable.
Although there has not been a significant amount of experience with procuring data from third-party vendors specifically for work zone purposes, it would seem that all of these approaches would be valid for work zone data procurement as well, depending on the location of the work zone (e.g., third-party data is not always sufficient on lower-volume facilities or for overnight hours).
4.4 Issuing a request for proposals or bids
After the procurement award mechanism has been selected, the agency has everything necessary to procure the system if the agency is directly procuring the system or system components. For a complex, uniquely designed system, this may involve the development and issuance of a request for proposals (RFP).
The RFP should contain clear specifications for the system, including any additional resources needed for operations and maintenance. The products of previous steps should contain all of the information necessary for inclusion to the RFP. The system requirements and system design are particularly important items to include, as is the testing strategy in order for the contractor to understand the desired system.
The structure of a given RFP will vary greatly based on a number of factors. Depending on the extent to which the agency plans to operate and maintain the system, staffing needs and maintenance considerations should also be included in the RFP document. It could be valuable to consult with several vendors or contractors in advance to research various options available in order to draft.
A separate consideration is the option of hiring an independent evaluator of the ITS deployment. An independent evaluator can assist an agency with making an unbiased comprehensive assessment of the deployed system. If an independent evaluator is preferred, this will be done through a separate RFP process. It is recommended that the contract be awarded early enough for the evaluator to make recommendations for data collection or documentation throughout the implementation.
If the need is more for a COTS system by the agency for which the agency has a good idea as to the functions, devices, and operating criteria to be used, a request-for-bid may be used in lieu of the more complex RFP for an agency’s direct purchase. In these situations a purchase specification of the desired components and performance of the system are issued for vendors to follow. In a request-for-bid approach, lowest cost typically controls the award selection.
When a work zone ITS is to be procured indirectly, as part of an overall construction contract, the contractor has the primary role in determining what to provide. For these situations, the agency will normally include a special specification in the overall bid package. It is then up to the contractor to identify the technology, system, and if necessary, subcontractor to help meet the specification. Depending on how the specification is written, the agency may have some opportunity to work cooperatively with the contractor in selecting the ITS technology and subcontractor. Typically, this collaboration occurs more often once a contractor determination has been made, so as to keep from influencing the overall bid process.
4.5 Selecting the preferred vendor, consultant, or contractor
For direct work zone ITS procurements by the agency that involve an RFP, the next step is for all proposals that have been received to be evaluated by the agency and the winning proposal selected. The review team should verify that the proposed system will meet the required objectives for the needed ITS before delving further into the details of the proposal and evaluating it. It can be helpful to include someone with ITS and traffic management expertise who is familiar with the project TMP on the review team.
The final selection of the winning proposal should be based on the award mechanism established in substep 4.3 using the criteria established in the RFP in substep 4.4. Generally, the specified set of criteria from the RFP is used by those evaluating the proposals to rank the proposals in various categories. If the proposal includes additional elements, these can be considered for the potential value added to the required system in comparison to the higher costs that may be incurred, depending on the award mechanism. This may be particularly applicable for best value or design-build (DB) procurements.
Upon selecting the winning proposal, notification should be sent to the contractor with clear guidance regarding next steps. This should include information regarding a kick-off meeting. A kickoff meeting provides a forum to discuss schedule information, expectations regarding system deployment and agency communications, and any changes that have occurred since the RFP was issued.
For simpler procurements, such as for a direct agency procurement of a COTS system for which a purchase specification and request-for-bid was issued, the process is very straightforward. The agency first verifies that the specifications included in the request-for-bid can be met by the vendors providing a bid, and then selects the lowest bid from those deemed to be acceptable.
Finally, procurements of a system or system components indirectly by a contractor as part of the overall contract may or may not involve the agency as part of the selection process, depending on when the procurement process is initiated (i.e., as part of the initial bid package or through a change order) and how the bid specification was crafted. Desirably, some level of involvement is incorporated into the bid specification (such as the requirement that the system be approved by the agency), since few contractors have enough experience with work zone ITS to be able to assess which vendor and/or subcontractor will best provide devices or a system that will best meet the requirements of the specification. Even then, it is still up to the contractor to first find the vendor/subcontractor, and then bring them to the negotiation table to bet agency approval of the selection.
|Example: Massachusetts Service Contract.|
|The Massachusetts DOT has entered into a two-year service contract directly with a vendor to deploy, calibrate, and oversee operations of smart work zone equipment at projects as directed by the agency. Emphasis has been on short-duration projects where the Massachusetts DOT is pushing for construction to be accelerated. The Massachusetts DOT purchased the equipment directly and so will retain it at the end of the service contract. The Massachusetts DOT spent slightly more than $370,000 on three pan-tilt-zoom capable portable camera trailers, nine portable traffic sensors, and three portable changeable message signs. The on-call portion of the contract consists of a $30/day deployment cost of the equipment, and a $1,000/month hosting charge for web-based monitoring of the system components.|
General Agency Perspectives
- Methods for estimating potential benefits and costs of work zone ITS are not well developed, such as expected diversion rates, resulting reduction in road user costs, or expected reductions in incident rates. Further, work zone ITS and its estimated benefits must compete for other construction (“hard-dollar) needs when assessing whether work zone ITS is actually the best use of funds.
- Once implemented, it is often hard for an agency to assess whether the work zone ITS was beneficial. Agencies want equipment to be activated as soon as it is deployed to get the most out of their investment and to preempt liability concerns should an incident occur in the work zone when the system is inactive. If the agency leaves the system turned off to get data for a true ”before” condition for comparison, criticism may result for not using equipment that has already been paid for and is supposed to alleviate issues caused by the work zone. Other methods of estimating impacts, such as through simulation models, are time-consuming and are not guaranteed to provide realistic estimates.
- Current agency procurement processes are difficult to apply to bid estimation for work zone ITS because there are not enough unit price experiences. Differences in various system objectives, designs, roadway and work zone characteristics complicate matters in trying to establish average unit pricings.
- Agencies should verify the qualifications of any ITS subcontractors that the contractor may propose or select. Contractors have limited experience with procuring work zone ITS technology and may be more focused on the main project, making the skills and capabilities of the subcontractor critical for a successful work zone ITS deployment.
- A separate ITS contract can allow for a better functioning work zone ITS, since that is the primary focus of the contract. With these contracts, the direct interaction between the agency and the vendor can reduce the time it takes to make the system work properly or make any necessary modifications.
- Language in separate contracts should include provisions for cooperating with adjacent projects since nearby projects may affect the work zone and functioning of the ITS.
- Best value contracts are useful, particularly if the vendor is required to demonstrate past successes and incorporate those proven technologies and strategies in their bid. Vendors with successful past experiences are more likely to reduce the time needed to make the system function properly, which is critical since the first days of deployment are critical to retain driver respect and attention.
- Agency access and use of third-party traffic data can be challenging, as the roadway segments used by the vendor may or may not line up well with actual work zone project limits, or even with how the agency defines segments within its own roadway inventory files.
- If third-party data is obtained for the purpose of post-hoc performance assessment of a work zone, the price of the “historical” data is likely to be relatively low but the data itself may be aggregated to a level that inhibits analyses of detailed work activities (i.e., a temporary lane closure occurring on a particular day or night). Conversely, leasing of real-time data for work zone monitoring and dissemination will typically allow for detailed assessment of specific work zone impacts, but will likely cost more to obtain.
Construction Contractor Perspectives
- Most contractors have very limited experience with procuring work zone ITS technology, and so many contractors rely on subcontractors for expertise. Generally, the technical knowledge needed for work zone ITS is much different than what normally exists on contractor staff. Contractors need to seek out qualified and experienced subcontractors to ensure that work zone ITS needs are sufficiently met.
- The addition of work zone ITS to a contract through a change order can be daunting for some contractors, who tend to be risk-averse. If the contractor does not have experience with similar issues or work zone ITS, the change order may be resisted and/or priced higher than might otherwise have occurred if included in the original bid documents, and the agency may have difficulty obtaining what was desired.
- Benefits to the contractor of a work zone ITS deployment, such as reduced delivery times or reduced litigation potential, are typically not considered or quantified by the contractor.
- Work zone ITS is often a small piece of an overall construction contract and therefore may not seem to warrant much effort or attention by the contractor.
- Not all agencies adequately verify that all required aspects of the bid specifications are met by the selected vendor prior to deployment of the system, or even once the system is deployed. The specification often does not spell out exactly what will happen should the system not meet the criteria in the contract (such as overall accuracy of each sensor, or the accuracy of the overall travel time that is estimated through the system). As a result, some vendors may propose on a project even if they are less than fully certain that they meet all the specification elements, since the consequences of not fully meeting the full specification are outweighed by the potential benefit of winning the contract.
- Some vendors prefer bid specifications that specify how much of each type of equipment is to be procured and deployed for a given work zone, so that competitive bids can be developed. Others prefer that the specifications only identify the functions and level of performance required, and allow the vendor to propose the number and location of devices that would meet the specification.
- Agencies who would like to see innovation in best value proposals should consider stating so in the bid documents. Otherwise, best value procurement requirements could restrict vendors from proposing innovative strategies that may be new but untested, given rapid changes in work zone ITS technologies.
- A standalone ITS contract allows the vendor to focus on the work zone ITS, as opposed to an indirect procurement where the contractor has its primary focus on the construction project itself.
|Tip: Strategies for successful procurement.|
42Turner, S. et al. Private Sector Data for Performance Measurement – Final Report. Report No. FHWA-HOP-11-029. FHWA, U.S. Department of Transportation, Washington, DC. July 2011.
43Middleton, D. et al. Synthesis of TxDOT Uses of Real-Time Commercial Traffic Data. Report No. FHWA/TX-12/0-6659-1. Texas Transportation Institute, College Station, TX. January 2012.
44Edwards, M.B. and M.D. Fontaine. Investigation of Travel Time Reliability in Work Zones with Private-Sector Data. In Transportation Research Record: Journal of the Transportation Research Board No. 2272. TRB of the National Academies, Washington, DC. 2012. pp. 9-18.