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21st Century Operations Using 21st Century Technologies

Considerations of Current and Emerging Transportation Management Center Data

Chapter 4. Procurement Strategies

When procuring data or services, agencies need to exert considerable effort to ensure proper communication of the agency's needs to bidders. When developing requirements for data, services, or both, two approaches are typically used:

  • Issuing a detailed set of system requirements to identify the functions and top-level design of the system. This approach requires a major effort on the part of the agency and can become expensive and frustrating—especially if new requirements are identified midway through the initiative or the requirements were not thought through entirely.
  • Developing the requirements as part of the contract prior to beginning. This method can allow for greater dialogue between the bidders and the agency, which ultimately can lead to a better product.

Both of the options have their advantages; however, the second approach typically results in an end-state that is more favorable to the agency.

Well-written and well-defined requests for proposal (RFPs) state the agency's preferred business model, data use rights, and delivery mechanisms. Agencies that leave these out of their procurements open themselves up to potential misunderstandings as to what is delivered and what will be allowable. The private sector may try to propose alternative business models in procurements, but that opens the agency and private sector to risk.

The requirements for the use of specific technologies or techniques to collect and deliver data, however, should be left out of RFPs. Development of new technologies, methodologies, and tools happens both quickly and often, and requiring outdated technologies can result in artificial limits being placed on the agency and the consultant as they work to perform analytical tasks. It is generally better practice to allow data or service providers to drive these decisions based on what they perceive to be the most efficient and effective tools and methods at the time of delivery.

Sole Source

Agencies that procure new data or services via sole-source procurements usually do so because they have thoroughly defined needs, have evaluated what is available from the private sector, and have found only one potential provider that can meet all of those needs. Sole-source justification is a good procurement strategy when and if an agency is fully aware of all of the alternative solutions and data providers and there is a clear advantage of one provider's data over another. Sole-source procurements are often appropriate for truly emerging data sets because it is unlikely that multiple sources exist for the data.

Less competition for sole-source procurements does not necessarily result in higher prices for an agency. Sole-source procurements are significantly less effort for the private sector—thus lowering overall costs and overhead associated with developing proposals. The private sector is often more open to negotiating favorable terms for an agency with sole-source procurements.

Sole-source procurements present problems when an agency does not truly understand its own needs or what may or may not be available from other data providers.

Traditional Requests for Proposals

Traditional RFPs are usually challenging for both the agency trying to procure data and the private sector. For the public sector, RFPs can take a very long time to let and award. Technology and data offerings can change significantly in a short period of time, and what is documented and specified in the early stages of RFP development could be significantly out of date and even irrelevant by the time the RFP is awarded.

It is also very difficult to write a good RFP. Agencies face the following challenges:

  • Being overly specific: Some agencies are far too specific and demanding in their RFP language—specifically surrounding technical requirements. Agencies that list a large number of technical requirements in an RFP risk inadvertently raising costs, confusing the private sector, or receiving complicated bids from the private sector. In addition, not every data provider can provide the exact same services. Often an agency will merge requirements from multiple data vendor systems. This can lead to a complicated RFP that no single vendor can truly meet. The agency may then select a vendor that claims they can meet all of the requirements, but it really cannot, leaving the agency feeling duped.
  • Being too vague: Being too ambiguous with requirements and needs can be another risk. Agencies may poorly define their requirements, and then receive many bids from unqualified candidates that do not truly understand the agency's needs and think they have a solution that might fit the poorly crafted scope of work. This leaves the agency reviewing more responses than needed, and it makes it very difficult for reviewers to judge appropriately which company should be given an award.
  • Being influenced by the private sector: While not always a bad thing, RFPs can be influenced by the private sector. This typically happens during the RFP conceptualization and drafting period—well before the RFP is let. Agencies can use contractor suggestions and inputs to their advantage, crafting an RFP that will receive a reasonable response from the private sector; however, when RFP development occurs without consideration of multiple providers' abilities, this can lead to unfair bias or even favoritism, which in turn results in an RFP that some competitors may perceive as being "written for" a specific vendor based on their known strengths. It is far better to have the agency meet with all potential data providers multiple times before drafting the RFP. However, the agency cannot simply combine each private sector data offerings into the requirements because this can create a list of requirements that no one can truly satisfy, as mentioned above.
  • Low-bid States: Many agencies exist in low-bid environments—meaning that they must always select the lowest bid response. While there are provisions in most States to reject bids that cannot meet all of the requirements of the RFP, it is rare that reviewers will outright reject a response partly because companies are good at writing responses that seem to meet all of the requirements of the RFP—when in reality, they might not.

Intergovernmental Agreements

Intergovernmental agreements (IGAs) are useful when an agency needs to obtain the data or the services of a public-sector university, wants to partner with another department of transportation (DOT) in another State, or desires to work with a quasi-governmental entity. The risks associated with IGAs are similar to those of sole-source agreements; namely, the agency must be sure that it is working with a provider that will meet all of its needs before going down this path. IGAs can also produce results at a lower cost because they are typically leveraging a resource that has already been vetted and procured or is being purchased in bulk.

Pooled Fund Study

Pooled Fund Studies (PFSs) are excellent ways to leverage the resources of multiple agencies to fund data and services from one or more providers. Agencies "pool" their resources (funds) to develop a scope of work and procure support. A single agency can administer PFSs on behalf of everyone else. While there is an increased level of burden on this lead State, the benefits are typically significant and far exceed the administrative costs. The work or data procured by a PFS can be sole-sourced or put out for bid.

Several benefits of PFSs include:

  • Scope Synergy: Because multiple agencies work together to define the scope of work/ services, there is a greater likelihood that the scope will ultimately be more complete and thoughtful, thus leading to a better product.
  • Lower Cost: Almost every data and/or service provider will lower prices when products are purchased in bulk. Therefore, each participating agency will likely pay less for the data/service that it wants to purchase.
  • Scalability: PFSs can grow in size over time. For example, if three agencies initially form a PFS that becomes successful, other agencies can later join the PFS—gaining from the wisdom and investment of the first three agencies and potentially further lowering costs. While there are many examples of this, the current American Association of State Highway and Transportation Officials (AASHTO) Transportation Management Center (TMC) Pooled Fund Study is a recent example of TMCs getting access to additional data and analytical services surrounding the National Performance Measures Research Data Set for reporting under the Moving Ahead for Progress in the 21st Century (MAP-21) third performance measure rule, PM3.

On-Call Consultant as the Procurer

Several agencies have leveraged their on-call consultant contracts to procure data or services for the agency. These types of purchases sometimes appear to circumvent the procurement process entirely; however, some agencies have effectively used these contracts in a reasonable and ethical way. For example, the City of Austin, Texas, recently had one of their on-call consultants procure realtime probe data and data analytics services on the city's behalf. The consultant put together their own RFP from which multiple private sector entities responded. The consultant then reviewed the responses in consultation with the DOT and chose a winner. The city essentially outsourced the entire procurement process to their consultant.

Procured as Part of a Larger System

There is a growing trend among some agencies to bundle data, analytics, and other services with the procurement of their advanced traffic management system (ATMS) or 511 platforms. While this makes sense if the DOT already knows exactly what data it needs and requests very specific data from a specific vendor in their RFP, the risks include:

  • Overhead: Most consultants need to markup the cost of data—to cover management, overhead, contract administration, legal, etc. An agency will need to evaluate if the cost implications of procuring within a bundled contract outweigh the cost of an independent procurement or purchasing strategy.
  • Mixed solutions: If the agency does not specify exactly which vendor, data, or service they want within their ATMS/511 procurement, then the agency risks receiving bids from ATMS vendors that choose data providers on lowest cost, strategic and/or existing business relationships. The agency must then choose to make an award to a great ATMS platform with sub-optimal data or an inadequate ATMS platform with potentially great third-party data.
  • Locked-in: Bundling data purchases with an ATMS purchase means that the agency can get locked into the data provider for the life of the ATMS contract—limiting the agency's ability to change providers without broader contract implications.
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