Procurement of ITS on behalf of roads authorities is usually done by public bodies who are obliged to follow local competition law, contract regulations and procurement practices. When ITS is procured by a private company, there may be more freedom in the procurement processes used but national and international contract law will still apply. Where international treaties are in place, such as in the European Union, there may be procurement regulations that operate across national borders to ensure open markets. (See Procurement Methods)
Competition and procurement are areas of ITS where the processes from the pre-ITS era – such as traditional contract practices for roads and highways – may not be appropriate. Procurement processes which have worked well – sometimes for many decades with little change – for the construction, maintenance and upgrade of infrastructure such as roads, bridges, tunnels and street lighting – do not work so well for ITS which is affected by the rapid pace of technological change.
There are various solutions to these problems. They include requiring an ITS supplier to conform to international standards and/or local system architecture requirements, (See ITS Architecture and ITS Standards) or to meet functional performance specifications that leave the preferred design option open rather than being highly prescriptive. Complaints about the client over-specifying the components and methodology of the procured ITS solution are common. It is good practice for the client to be specific about the required outcomes and services, leaving the supplier free to choose the most appropriate means of delivering these outcomes. The supplier must be prepared to justify their choices and demonstrate that they will meet the client’s requirements.
Inflexible procurement procedures can lead to suppliers being unable to offer the best price for the best service, or the best technical solution. This may be reinforced by a risk-averse culture within the procuring organisation that means innovative solutions are disregarded. Inflexible procedures can also dampen innovation in the market. This may impact on ITS suppliers who have a unique and cost effective concept but find that public procurement rules frustrate their realisation of its commercial potential. The only way to market the concept may be to participate in an open competition procurement process held by the authority for bids based – directly or indirectly – on the supplier’s concept. The downside is that this requires the authority to share details of the supplier’s concept with other bidders – whereas the supplier with the concept would doubtless prefer a contract awarded on a single tender basis.
A further complication is that ITS is often procured using a process of pre-qualification in order to assess supplier competence and suitability and create a short-list. It is also common for a public authority to set up a framework contract or framework agreement with authorised suppliers, which can impact negatively on small and medium sized enterprises and may restrict the number of players in the supply chain.
Many countries follow strict practices in relation to purchasing and commissioning infrastructure, equipment and services by public authorities. This is to ensure fair, honest, transparent and value for money procurement. Where such frameworks exist, publicly funded spending on ITS systems and services will be within scope of the rules, often as part of a larger scheme, such as the building of a motorway where ITS is a component.
The details of procurement rules and practices and the methods for enforcing them vary from authority to authority and in some cases region to region. The intention behind the rules is generally always to ensure that the public receives best value from public expenditure, by ensuring that the best possible bid is successful. (See Case Study: ITS Procurement USA)
In ITS terms, the “best” bid would normally be the one that offers an optimum solution in terms of meeting all the deployment objectives for the project or scheme. A number of factors may have a bearing on the choice of project contractor or equipment supplier. Some countries have developed specific requirements that are imposed on ITS deployments. For instance, they may require compatibility with a national or regional ITS architecture or a good grasp of international ITS standards.
Contract award criteria may need to include whether the systems are robust, easy to operate, as cheap as possible to install, operate and maintain without risk to reliability, inter-operability with existing systems, and future “lock-in” to a particular supplier. The preferred bid may also need to demonstrate compliance with relevant international or local standards, national or regional ITS architecture, and available telecommunications (See Planning an ITS Programme, ITS Architecture and ITS Standards).
In many countries litigation by unsuccessful bidders for public sector contracts is on the increase, and ITS is seeing its share of this. Relationships between authorities and contractors inevitably form – and may be formalised through long-term call-off contracts making it difficult to test the market with new suppliers.
A recent European Commission project (P3ITS: See www.P3ITS.eu ) looked at pre-commercial procurement for ITS. The intention was to produce guidelines that would help a public authority to support the pre-commercial development of innovative ITS solutions by private companies in trials prior to large-scale market deployment. The challenge was how to do this without the market procurement being considered anti-competitive on the grounds that a supplier not involved in the original trials might be at a disadvantage – not having had the opportunity to take part in the trials. The European Commission believes that the P3ITS project came up with credible solutions to this problem. (See Case Study: Pre-Commercial Public Procurement)
Where public procurement rules apply, the evaluation of proposals for ITS systems and services must be done systematically and rigorously. The procedures must ensure a fair outcome that matches the project requirements and will stand up to scrutiny, especially by those suppliers who are unsuccessful against their competitors.
A key issue for a public authority procuring an ITS scheme, is the choice of criteria against which the suppliers’ bids are evaluated and scored. Failure to apply the award criteria strictly can be a source of challenge to the procurement. Good practice means that award criteria, scoring thresholds and their weighting should be specified and made known in advance. Demonstrating fairness in awarding contracts beyond all doubt can be difficult when such a wide variety of considerations come into play.
There is general agreement that the best results are obtained by specifying the outcomes and services required from the supplier, not the technical detail of how these are to be achieved.
The procedures that have been developed for use in purchasing IT systems may often be more appropriate for ITS procurement than traditional models used for civil engineering works by a roads authority. If the road authority’s procurement processes for ITS do not work well, because they have been designed for major infrastructure projects, a useful first action is to consider whether IT procurement processes would be more appropriate. Perhaps a hybrid of the two can be developed without breaking existing guidelines.