Consider procurement and contracting issues for leased versus owned ITS telecommunications systems.

Experiences from the Departments of Transportation (DOTS) of multiple states in selecting telecommunications options.

California,United States; Georgia,United States; Maryland,United States; Michigan,United States; Minnesota,United States; Missouri,United States; New York,United States; Texas,United States; Virginia,United States; Wisconsin,United States

Background (Show)

Lesson Learned

Procurement of either owned or leased telecommunications services is a critical part of an ITS implementation, as the telecommunications system enables the ITS infrastructure to operate in an effective manner. In the case of an owned system, the capital required to implement the telecommunications system represents a significant portion of the overall cost. Similarly, if services are procured (instead of acquiring a system) the service cost is quite significant in comparison to the total operation and support cost for the remainder of the ITS infrastructure. As a result, careful attention must be paid to procurement and contracting issues, in order to insure that the telecommunications system meets the needs of the agency.

For procurements, the following lessons learned are offered with regard to owned systems:
  • Use a telecommunications consultant to assist with procurement. Agencies will often find themselves procuring items with which they have little previous experience, so the expertise of telecommunications consultants can be of great value.
  • Check if existing specifications and standard plan details are appropriate for current telecommunications cable and equipment. In many cases the existing specifications and standard plan details may be inappropriate, as they were developed for use in dial-up or leased line situations.
  • Review standard documentation, training, testing, spares and system support procurement clauses. This documentation may be inappropriate for the current telecommunications system.
  • Determine that the interfaces among devices are fully compatible. The telecommunications system is often comprised of separately procured or pre-existing devices that must interact successfully at many levels. If the interfaces are not compatible, this may prevent functioning of the ITS implementation.
  • Consider the drawbacks of dividing a major project into multiple contracts. If multiple contracts are issued, it may be challenging to assign responsibility for difficulties in bringing the system online.
  • Review methods commonly used for measuring completion of work and of assigning value for payment. These methods may be inappropriate where trenching represents the greatest cost, but appropriate where a few switching devices provide the most critical functionality.
  • Consider a "best value" approach to procurement. In public procurements price is often the main determinant. However, with telecommunications systems, devices can vary widely in capability and quality, so "best value" may be a more appropriate approach.
In the case of a leased system, the following lessons learned are presented:
  • Define the complete set of requirements, including acceptable levels of service and responsiveness to outages. In addition, the requirements should outline how the response to network problems or failures will be handled.
  • Consider contract length and ease of contract modification. These factors should be considered in order to obtain the best pricing and to simplify contract administration.
  • Define the selection criteria so the local phone company is not excluded from the competition. The selection criteria should include all relevant service factors.
  • Consider a hybrid network configuration. A hybrid configuration, which takes advantage of existing agency telecommunications infrastructure or of existing agency telecommunications services (i.e. previously leased) may be more economical.
  • Investigate existing state contracts to determine whether superior terms are available under an existing contract. Under such circumstances, however, the DOT must consider how it will effectively interact with the contract holding agency, as the latter may have little understanding of the transportation agency’s telecommunications needs.
  • Specify in the Request for Proposal how the contract will or will not respond to changes in telecommunications tariffs and to market prices for competitive services during its lifetime. Given that the life cycle of a contract may be ten years (or longer), this issue should be addressed upfront in the contract.
The report also includes the following lessons learned for agencies contracting telecommunications services:
  • Consider how to exercise the necessary leverage over the provider to ensure the level of responsiveness that is desired or needed. It is likely that any single procurement will only represent a small portion of the business that an agency or state conducts with a carrier, thus it may be a challenge to get the carrier to perform as desired.
  • Expect that diagnosing telecommunications problems will be a challenge when moving through the public network. Ordinary diagnostic tools may find inconsistent or unusable results due to the variety of switching and cable installations between endpoints.
  • Be prepared to encounter resistance or to pay a higher fee if imposing specifications that are different from the carrier's specifications. The agency may learn that the carrier's installation specifications are quite different from its own (i.e. regarding cable burial depth, trench fill, conduit composition and schedule).
  • Expect to pay higher fees for network planning and installation if there is a lack of formal street addresses. The lack of formal street addresses in some geographic areas may complicate the carrier’s network planning and installation. Under such circumstances, the agency will bear additional costs.
  • Be prepared to pay a higher-level fee to obtain a guaranteed response time for problems or repairs. In ordinary consumer service and for many economically attractive tariffs, the carrier does not guarantee either response time to a problem call or the period within which a repair will be made. Such requirements will result in an added expense.
  • Design a carrier contract that supports expansion of the network and extension of the contract. Expansion may include a longer network, more access points, alternative services, and additional total bandwidth.
  • Be aware of the potential for leasing rates to increase significantly between contracts. If prices are greatly increased, agencies typically are not in a position to terminate operations of some or all of its systems while arrangements are made for an alternate carrier or while an owned system is installed.
  • Be prepared to pay significant costs when expanding a network across local access transport area lines (i.e. moving from "local" to "long distance"). In such cases, the cost for a relatively short extension of the network can be much greater than previously experienced for the network.
Procurement of either an owned or a leased system can be a complex undertaking for a transportation agency. There are numerous issues to consider that affect both the cost and the quality of the project. This report highlights these procurement and contracting issues and offers guidance to transportation agencies. Through the effective procurement of either leased or owned services, agencies can acquire telecommunications systems that are both cost-effective and meet their transportation needs.

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Communications for Intelligent Transportation Systems - Successful Practices: A Cross-Cutting Study

Author: Vince Pearce

Published By: U.S. Department of Transportation, Federal Transit Administration and Federal Highway Administration

Source Date: 2000

EDL Number: 11488

Other Reference Number: FHWA-JPO-99-023/FTA-TRI-11-99-02

URL: https://rosap.ntl.bts.gov/view/dot/2867

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Richard Dye
Chesapeake Highway Advisories Routing Traffic

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Margaret Petrella
RITA/Volpe National Transportation Systems Center


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Lesson ID: 2007-00365