A Case Study

Using a Design Competition to Procure ITS Software

Chart II Software Upgrade

Federal Highway Administration Intelligent Transportation System

March 2000 U.S. Department of Transportation

Federal Highway Administration
Notice

This document is disseminated under the sponsorship of

the Department of Transportation in the interest of

information exchange. The United States Government

assumes no liability for its content or use thereof.
1. Report No.

FHWA-OP-01-022

2. Government Accession No. 3. Recipient’s Catalog No.

4. Title and Subtitle

A Case Study

Chart II Software Upgrade

Using a Design Competition to Procure ITS Software

5. Report Date

March 2000

6. Performing Organization Code

7. Author(s)

Jeffrey Trombly (SAIC), Timothy Luttrell (SAIC)

8. Performing Organization

Report No.

9. Performing Organization Name and Address

Science Applications International Corporation

301 Laboratory Road

Oak Ridge, TN 37831

10. Work Unit No. (TRAIS)

11. Contract or Grant No.

DTFH61-96-C-00098

12. Sponsorship Agency Name and Address

United States Department of Transportation

ITS Joint Program Office, HVH-1

400 7th Street SW

Washington, DC 20590

13. Type of Report and Period

Covered.

14. Sponsoring Agency Code

HVH-1

15. Supplementary Notes

Mr. William Jones

16. Abstract

This is one of a series of case studies that examine procurement approaches used to deliver Intelligent Transportation

System (ITS) projects. The purpose of these reports is to provide examples of

successful strategies that have been used to overcome ITS procurement challenges within the traditional

"Design-Bid-Build" project delivery approach. Many ITS projects are stand-alone in nature, and do not have to be procured

under rules for construction. The installation of field devices and communications infrastructure often meets the definition

of construction. However, if a project involves the development of software for the purpose of integrating field devices, then

it does not meet this definition. The purpose of this series is to show that other procurement options are

available under Federal-aid regulations for projects that do not meet the definition of construction.

This case study provides an overview of the CHART II system design contract that the Maryland State Highway

Administration (MDSHA) used to procure system engineering expertise necessary for the federally-funded CHART II

upgrade program.

17. Key Words

Intelligent Transportation Systems, ITS,

Procurement

18. Distribution Statement

No restrictions. This document is available to the public

from: The National Technical Information Service

Springfield, Virginia 22161

19. Security Classif.(of this report)

Unclassified

20. Security Classif. (of this page)

Unclassified

21. No. of Pages

12

22. Price

N/A

Form DOT F 1700.7 (8-72) Reproduction of completed page authorized
Chart II Software Upgrade

Procurement Options for ITS Federal-aid Projects

Definition of Construction

The term “construction” means the supervising, inspecting, actual building, and all expenses incidental to the construction

or reconstruction of a highway, including locating, surveying, mapping, resurfacing, restoration and rehabilitation,

acquisition of rights-of-way, relocation assistance, elimination of hazards of railway grade crossings, elimination of roadside

obstacles, acquisition of replacement housing sites, acquisition and rehabilitation, relocation, and construction of

replacement housing, and improvements which directly facilitate and control traffic flow, such as grade separation of

intersections, widening of lanes, channelization of traffic, traffic control systems, and passenger loading and unloading areas.

The term also includes capital improvements which directly facilitate an effective vehicle weight enforcement program, such

as scales, and also includes costs incurred by the State in performing Federal-aid project related audits which directly benefit

the Federal-aid highway program.

ITS Projects that are not Construction

Section 112 of Title 23 requires competitive bidding for all construction projects. The definition of “construction” by FHWA

does not include many ITS projects. If the project is just installing field devices, it is construction. However, if the project

involves software to control the devices or integration of the devices with a control center or communications system, then it

is not construction. Communications systems or traveler information systems that require only limited installation are not

construction. Each project should be carefully examined to determine if it falls into the construction category. Many ITS

projects do not.

Prequalification of Suppliers

Even if a project does fall under construction, agencies can establish a pre-qualification process to insure that all bidders are

qualified to perform the work. The criteria for qualification are defined by the procuring agency. However, if the ITS project

is a part of a larger construction project, it is recommended that the ITS portion be made a separate procurement.

State Procurement Practices

If the ITS project does not fall under construction, another alternative is to use the state’s own procurement procedures in

accordance with 49 CFR 18. This applies to all non construction projects. Since many states have recently established special

procurement rules for technology projects, this could be advantageous to implementers ITS projects.

However, if you use federal aid procurement practices, then there are other alternatives available, which are:

• Engineering or Design Services

This contracting mechanism can be applied to a variety of ITS projects such as software development. It has also been

successfully used to retain System Integrators and System Managers that can provide the entire spectrum of services

required to implement an ITS Project, such as a traffic management center. This might include the specification,

procurement, configuration and installation of all hardware and software to provide the functionality required. Even if

field device installation is required of the system integrator, and not done under a separate construction contract, a

design - build contract could be used under FHWA SEP14.

• SEP - 14 (Special Experimental Project number 14)

The SEP -14 process is aimed at encouraging innovative procurement practices of all types. It has been successfully

used for Design -Build and Design -Build-Operate projects. However, other value oriented procurement processes can

be employed using SEP-14. To use SEP-14, permission of FHWA is required, and the contract must be awarded under

some form of competitive process. However, the selection criteria may vary from project to project and generally

includes: value, quality of the completed product, schedule, and cost.
Chart II Software Upgrade

Table of Contents

Preface .............................................................................................................................................................................................. 1

Background ...................................................................................................................................................................................... 1

Statewide ITS Services Contract ..................................................................................................................................................... 2

Maryland Network Management Services Contract ....................................................................................................................... 3

Procurement Planning .................................................................................................................................................................... 3

Scope of Services .............................................................................................................................................................................. 5

Procurement Challenges ................................................................................................................................................................. 5

Contract Evaluation and Award ....................................................................................................................................................... 5

Current Activities ............................................................................................................................................................................. 6

Benefits of the Procurement Strategy ............................................................................................................................................. 6

ACRONYMS

CCTV Closed-circuit television

CHART Chesapeake Highway Advisories Routing Traffic

COTS Commercial off-the-shelf software

CWG CHART Working Group

FHWA Federal Highway Administration

ITS Intelligent Transportation System

LAN Local Area Network

MDSHA Maryland State Highway Administration

SOC Statewide Operations Center

TAR Traveler Advisory Radio

TOC Traffic Operation Center

VMS Variable message sign

WAN Wide Area Network
Chart II Software Upgrade

Preface

This is one of a series of case studies that

examine procurement approaches used

to deliver Intelligent Transportation

System (ITS) projects. The purpose of

these reports is to provide examples of

successful strategies that have been used to

overcome ITS procurement challenges within the

traditional “Design-Bid-Build” project delivery

approach.

Many ITS projects are stand-alone in nature, and

do not have to be procured under rules for

construction. The installation of field devices and

communications infrastructure often meets the

definition of construction. However, if a project

involves the development of software for the

purpose of integrating field devices, then it does

not meet this definition. The purpose of this series

is to show that other procurement options are

available under Federal-aid regulations for projects

that do not meet the definition of construction.

Background

The following case study

provides an overview of

the CHART II system

design contract that the

Maryland State Highway

Administration (MDSHA)

used to procure system

engineering expertise

necessary for the

federally-funded CHART

II upgrade program. The

CHART program, started

in the mid-1980s, focused

on improving travel to and from Maryland’s

eastern shore. Since its founding, CHART has

expanded to a statewide program providing traffic

monitoring, traveler information, incident

management, and traffic management services for

travelers throughout Maryland, including the

heavily traveled Baltimore-Washington corridor.

The CHART II program is designed to significantly

upgrade the current capabilities of the CHART

program. At the heart of the system will be the

development of enhanced and expanded software

capabilities. In an effort to provide the CHART

program with a maximum degree of flexibility and

responsiveness in procuring the necessary services

Contracting options for Federal-aid transportation procurements

Traditional Construction

23 USC 112

23 CFR 635, 695

Competitive Bidding

Responsive and

Responsible Lowest Bid

Engineering and

Design Services

23 CFR 172

Qualifications

Based

Selection

Competitive

Negotiations

Systems Manager

Systems Integrator

(Consultant)

Non-Engineer

Non-Architect

49 CFR 18

Procuring Goods

& Services

Using Equivalent

State Procedures

Special

Experimental

Project No. 14-

Innovative

Contracting

Practices

(SEP-14)

23 USC 307

FHWA

Headquarters

Concept Approval

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Chart II Software Upgrade

to accomplish this goal, the MDSHA conducted a

design competition through an existing statewide

ITS services contract. Two contractor teams were

invited to participate in this competition, which

resulted in preparing system requirements

documentation for the CHART II program

implementation. The competition, as well as the

ultimate award of the implementation of the

system requirements, was conducted in accord

with existing Federal Highway Administration

(FHWA) procurement regulations.

The Statewide Operations Center (SOC), an

information clearinghouse located in Hanover near

the Baltimore-Washington International airport, is

the hub of the CHART system. It is supported by

four satellite Traffic Operation Centers (TOCs)

located near College Park, Baltimore, Rockville,

and Annapolis. This hub and satellite architecture

provides statewide coverage, which allows

information to be distributed based on

geographical needs and/or expertise, and allows

operations to be managed from several different

locations. To support the monitoring and control

activities of the SOC and the TOCs, a large number

of field components and devices are deployed,

including a communications infrastructure,

closed-circuit television (CCTV) system for traffic

monitoring and complex interfaces to existing and

new detection systems. To support the motorist

information needs, the MDSHA is currently

expanding its already extensive arsenal of Variable

Message Signs (VMSs), Traveler Advisory Radio

(TAR) transmitters, and Highway Advisory

Telephone system. A media interface will also be

added to the SOC system, which will allow the

media to access higher quality real-time traffic

video. The incident management capability will

also be enhanced through the integration of all

radio communications, local government

communications, and our traffic signal systems

activities.

The current CHART SOC represents the

culmination of a four-year systems development

effort that was intended to provide statewide

control of VMS, TAR, and CCTV field elements. The

SOC was also to have offered the capability of

receiving, processing, and storing detector data

and controlling various displays at the SOC and at

remote workstations. Efforts to modify the current

software fell short of these capabilities and the

MDSHA concluded that it is unlikely these

requirements could ever be achieved through

modifications to the existing software. As a result,

a complete replacement of the SOC software and

hardware was initiated.

The design, development, and implementation of

the CHART II system required a wide variety of

technical expertise, including systems engineering,

software development, systems integration, and

telecommunications. The MDSHA realized that it

would have to procure the services of a contractor

team to access this wide range of expertise. The

MDSHA determined the best approach to ensuring

a successful implementation of the CHART II

system was to design a procurement competition

using contractor teams working under the

Statewide ITS Services task order contract and the

Maryland Network Management Services contract.

Statewide ITS Services Contract

Several years ago, the MDSHA awarded a Statewide

ITS Services Contract to five contractor teams.

Under the terms of this agreement, task orders

have been issued to contractor teams to provide

ITS-related systems engineering and project

development expertise. Under terms of the

resulting agreement, task orders can be made on a

sole source basis to a contractor team or could be

awarded competitively at the discretion of the

government.

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Chart II Software Upgrade

Maryland Network Management

Services Contract

The objective of the Network Management Services

Contract was to provide State Agencies with an

economical way to obtain Wide Area Network

(WAN) and Local Area Network (LAN) services.

The contract was structured as an Indefinite

Delivery, Indefinite Quantity contract, allowing for

the issuance of task orders for time and materials

on an as-needed basis to support ITS planning and

implementation. A total of two contractor teams

were awarded contracts under this procurement.

Earlier, both of these teams had been made awards

under the Statewide ITS Services Contract.

MDSHA officials were thus provided with an

opportunity to conduct a design competition.

Procurement Planning

The difficulties associated with the development of

the original CHART system were a result of the

following problems:

• Inadequate definition of system requirements.

• A desire to use existing software that could not meet

the system objectives.

• The evolution of system requirements to the point at

which the system objectives exceeded the ability of the

initial system to satisfy the rapidly evolving

requirements.

• Inadequate staff expertise to permit the definition of

system requirements.

• Inadequate communications between the system

developers and the CHART staff regarding the systems

capabilities.

• Flawed “low-bid“ procurement method

The implemented procurement strategy was

intended to avoid these problems. It featured

cooperative development of systems requirements

between the system integrator and MDSHA

personnel. It also included an activity intended to

identify future, long-term requirements in order to

avoid unintended growth in the initial requirements. It was planned that the work would be

done in a series of short phases, rather than a

several year effort. The contractors were to deliver

a set of system requirements as the first phase

before the software development began. In

addition, the procurement strategy was designed to

provide the system definition in adequate detail to

permit MDSHA staff to evaluate the degree to

which the system requirements will be satisfied by

the replacement systems.

The MDSHA worked closely with the FHWA

Maryland division staff to formulate a strategy for

procurement of the CHART II system. This

coordination ensured that the resulting contract

complied with all FHWA contract requirements

and was eligible for federal-aid funds.

MDSHA officials devised a procurement strategy

that used an existing task order contract vehicle to

conduct a design competition between two

contractor teams. The specific elements

comprising this strategy are described below:

A written task order was issued to two

qualified contractor teams to develop a

system description in adequate detail to

permit the selected system integrator and

MDSHA to have a through understanding of

the characteristics of the system to be

delivered for the CHART II software. Each

contractor was provided with $250,000 in

funding and six months to complete this

work.

Each contractor team was provided with all

available documentation for the existing

system and was encouraged to work

collaboratively with CHART personnel in

developing detailed system requirements. In

addition, a series of independent meetings

were held with CHART and contractor

personnel to facilitate interaction between

the contractor team and CHART staff.

During these meetings, contractor personnel

were encouraged to discuss various ideas and

concepts with CHART personnel as well as

clarify any questions they had regarding the

development of the system requirements.

MDSHA established a CHART Working

Group (CWG) consisting of representatives

from state and local agencies who are likely

to be impacted by the operation of the

CHART system and who may want to

cooperate. After the CWG was established,

contractor teams were encouraged to attend

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Chart II Software Upgrade

the CWG meetings to participate in

identifying the interfaces and functions that

defined the long-term expansion requirements

of the CHART II system.

At the conclusion of the detailed system

description development period, both

contractor teams submitted their final

products to MDSHA for final evaluation to

select the contractor team most likely to

provide a replacement CHART system.

Following are factors considered in this

evaluation:

• Responsiveness of the products produced by this task

order to the requirements of the CHART replacement

system.

• Quality and level of detail of the system requirements

documentation.

• Applicability of the system design to the needs of the

State of Maryland.

• System expandability.

• Quality of the implementation plan, including cost,

schedule, and evaluation plan.

• Relevant experience and quality of the internal

development processes of the proposed implementation

team.

Prior to awarding a task order to the selected

systems integrator, additional meetings were

held between MDSHA personnel and the

integrator. The purpose of these meetings was

to resolve all details of the system definition to

ensure that all requirements were fully

defined and satisfied. A cost proposal was

then submitted based on the modified system

definition documentation. A follow-on task

order was then issued based on the cost

estimate and the modified system definition

documentation.

The detailed system requirements delivered at

the end of the initial period were evaluated by

MDSHA. Based on this evaluation, MDSHA

awarded a follow-on task order to implement

the detailed system description designed by

winning team. It was estimated that the value

of the follow-on contract would be in the

range of $10 million.

The idea of a design competition can be very

beneficial to the client. This type of procurement

provides funds to support creative solutions in an

effort to better determine a contractor’s

capabilities. A design competition can showcase

the competitors’ understanding of the client’s

needs, and allow the client to find the best partner

for the project. This type of procurement also

reduces the risk for both parties with respect to

cost and schedule.

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Chart II Software Upgrade

Scope of Services

The system requirements documentation produced

as a result of the design competition task order

included the following:

• A functional description of the software that fully

defined all processing, displays, interfaces, and

databases. Also included in this description were a

discussion of the recommended architecture and a

comparison of this architecture with others that have

been considered.

• A prototype user’s view of the system providing all

information related to displays, inputs, and outputs.

This view was designed to permit operators and

administrators an understanding of the system

operation.

• Various technical information related to life cycle

requirements, estimated operations and maintenance

requirements, database definition, recommended

hardware, and commercial off-the-shelf (COTS)

software to be used in the development and operation

of the system, system security features and

capabilities, and failure modes and backup capabilities.

• Description of the approach required to interface the

CHART II system with existing systems operated by

other agencies and the MDSHA.

• A detailed staffing plan, schedule, and budget for the

work.

• An evaluation plan that defined all tests to be

performed in acceptance testing.

Procurement Challenges

The development of the CHART II design

competition procurement required the close

cooperation among state agencies and officials of

the FHWA. This interagency communication was

facilitated through the involvement of the MDOT

procurement staff early in the procurement

process. MDOT staff worked closely with the

Department of Budget and Management to ensure

that the resulting contract was consistent with

federal-aid procurement rules (23 U.S.C. 112; 23

CFR 172.7). The MDOT staff sought FHWA

involvement in developing the Request for

Proposal in order to resolve any issues that may

limit the eligibility of resulting work for federal-aid

reimbursement. The approval of FHWA was a

particularly important issue because the CHART II

project will be heavily financed through the use of

federal-aid funds. Therefore, without FHWA

approval it would be very difficult to implement

planned changes to the CHART system.

Contract Evaluation and Award

Contractor teams began work on the system

description design immediately after the task order

under the Statewide ITS Services Contract was

issued. Over the succeeding six-month period,

both contractor teams interacted extensively with

MDSHA, CHART officials, and the CWG. This

interaction was used to better define the system

needs and also provide an opportunity for

contractor team to understand the unique needs of

the CHART II system. As required under the task

order, both contractor teams delivered the required

system design materials, including prototype

interfaces. Following a detailed evaluation of these

materials by MDSHA and CHART officials, an

award was made to one of the contractor teams

and a task order was issued under the Maryland

Statewide Network Services Contract to begin

implementing the system description.

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Chart II Software Upgrade

Current Activities

Work to develop the CHART II system is well

underway with Phase I deliverables on schedule for

completion in the next two months. This

deliverable will consist of software for the freeway

management functions of the CHART II system.

Over the next several years, system development

will proceed incrementally with multiple phases

(as recommended in software acquisition

document codes) completed in turn as additional

capabilities are brought on-line. In order to

manage the contractor team, the MDSHA has

assigned two full time staff equivalents to provide

technical oversight. This provides for the

necessary communication and review capabilities

on the government side to ensure that the

contractor staff remains on schedule and budget

and that the necessary government reviews are

completed. In addition, the multi-phase approach

adopted for project implementation provides a

clear understanding of expectations as well as

flexibility in project implementation.

Benefits of the Procurement Strategy

While it may be true that the CHART II situation is

unique in the sense that two contract vehicles were

used to procure the system (which can be done

under CFR 172.7 without having the task orders in

place), it is nonetheless also true that it was

completed entirely within existing federal and state

procurement laws. It is, therefore, important to

emphasize that the procurement strategy applied

was entirely consistent with existing Federal-aid

procurement regulations. The success of the

approach rested on the fact that the FHWA

Maryland Division office was involved throughout

the process and that the MDSHA acquisition

manager worked very hard to make the strategy

work under Maryland law. In simple terms, it

appears that persistence paid off in working the

procurement effort through the necessary hurdles

within existing procurement laws.

• The highly interactive process permitted through the

design competition ensured that system designers (and

ultimately system integrators) were provided with an

opportunity to understand system requirements in a

high level of detail. This interaction also permitted the

government an opportunity to understand proposed

solutions in detail. The lack of this magnitude of

interaction is typically cited as a major weakness of the

traditional “Design-Bid-Build” approach when applied

to ITS procurements.

• The approach provided for the opportunity to see a

working prototype of the proposed system. The

prototypes provided a basis to evaluate the proposed

system alternatives in a tangible fashion and thus gave

the MDSHA a specific understanding of proposed

features. Officials were in a better position to decide

whether the contractor was on the right path well

before a significant investment had been made in the

system development and system plans could be

modified.

• The process forced the government to consider

alternative approaches in an informed manner.

Competition was maintained but risk was reduced

because the government and the contractors could

collect as much information about system requirements

as needed to make an informed choice.

• The contractors produced designs worth more than the

initial $500,000 government investment. The client

was able to experience greater benefits because a

design competition was used.

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Participants in the procurement planning and

acquisition process for the CHART II system cited

a number of benefits to the procurement strategy

pursued in this case. Included among these

benefits are the following:

The best procurement process is not a sole

guarantee of success; it is only one element. A

good management style along with a team-based

approach is necessary to achieve the full benefits

of a particular procurement.
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Procurement Resources

Documentation

• ITS Procurement Resource Guide, ITS Joint Program Office

– FHWA Memorandum: Procurement Information for ITS Projects - Discusses types of ITS projects

and the alternatives available under federal aid.

– Virginia Department of Transportation Public-Private Procurement - Issues and Accomplishments

A lessons learned discussion of public- private partnerships

– Innovative Contracting Practices for ITS

Executive Summary & Final Report - A detailed compendium of state and federal procurement

laws and options

– FHWA Federal-Aid ITS Procurement Regulations and Contracting Practices

• The Road to Successful ITS Software Acquisition, ITS Joint Program Office

Executive Summary; Vol. I; Overview and Themes; Vol. II; Software Acquisition Process Reference

Guide - A discussion of the key issues and approaches to responding to those issues.

• ITS Software: Effective Acquisition Practices, NCHRP - This report will be available from AASHTO by

the end of the year.

• Successful ITS Procurement Case Studies ( Available1/1/2000)

(All DOT documents available via the ITS web site www.its.dot.gov)

Training (See NHI course listing)

• ITS Software Acquisition; A two day course for project managers and engineers based upon “The

Road to Successful Software Acquisition”.

• ITS Procurement Using Federal Aid; (Available 1/1/2000) This one day workshop, aimed at project

managers and procurement officials, will concentrate on the use of various contracting approaches

allowed by federal aid for ITS projects.
To access an electronic version of this publication

and other ITS related publications visit the

ITS Electronic Document Library (EDL):

www.its.dot.gov/itsweb/welcome

EDL Document Number: 13462

Visit Our ITS WEB site

ITS Joint Program Office: http://www.its.dot.gov

Publication NO. FHWA-OP-01-022

HOIT-1/4-01(1M)QE