[Federal Register Volume 63, Number 226 (Tuesday, November 24, 1998)]
[Pages 64994-64997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31266]

[[Page 64993]]


Part II

Department of Transportation


Federal Transit Administration

Federal Highway Administration


Request for Letters of Interest to Participate in an Operational Test 
of an Electronic Payment System for Transit Fare Collection and Other 
Applications; Notice

Federal Register / Vol. 63, No. 226 / Tuesday, November 24, 1998 / 

[[Page 64994]]


Request for Letters of Interest to Participate in an Operational 
Test of an Electronic Payment System for Transit Fare Collection and 
Other Applications

AGENCY(S): Federal Transit Administration (FTA) and Federal Highway 
Administration (FHWA).

ACTION: Notice.


SUMMARY: The U.S. Department of Transportation (USDOT) announces a 
Request for Letters of Interest from eligible applicants for an 
operational test of an electronic payment system for transit fare 
collection and other applications. The USDOT is interested in 
identifying and evaluating issues associated with the establishment of 
partnerships between public transit service providers and other 
entities in the development and use of multiple-application electronic 
payment systems. The Department is specifically interested in an 
operational test of a payment system that includes a variety of 
applications, with preferred emphasis on multiple transportation 
applications, government benefits applications, and retail 
applications. This Request for Letters of Interest will be followed by 
a Request for Proposals (RFP) at a later date. To assist potential 
respondents this notice contains proposed draft text of the RFP.

DATES: Letters of Interest shall be submitted by 4:00 P.M. EST on or 
before 60 days after the date of the Federal Register Notice.

RESPONSE FORMAT: Letters of Interest shall not exceed five (5) pages in 
length. A page is defined as one (1) side of an 8\1/2\ by 11-inch 
paper, line spacing no smaller than 1.5 with a type font any smaller 
than 12 pt. The first page of the Letter of Interest shall include the 
name, address, and telephone number of the individual to whom 
correspondence and questions may be directed. Within the Letter of 
Interest, the respondent is asked to provide a summary of a potential 
proposed operational test with goals and objectives consistent with 
proposed draft text of the RFP presented below. Respondents are also 
invited to include comments on the proposed draft text of the RFP 
below. These comments shall not exceed ten (10) pages in length and 
shall be submitted as an Appendix to the Letter of Interest.

ADDRESSES: Letters shall be submitted to Walter Kulyk, Director, Office 
of Mobility Innovation (TRI-10), Federal Transit Administration, 400 
7th Street SW., Room 9402, Washington DC 20590 and shall reference 
Electronic Payment System Demonstration.

ELIGIBILITY: It is important to note that only those agencies that 
submit Letters of Interest will be eligible to respond to the Request 
for Proposals. The Request for Letters of Interest is extended to 
public agencies and organizations in the United States including public 
transportation agencies and operators, transportation authorities and 
commissions, metropolitan planning organizations, local Councils of 
Government, and State and local Departments of Transportation.

FOR FURTHER INFORMATION CONTACT: Sean Ricketson, Office of Mobility 
Innovation, (TRI-11), at (202) 366-6678.


Proposed Draft Text of a Request for Proposals (RFP)

    The remainder of this notice contains proposed draft text of the 
RFP to be made at a later date. Please note that though the text is 
draft, Section II, Vision, Goals and Objectives, is final and will not 
change. The remaining text is subject to change and revision. 
Respondents should use the draft text to guide their summary proposals 
to be included in their Letters of Interest. Respondents are also 
invited to comment on the text.


I. Background
II. Visions, Goals, and Objectives
III. Definitions
IV. Project Development
    A. General
    B. Management Oversight
V. Partnerships
VI. National ITS System Architecture
VII. Project Evaluation Activities
VIII. Funding
IX. Schedule
X. Proposals
    A. Technical Plan
    B. Management and Staffing Plan
    C. Financial Plan
XI. Proposal Evaluation Criteria

I. Background

    Recent developments in card systems and card technology present a 
unique opportunity for public and private institutions to establish 
mutually beneficial partnerships in the development and management of 
electronic payment systems for transportation. Recent developments 
include stored-value card systems created by financial institutions, 
contactless smart card systems for public transportation, electronic 
toll collection systems on highways and card systems for human service 
agencies' program management and benefits delivery. Private industry 
and public agencies foresee substantial benefits in establishing 
partnerships to develop further capabilities in electronic fee 
collection, delivery of benefits payments, funds transfer and financial 
clearinghouse functions. However, a number of institutional issues 
continue to restrict the formation of these partnerships. Through the 
development of an operational test this project intends to be a step 
toward identifying and addressing the complex institutional issues 
surrounding electronic fare payment systems in transportation.

II. Vision, Goals, and Objective(s)

    The vision this operational test supports is one of improved public 
transit customer service and improved operational efficiency for 
transit providers. While the goals and objectives described below are 
focused on technical and institutional outcomes, the success of the 
test will be dependent upon whether it makes a positive contribution to 
the enhancement of public transit customer service and operational 
efficiency. This focus must be maintained throughout the planning, 
development and execution of the project by the grantee.
    The goal of the operational test is to provide solutions to transit 
operators and other transportation and government service providers 
exploring the potential of integrating transportation payment systems 
with other payment systems and other applications. Additionally the 
operational test is intended to offer insight to those in the card 
industry, financial services industry, and other industries interested 
in becoming involved or integrating their services with a 
transportation payment system.
    The objective of the operational test is to evaluate one or more 
transportation payment applications, one of which must be transit fare 
collection, within a card system of more than one card issuer and more 
than one service provider, with a financial institution functioning as 
a clearinghouse.
    Additional objectives, if feasible, are to evaluate the viability 
and benefits of integrating a transportation payment system with a 
government benefits program and/or commercial stored-value card system 
(e.g., retail, telephone, etc.).

III. Definitions

    Card issuer--the entity (e.g. transit agency, bank or financial 
institution, university, human service agency) that provides the card 
media (and may be identified on the media) and reconciles with 
participating service providers based on the stored value they have 
received from users.

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    Service provider--an entity (e.g., transit agency, retail store, 
university, human service agency, telephone company) which provides a 
service or product in exchange for payment via the card system.
    Financial institution--bank or financial service company.
    Application--a use or purpose for the card and card system, such as 
fare collection, telephone, welfare benefits, or electronic cash.
    Government benefits program--disbursement of benefits by local, 
State, or Federal government to eligible customers. Examples include 
food stamps, welfare programs, and Social Security.
    Clearinghouse--an entity or organization responsible for 
collection, reconciliation and settlement of customers' transactions 
among the participants of the card system. Additional tasks may include 
managing support functions of the system. These functions can include 
card management, issuance, distribution, revenue management, customer 
service and marketing.
    Stored value card--a card application where monetary value is 
stored on a card in an electronically readable form. Card reader 
devices deduct the appropriate amount from the card. Stored value cards 
can be implemented with a variety of technologies including chip cards 
and conventional magnetic stripe cards.

IV. Project Development

A. General

    The operational test will need to achieve an optimal balance of 
meeting local needs while also providing a worthwhile national model of 
payment system coordination and partnerships for implementation in 
other locations.

B. Management Oversight

    The operational test will be managed by the grantee and local 
partners in the project. Additional guidance will be provided by the 
FTA advisory committee composed of transit industry representatives 
that provides guidance on electronic fare payment activities. Any 
changes in project scope or direction will be made in consultation with 
this advisory committee. For this project, the committee may be 
augmented by experts from other industries as needed, such as financial 
institutions and human service agencies. Concurrently, this committee 
will direct a separately funded effort being conducted by USDOT to 
develop and document a set of guidelines for the integration of 
electronic fare payment with other payment systems. These guidelines 
will assist individuals and agencies with the integration of a transit 
multi-use card with electronic payment systems for other uses, such as 
benefits transfer, toll collection, security, parking, retail, 
financial services, telephones, identification and access control. The 
results of the operational test are intended to contribute to the 
advancement of the guidelines document. In turn, the development of the 
guidelines document is intended to assist the advisory committee, the 
grantee, and local partners with the implementation of the operational 

V. Partnerships

    The USDOT will generally work with the lead public agency (grantee) 
participating in the partnership (State, City, Regional Agency, 
depending on site) to ensure the needed support to achieve the 
objectives of the field operational test. The USDOT will verify that 
the needed institutional, partnership and funding arrangements are in 
place. All necessary partnership arrangements and institutional 
agreements to support the project need to be specifically documented.

VI. National ITS System Architecture

    The National ITS System Architecture provides a common structure 
for the design of Intelligent Transportation Systems (ITS). The 
architecture defines the function that must be performed to implement a 
given user service, the physical entities or subsystems where these 
functions reside, the interfaces/information flows between the physical 
subsystems, and the communication requirements for the information 
flows. In addition, the architecture identifies and specifies the 
requirements for standards needed to support national and regional 
interoperability, as well as product standards needed to support 
economy of scale considerations in deployment.
    Proposals shall provide a ``Statement of Intent'' to design a 
system that is consistent with SAE J1708T Bus Vehicle Area Network, the 
National ITS Architecture, including the Transit Communications 
Interface Profiles (TCIP) and national ITS standards, protocols, or 
standards requirements as these emerge from the National ITS 
Architecture Development Program. Information about SAE J1708T may be 
obtained from the Society of Automotive Engineers, 400 Commonwealth 
Drive, Warrendale, Pennsylvania, USA, 15096-0001; phone: 412-776-4841, 
fax: 412-776-5760, or through the Internet at http://www.sae.org. 
Information about TCIP can be obtained on the TCIP homepage at http://
www.tcip.org or by contacting the Institute of Transportation Engineers 
525 School St., S.W., Suite 410 Washington, DC 20024; phone: 202-554-
8050. Copies of the Architecture Definition Documents, the draft 
Standards Requirements Document, and the Standards Development Program 
from the Architecture Development Program are available from ITS 
America, 400 Virginia Avenue, S.W., Suite 800, Washington, D.C. 20024, 
telephone 202-484-4847. Electronic copies are available on the ITS 
America Internet Homepage, http://www.itsa.org. These documents provide 
insight into the definition of the National ITS Architecture, and the 
emerging approaches being taken toward standardizing interfaces that 
would support the integration of transportation management components.
    In developing plans for standards and architectural consistency, 
proposals should recognize the practical benefits of this requirement. 
The ability to integrate systems and exchange data among applications 
offers some of the strongest benefits of ITS. As an illustration of 
understanding of this point, plans should identify potential 
opportunities for integration and data sharing among fare payment and 
other systems and applications. Information about key indicators of the 
electronic payment component of the ITS metropolitan infrastructure and 
integration of it with other components can be found in, ``Measuring 
ITS Deployment and Integration: August 1998'' available through the 
Internet at URL Http://www.its.fhwa.dot.gov/cyberdocs/welcome.htm the 
report is document number 4372 in the Electronic Document Library 
maintained at this website.

VII. Project Evaluation Activities

    A major goal of the FTA is to promote development of innovative 
applications of advanced technologies. In order for the FTA to be able 
to encourage the widespread adoption of technological innovations, the 
technologies tested, and the results obtained must be analyzed, 
documented and reported. Accordingly, evaluations are an integral part 
of each field operational test and are critical to the success of the 
National ITS Program.
    This electronic payment system operational test will be evaluated 
by the Volpe National Transportation Systems Center (Volpe Center) and 
its contractors. They will develop an Evaluation Plan which will 
specify the data collection requirements which will enable an 
assessment of the

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achievement of the goals and objectives of the National ITS Program 
applicable to this project as well as the goals and objectives of the 
implementing organizations. They will assemble all the data collected 
in accordance with the Evaluation Plan, analyze these data, and prepare 
the Evaluation Report.
    Although the Evaluation Plan will detail the specifics of the 
evaluation, it is anticipated that it will include an assessment of the 
technological issues, operational issues, customer acceptance, system 
reliability, attitudes of implementing organizations, implementation 
and continuing operational costs, integration issues, and a variety of 
institutional issues including partnership arrangements, legal issues, 
clearinghouse operation, the reason for selecting the type of system 
(closed or open), and the success in obtaining multiple agency 
    The operational test partners (all participating agencies and 
institutions) will be involved in all phases of the evaluation. They 
will be expected to provide the local goals and objectives, review and 
comment on the Evaluation Plan, collect the data specified in the 
Evaluation Plan (including any surveys that may be necessary), provide 
information on external factors that may affect the project's results, 
and review and comment on the Evaluation Report prepared by the Volpe 

VIII. Funding

    Federal funds available for this operational test will initially be 
$1.3 million with an anticipated additional $1.0 million available 
within one year of the grant award. Federal funding shall not exceed 
50% of total project costs.
    Implementing organizations will be required to furnish the 
specified evaluation data and perform reviews of evaluation documents. 
No additional Federal funding will be provided for this effort. The 
evaluation activities conducted by the Volpe National Transportation 
Systems Center (Volpe Center) will be funded separately by the FTA.
    The USDOT, the Comptroller General of the United States, and, if 
appropriate, individual States have the right to access all documents 
pertaining to the use of Federal ITS funds and non-Federal 
contributions. Non-Federal partners must submit sufficient 
documentation during final negotiations and on a regular basis during 
the life of the project to substantiate these costs. Such items as 
direct labor, fringe benefits, material costs, consultant costs, and 
subcontractor costs, and travel costs should be included in that 

IX. Schedule

    The project must remain operational for a period long enough to 
obtain valid evaluation data. The data collection period will be for a 
minimum of twelve (12) months from the time that the project is fully 
operational (i.e., all elements are working as intended). Upon the 
completion of data collection there shall be a six (6) month period of 
analysis and report coordination before a final evaluation report is 
submitted. The system shall remain operational throughout the 
evaluation process until the final report is received and accepted by 
the Department.

X. Proposals

    The USDOT will select one (1) or multiple sites to evaluate the 
issues associated with the establishment of partnerships between public 
transit service providers and developers of stored value card systems, 
electronic payment systems and financial clearinghouses.
    Applications should, where possible, focus on utilizing currently 
available card technology. The Department is specifically interested in 
an operational test that includes a variety of applications with the 
primary emphasis on multiple transportation applications, government 
benefit applications and retail applications.
    Applications that offer the greatest potential for demonstrating 
and evaluating the benefits of using electronic fare payment in a 
multi-application transportation environment with a private partnership 
will be considered the most desirable.
Proposal Criteria
    A proposal shall not exceed thirty (30) pages in length including 
title, index, tables, maps, appendices, abstracts, resumes and other 
supporting materials. A page is defined as one (1) side of an 8\1/2\ by 
11-inch paper, line spacing no smaller than 1.5 with a type font any 
smaller than 12 pt. A proposals exceeding than thirty (30) pages is 
strongly discouraged. Ten (10) copies plus an unbound reproducible copy 
of the proposal shall be submitted. The cover sheet or front page of 
the proposal shall include the name, address and phone number of an 
individual to whom correspondence and questions about the application 
may be directed. Each proposal shall include a Technical Plan, 
Financial Plan, and a Management and Staffing Plan that describes how 
the proposed objectives will be met within the specified time frame and 
budget. These plans should be structured so that they contain the 
following information.

A. Technical Plan

General Requirements
    1. General Description of the local transit market and other 
proposed card system markets. Information shall include transit 
ridership statistics, outline of current fare collection process and 
payment media as well as any multi-modal aspects of the transportation 
system. Additionally, potential public/private agency(s) involvement 
such as partnerships, merchants, retailers, etc. must be outlined.
    2. Interagency, public/private cooperative arrangements currently 
in place or planned, which will participate in the operational test and 
evaluation effort.
Concept Overview
    1. Define existing infrastructure and support systems in place, 
e.g., current fare collection system and cash handling procedures, as 
well as current systems of those additional applications being 
considered for integration.
    2. Describe how the existing infrastructure will be expanded and 
used to support the proposed system.
    3. Describe the proposed system and how it will be integrated with 
other applications and participating institutions.
    4. Summarize the expectations of the proposed system (e.g. costs, 
benefits, risks, operations, maintenance issues, plans, and system 
Technical Approach
    The technical approach will be judged on its ability to incorporate 
the requirements of a multi-application card system within a transit 
fare system. Proposals will be evaluated on demonstrated capability to 
integrate the requested scope of services with the necessary public and 
private sector partners in the transit environment.
    Within the technical approach the following areas need to be 
clearly addressed:
    1. Describe the goals and objectives of the system. These should 
include descriptions of both improved customer service and improved 
operating efficiency.
    2. Describe the system design concept outlining extent of system 
integration, type of proposed media, settlement processes, and 
    3. Describe implementation of the system in probable phases with 
funding for each phase clearly specified.
    4. Describe the technical approach by which the system design 
concept will be

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refined, developed, and operationally tested.
    5. Document the schedule of work, assumptions and technical 
uncertainties, and proposed specific approaches to resolve any 
    6. Show evidence that the project team has thought through the 
service delivery part of the project design addressing such issues as: 
who will use the new payment media; and what problems will it solve for 
the participating transportation providers? What will the benefits of 
the new system be and how will the project team market the system to 
the rider?
    7. Describe the plan for concluding the operational test (Closure 
Plan), indicating whether hardware, software, and infrastructure will 
remain in revenue service, be sold, or returned to participating 
vendors, if applicable. Closure Plans may be contingent upon the 
results of the operational test, in which case more than one Closure 
Plan may be developed.

B. Management and Staffing Plan

    Provide names and positions of all personnel related to managing 
the project. Identify key management/control responsibilities for 
system database and the overall system. Provide a timeline and define 
key milestones and deliverables for the project for each funding year. 
Provide estimated professional and technical staffing in staff-months 
and staff-hours. Demonstrate that the project manager is capable, 
available and able to commit to a level of involvement that ensures 
project success. Include biographical data on key management personnel.

C. Financial Plan

    Provide a description of total project costs and sources of 
matching funds, if applicable.
    Provide a system budget identifying costs for system design, 
development, implementation, project management, operations, 
maintenance and evaluation support.
    The applicant's evaluation support costs shall include the 
following information:
    Breakdown costs identifying them by one of the following: (1) 
Local; (2) State; (3) Private; (4) Federal ITS; (5) Other Federal-aid; 
(6) Other (describe). Note: Costs attributed to Federal dollars 
proposed to be received through award of this operational test are 
Federal ITS.
    Provide cost estimates by phase by funding year as defined in the 
technical plan.
    All financial commitments to the project from both public and 
private sectors shall be documented in signed MOU's and included in the 
    The proposal shall provide an in-depth description and assessment 
of the total cost of achieving the objectives of the Electronic Fare 
Payment System field operational test. The Financial Plan should 
describe a phased approach that delineates what will be accomplished 
with the project funding.
    The proposal should provide a comprehensive, concise plan that 
ensures systems integration of the functions necessary to support an 
electronic payment system for fare collection. The plan shall include a 
discussion of the ways in which design, acquisition, construction, and 
other procurement activities will affect systems integration.

XI. Proposal Evaluation Criteria

    The primary evaluation criterion for the proposal will be the 
degree to which the proposal demonstrates common use of a multi-use 
card payment system with a multi-modal approach. It is important to 
note that the proposal needs to demonstrate not only regional 
applicability but provides the baseline for a national model. The 
proposal should emphasize in detail the nature and arrangement of the 
proposed public-private partnerships. The proposal will also need to 
illustrate the potential benefits as well as the associated risks and 
costs to the transit agency(s). The demonstration test will provide an 
opportunity to document and collect data that will be shared with the 
industry. Additionally, the grantee will need to specify how the 
demonstration test can contribute to the continued development of the 
design guidelines document.
    Significant consideration will be given to those projects with 
greater levels of private and local funding contributions.
    Significant consideration will be given to those projects involving 
public agencies with previous work or experience developing and 
integrating electronic payment systems.
    All applicants must submit an acceptable ``Technical Plan,'' 
``Financial Plan,'' and ``Management and Staffing Plan,'' that provide 
sound evidence that the proposed partnership can successfully meet the 
above stated objectives.

    Issued: November 18, 1998.
Edward L. Thomas,
Associate Administrator for Research, Demonstration and Innovation, 
Federal Transit Administration.

Dennis C. Judycki,
Associate Administrator for Safety and System Applications, Federal 
Highway Administration.
[FR Doc. 98-31266 Filed 11-23-98; 8:45 am]