Transportation agencies could slash red tape and boost innovation by ditching traditional procurement for Outcomes-Based Contracting (OBC) that pays vendors based on results, not products, according to a new white paper published by ITS America and NEMA (National Electrical Manufacturers Association).
The paper entitled Procurement Solutions for Modern Transportation Technologies tackles what the writes call outdated procurement models hampering the digital transformation of America’s transportation infrastructure.
OBC is presented as a possible way to modernize how agencies buy everything from traffic signal systems to crash response platforms. Rather than purchasing specific products or services, agencies should purchase outcomes such as reduced traffic fatalities, improved travel times, or increased transit access, and hold vendors to account to deliver these.
“Public agencies are grappling with outdated procurement models in a digital-first transportation era,” says Bobby McCurdy, ITS America vice president of policy and advocacy. “This paper provides a practical roadmap to unlock innovation and improve performance.”
The paper draws on real-world case studies from Alpharetta, Georgia; the Virginia Department of Transportation; and Southern Nevada to demonstrate OBC’s effectiveness. It also provides guidance for federal leadership in aligning policies and funding mechanisms with modern infrastructure needs, plus recommendations to help state and local agencies address cybersecurity, software licensing, and resource challenges.
“The evolution of intelligent transportation demands procurement frameworks that are just as smart,” says Steve Griffith, NEMA executive director, for regulatory and industry affairs in mobility. “Outcomes-based models offer governments the flexibility and incentives needed to deploy cutting-edge technologies and maintain them over time.”
The white paper emphasizes the critical role of the USDOT in promoting outcomes-based procurement through initiatives like Every Day Counts and ARPA-I, and urges Congress to modernize procurement and funding policies to ensure long-term adaptability.
Industry representatives who contributed to the paper’s development also highlight its practical benefits. “Outcomes Based Contracting represents a practical and effective way to agencies to keep up with technology advancements that support safer, more efficient, and more resilient transportation systems,” says Guerry Bruner, manager for ITS and unmanned infrastructure solutions, at ASSA ABLOY. “By focusing on results vendors can provide solutions to agencies problems that fit within their existing infrastructure,”
“OBC is increasingly important in the transportation industry because it shifts the focus from what is being bought to what results are being achieved,” says Alison Boan, national capture manager at Rekor. “Instead of procuring specific products or services (e.g., cameras, software, or engineering hours), agencies define success in terms of outcomes — like reduced traffic fatalities, improved travel times, or increased access to transit — and hold vendors accountable to those outcomes.”
The paper was developed by a task force of members from both ITS America and NEMA as part of their recent memorandum of understanding to share information, promote shared policy objectives, and scale intelligent transportation system deployment across the United States.
