How public bodies can use the private sector to predict the future


I have been thinking a fair amount lately about the enormous gulf in technology between what the public sector can specify and acquire, and what the private sector can offer. If a public agency were to acquire a new system for any purpose – tolling, traffic management, signalization or traveler information – they would need to write specifications today. That would mean a 2015 document for a system to be purchased in 2016 and that would be expected to last until at least 2021. It’s simply an impossible task. Nobody can say today what the state of the practice will be in one year, let alone five.

The problem with the current public procurement model is that it’s based on the notion that the work can be specified and then the contractor can be held to the specification – but if the spec ages badly, then so will the system. Instead we need to figure out how to better conceptualize the respective roles. The agency needs to be able to deliver a service to the public and be sure that the contractor is doing it well. The contractor needs to bring to bear new technology as it becomes available. Can we reconcile the two?

The solution may lie in this proposed new model for public-private partnerships, which takes advantage of the strengths of both sides and avoids their weaknesses. It would require new flexibility for the contractor and new contract management tools for the agency.

Let’s start with the specifications, which should define what is to be done but not how it is to be accomplished. We can start to diverge from the traditional model with the option for the contractor to pay for the system and collect fees based on transactions or some other monthly metric. It truly gets the contractor more ‘invested’ in success with a large amount of capital tied up. The third element would be to make extensive use of KPIs (key performance indicators) as the basis for the expected service levels.

I think the next two are the most innovative. The contractor shall prepare a hardware and software roadmap for the entire length of the contract, indicating what elements will be upgraded over what timeframe. Then at the end of the contract the contractor will be responsible for turning over to the agency an up-to-date system (software and hardware), even if it’s five or 10 years down the road.

The key to make this all work is that whatever can reasonably be measured, monitored or recorded is actually measured, and is provided to the agency. It does not matter if it’s not the basis of a service level agreement or even if it’s an input measure. It will be measured and provided to the agency. It’s only in this way that the agency can truly have oversight and control of the system. The database would be extensive and valuable for more than contract management purposes.

In a short column it’s not possible to articulate fully the new model, but in longer pieces and meetings with agencies it will be fleshed out. It’s not as if we really have a choice now. Do we?

Larry Yermack is strategic advisor to Cubic Transportation Systems, USA.

Illustration: Ian Parratt,

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