Kapsch wins big next-gen E-ZPass tag-reader procurement - "better performance, better price" than TransCore (CORRECTED)

July 21, 2011
By Peter Samuel

Kapsch TrafficCom IVHS Inc (Kapsch) has been chosen over TransCore to supply the next generation tag-reader system to the E-ZPass group of 24 toll agencies of the E-ZPass Interagency Group (IAG). In a one page announcement just released the IAG says: "Kapsch TrafficCom IVHS, Inc. was selected for contract award after responding to a request for proposal where they received the overall highest score and had the lowest cost during the evaluation process.  Evaluation elements included technical and non-technical criteria, as well as estimates for operating and transition costs."

The contract envisioned will be for ten years of equipment supply and services, although after four years of sole source purchases IAG members will have the option to go out to competitors for transponders.

PJ Wilkins executive director of the IAG is quoted in the statement: "E-ZPass is the world leader in toll interoperability.  Our customers have come to expect the enhanced traveling experience our interoperable system provides.  They will be well-served by the new contract, as the more than 21 million transponders in use throughout the 14-state E-ZPass region will remain fully compatible with the new equipment procured in the future."

IAG chair Donald Bell is quoted as saying the selection assures continued high accuracy "at the industry's most competitive prices."

The decision in essence continues a long established relationship, because for the past 15 years the IAG has been supplied by Mississauga Ont, Canada-based Mark IV IVHS, which has recently been acquired by Austria-based Kapsch. Kapsch previously had little presence in North America so the Mark IV IVHS unit in effect became their North American Division.

Value of the contract we don't have but it is almost certainly the biggest toll system procurement in US tolling history because the IAG services some 21 million transponders from several thousand readers mounted over the roadways of tollroads, bridges and tunnels from west of Chicago to east of Baltimore and from Portland Maine south to West Virginia.

Cost of transponders to drop from $20.95 to $8.90 apiece

The Kapsch offer is for transponders to be sold to IAG tollers for $8.90 each compared to the $20.95 price present tranponders are acquired for - a drop in price of 57.5%. TransCore quoted $11.37/transponder. That is 21% more than the Kapsch price.

PJ Wilkins executive director of the IAG told us this afternoon the pricing was "wonderful" because of the significant savings involved. He said the IAG expect to buy around 40 million of the transponders over the ten years of the contract, so the savings are huge.

Our arithmetic:

Continuation of old contract price of $20.95ea x 40m = $838m

Kapsch $8.90ea x 40m = $356m

TransCore $11.37ea x 40m =$455m

Our guess is that the supply of new readers and services would be at least the price of transponders, making this contract worth something in the range $800m to $1 billion total.

Similar 'primary' offering tested

Both 'primary transponders' offered by Kapsch and TransCore were similar - 915MHz active transponders, hardbodied with a sealed battery (not user-replaceable) with similar functionality to the existing E-ZPass transponders.

The form factor or shape of the new transponders will be different.

Wilkins calls them "smaller, sleeker and sexier" but similar in performance to existing E-ZPass and completely compatible with the existing readers.

New protocol equipment not in the race

A surprise to us was that no different transponder technology was part of the testing. The 5.9GHz technology sponsored by FHWA and proposed by Kapsch (before Mark IV IVHS was acquired by Kapsch) did not make it to testing. Nor did sticker tags.

Wilkins told us both finalist companies offer additional options. TransCore proposed a multi-protocol transponder eZGo Anywhere and ISO 18000 6 series sticker tags. Kapsch also offered extra options. But none of these optional extras figured importantly in the selection process (REVISED - we incorrectly wrote yesterday 07-21 that the multiprotocol readers were not tested - editor)

The testing and scoring was focussed on the "primary offering" of a basic transponder and basic reader of identical protocols and functionality to the present IAG transponders.

Both companies offer multi-protocol readers in addition to the basic IAG standard reader but it seems they did not play any major role (REVISED) in the scoring or selection.

Although the functionality of the new transponders is the same as the old, they apparently use new in-chip circuitry and memory, new antennas, and new batteries.

Wilkins called the performance of both finalists excellent but said Kapsch scored higher.

ADDITION/CORRECTION: Wilkins emails this morning: What I had said to you was that both companies did extremely well (in testing), and both passed validation testing.  Your reference to Kapsch scoring higher should not have been attributed to me.  I am not prepared to discuss the scoring of individual elements of the evaluations." (ADDITION: 07-21 13:20)

When the Kapsch price was also 21% lower than TransCore the choice was clear.

The procurement was protracted by the amount of testing done and the requirement for unanimity. All 18 full voting member agencies of the IAG were represented on the selection committee. Wilkins dates the procurement from the spring of 2008 when the final RFP was issued. (Others date it from as far back as 2005.)

Draft contract needs "clean up"

Wilkins says there is a draft contract but it will need to be carefully "cleaned up" in discussions with Kapsch. A signed contract is "at least several weeks away," he says.

New York City's Triboro Bridge and Tunnel Authority (MTA B&T) is heading up the contracting process on behalf of the IAG.

The contract will provide for sole source privileges for Kapsch for four years on transponders, readers and other equipment. After four years the IAG will be free to seek competing bids for all equipment. The ten yearsof the contract is for services. (CORRECTED 07-21 13:20)

From four to three to two

Wilkins says that there were four responses to the final RFP:

- Kapsch

- Mark IV

- Skymeter

- TransCore

Skymeter was quickly eliminated because it proposed a satellite-based scheme and was non-compliant.

"It was more of a concept than a real proposal," Wilkins said of the Skymeter proposal.

Then the original Kapsch proposal of the FHWA 5.9GHz OmniAir was ruled out because it would require a complely new array of readers at all of several thousand toll points before any of the new transponders could be issued. 5.9GHz equipment was not even tested.

So much for the many millions spent by the US Government to promote a new North American standard technology!!!

That made it a Mark IV versus TransCore competition.

Kapsch only re-entered the competition when it bought up Mark IV and made Mark IV its North American division.

Copy of press release:

http://www.tollroadsnews.com/sites/default/files/IAG Press Release.doc

Kapsch USA:

http://www.kapsch.net/us/en/Pages/default.aspx

E-ZPass IAG:

http://www.e-zpassiag.com/

NOTE: The phrase in the headline "better performance, better price" was intended to summarize and dramatize the thrust of the evaluation as described to us. It was not a phrase actually used by PJ Wilkins - editor.

TOLLROADSnews 2011-07-21


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