Procuring a new fare collection system is no easy task. You’re navigating a complex environment—balancing the needs of riders, operational goals, and financial constraints while working through lengthy procurement processes. It’s no wonder many systems end up slow to implement, over budget, and unable to keep pace with the evolving demands of your agency (operator or authority) and riders (passengers).
But it doesn’t have to be this way!
By rethinking your approach to procurement—prioritizing outcomes while keeping essential technical requirements broad enough to encourage competition—you can drive innovation and secure a solution that works for your agency now and into the future.
The question of how you can successfully procure a contactless ticketing system (contactless fare collection system) is not an easy one, but have no fear!
In this blog post, we share eight practical recommendations to ensure your RFP won't exclude the most innovative vendors from bidding - whether you are a smaller operator or procuring for a large city or region.
The Challenge: Overly Prescriptive RFPs and Bespoke Systems Limiting Innovation
Overly detailed RFPs, designed to cover every potential need, often push agencies toward bespoke fare collection solutions. While intended to ensure thoroughness, this approach leads to custom-built bespoke systems with significant downsides.
Custom solutions can take years to implement, delaying benefits and leaving you with outdated technology upon launch. They also require high upfront investment and ongoing maintenance costs, straining budgets. Bespoke systems can lack flexibility, making it hard to adapt to new technologies or integrate with tools like CAD/AVL, CRM or MaaS platforms.
This rigidity often results in vendor lock-in, where updates or fixes can only be handled by the original developer, limiting options and driving up costs. Crucially, such RFPs also exclude modern SaaS providers, whose adaptable, scalable platforms aren’t compatible with rigid custom requirements that prioritize bespoke development.
By focusing your RFP on outcomes rather than prescribing technical details, you can encourage innovative solutions. Define the problems you need solved and the goals you want to achieve. This approach opens the door for SaaS vendors, offering faster deployment, lower costs, and systems that can grow with your agency's needs.
Why You Should Embrace SaaS Vendors in Your RFP: Unlocking Innovation and Flexibility
Outcome-focused RFPs invite SaaS providers to compete, expanding options and fostering innovation. Unlike static bespoke systems, SaaS platforms continually evolve, ensuring your transit system stays modern, flexible, and competitive. With faster implementation timelines and usage-based pricing models, SaaS reduces upfront costs and simplifies maintenance, delivering long-term savings. SaaS platforms also integrate seamlessly with other systems via open APIs.
Enabling Enterprise SaaS Solutions for Larger Agencies
For complex transit networks, Enterprise SaaS platforms provide the scalability, reliability, and adaptability needed to handle high transaction volumes and multi-jurisdiction operations. To maximize their potential, consider supporting a consortium approach in your RFP.
This strategy pairs a systems integrator (SI) with a SaaS platform for back-office operations and specialized vendors for key components like validators or CRM systems. Each partner brings expertise, creating a robust, cohesive solution.
Unlike bespoke systems, Enterprise SaaS platforms grow with your needs, integrating easily with other technologies and adapting to advancements. They deliver continuous innovation without costly overhauls, offering a future-proof solution for large agencies and reducing lock-in.
8 Best Practices for Fare Collection Procurement Success
Procurement doesn’t have to be a battle between flexibility and rigor. By prioritizing outcomes and focusing on what really matters, you can foster innovation while meeting your agency’s goals. Here’s how to get started:
1. Start with Clear Goals
What are you trying to achieve? Whether it’s increasing ridership, reducing operational costs, or improving fare equity, clearly articulate your objectives. For example, an agency seeking to enhance fare equity might specify:
"The fare collection system must support fare capping and provide mechanisms for offering discounted fares to eligible riders, including students and seniors."
Or perhaps the cost of fare collection is an issue.
If so, set a clear goal to reduce costs by 20% within the first two years of implementation.
This clarity helps vendors align their proposals with your vision and provides a benchmark for evaluating submissions.
2. Defining Outcomes, Not Just Specifications
Ask vendors how their solutions address your specific challenges rather than requiring them to comply with a prescriptive list of features. This approach encourages creativity and reveals the vendor’s ability to innovate. It's useful to remember that every additional prescriptive solution/requirement has a cost implication.
For example, instead of asking for a specific reporting tool, frame the question around outcomes: "How does your solution provide actionable insights into ridership trends and fare policy effectiveness? Provide examples from other deployments."
To illustrate this approach, consider how you frame your requirements:
Specification-Driven Approach: "The system must support a 16-character password and integrate with XYZ hardware."
Outcome-Based Approach: "The system must enhance security while ensuring seamless integration with existing and future hardware solutions."
The latter invites vendors to propose solutions that achieve the desired result without locking the agency into a rigid technical framework.
3. Think Beyond Implementation
Post-award success is just as important as choosing the right solution. Avoid rigid requirements, such as bid bonds, that may deter innovative vendors.
Instead, assess the vendor’s proven reliability by asking: "How many agencies currently use your platform? Provide references demonstrating successful implementations."
Also, consider the operational impact of your choice. For example, a SaaS platform with continuous updates ensures your system evolves with changing rider needs, avoiding the stagnation of traditional models.
4. Allow Alternatives
Allowing alternatives in your RFP encourages innovation and expands the pool of viable solutions.
Clearly state that alternative proposals are welcome and outline how vendors should present them, such as marking responses as “comply with modification.”
Adjust scoring to ensure alternative solutions that meet requirements are evaluated fairly, allowing agencies to focus on outcomes rather than rigid specifications.
5. Don’t Request IP Ownership
Ownership of operational data is critical, but demanding intellectual property (IP) ownership doesn't align with the SaaS model and can limit vendor participation. SaaS platforms operate on a shared, multi-tenant model, using a proven base product tailored for each agency.
Requiring IP forfeiture excludes experienced SaaS providers, reduces competition, and raises costs. Instead of focusing on IP, prioritize data ownership, ensuring agencies retain control over operational insights.
Similarly, source-code escrow—designed for static software—offers limited value in SaaS, where solutions are dynamically updated and maintained. Evaluate SaaS vendors on their track record, financial stability, and ability to deliver ongoing innovation, avoiding unnecessary complexity and costs.
6. Avoid On-Premise Hosting
Leverage the Benefits of Cloud Solutions. Modern fare collection platforms thrive in the cloud, offering unparalleled scalability, reliability, and security. Unlike on-premise hosting, cloud solutions scale seamlessly to meet demand, ensure better uptime with advanced redundancy measures, and adhere to the highest security standards. Additionally, cloud hosting allows agencies to access the latest features and updates without delays. Requiring on-premise hosting or a specific cloud vendor can limit SaaS providers' ability to bid, reducing competition and innovation.
Instead, agencies should focus on compliance needs rather than mandating hosting locations. For example, instead of specifying “Data must be hosted in Country Y,” opt for flexible guidelines like “Do not host data in Country X.” This approach supports compliance without excluding capable vendors, enabling a broader range of modern solutions.
7. Foster Trust with Storytelling and Problem-Solving
Over-specifying RFPs often stems from past disappointments with vendors, leading agencies to impose rigid requirements in an attempt to guarantee success.
However, this approach can backfire, favoring vendors who agree to everything upfront but later face delays, or deliver custom-built solutions that are difficult to maintain.
Instead, build trust by using the RFP as a tool to understand a vendor’s history, methodology, and problem-solving capabilities. Invite storytelling by asking vendors to explain how they’ve addressed challenges in the past.
For example: "Describe a feature requested by a customer in the past three years and explain how you delivered it successfully."
"Provide a reference from an agency where your solution reduced fare collection costs by at least 25%."
These types of questions reveal a vendor’s experience, flexibility, and approach to partnership, helping you identify the right long-term collaborator while still conducting rigorous due diligence.
8. Build a Balanced Selection Committee
To ensure diverse perspectives, your selection committee should include representatives from:
- Operations: To assess practical usability.
- IT: To evaluate technical capabilities and integration potential.
- Finance: To analyze cost-effectiveness.
- Customer Service: To prioritize rider satisfaction.
Agencies that include a mix of stakeholders are more likely to select solutions that address broad organizational goals rather than siloed priorities.
Why It’s Worth the Effort
By focusing on outcomes and enabling flexibility, your procurement process can:
- Deliver systems that are faster to implement and cheaper to operate.
- Enhance the rider experience through innovative features like fare capping and contactless payments.
- Future-proof your fare collection infrastructure, ensuring scalability and adaptability for years to come.
If your agency is ready to modernize its fare collection system, we’d love to help you design a procurement process that prioritizes innovation and delivers exceptional results. Contact us today to learn more!
