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CALIFORNIA’S INNOVATIVE CORRIDORS INITIATIVE:
A NEW MODEL FOR PUBLIC- PRIVATE PARTNERSHIPS IN TRANSPORTATION
Susan Shaheen, Cynthia McCormick, and Rachel Finson
Susan A. Shaheen, Ph. D.
Honda Distinguished Scholar in Transportation, University of California, Davis &
Policy & Behavioral Research Program Leader, California PATH
University of California, Berkeley
1357 S. 46th Street. Bldg 452; Richmond, CA 94804- 4648
510- 231- 9409 ( O); 510- 231- 9565 ( F); sashaheen@ path. berkeley. edu
Cynthia McCormick
Graduate Student Researcher, California PATH
University of California, Berkeley
1357 S. 46th Street, Bldg. 452; Richmond, CA 94804- 4648
510- 231- 9511 ( O); 510- 231- 9565 ( F); cmccormick@ path. berkeley. edu
Rachel Finson
Researcher Specialist, California PATH
University of California, Berkeley
1357 S. 46th Street. Bldg 452; Richmond, CA 94804- 4648
510- 231- 9460 ( O); 510- 231- 9565 ( F); rfinson@ path. berkeley. edu
ABSTRACT
California’s Innovative Corridors Initiative ( ICI) is a multi- year project to test a new approach
for accelerating the deployment of Intelligent Transportation Systems ( ITS) technologies,
products, and services along major California corridors. As part of the effort, ICI governmental
partners developed a Call for Submissions ( CFS) to solicit proposals for pilot demonstration
projects to be showcased in conjunction with the forthcoming 2005 ITS World Congress in San
Francisco, California. The unique nature of the project is that no public funds will be awarded as
part of the solicitation. In this paper, the authors explore public- private partnerships as a means
to accelerate ITS deployment, including legislative and initiative- based approaches to
partnership. A review of the public- private partnership literature in transportation reveals several
case studies that involve access to public rights- of- way or other public facilities. The authors
present lessons learned from three relevant case studies ( upon which the ICI builds), an overview
of the ICI planning process, a discussion of four possible business models for future ITS
deployment resulting from the CFS, and ICI lessons learned to date. Early findings from the ICI
reveal that the CFS resulted in: 1) 28 project proposals intended to improve mobility and safety
for California travelers; 2) inter- agency cooperation among ICI partners; 3) additional expertise
brought on by multiple- agency participation during proposal evaluation; 4) a broader perspective
at the table by engaging in negotiation with the private sector; and 5) an opportunity for industry
and government to work together beyond the initial demonstration period, if appropriate.
Key Words: Public- Private Partnerships, Policy, Planning, Intelligent Transportation Systems,
Innovative Corridors Initiative
Word Count: 7,500 words
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INTRODUCTION
Intelligent Transportation Systems ( ITS) show great potential to improve safety; transportation
system management; and individual choice of mode, route, and travel time. However, there are
still many challenges to ITS deployment including unclear roles and responsibilities among
jurisdictions in ITS policy development and operations; competing priorities for scarce
resources; limited private investment in ITS; limited ITS expertise among transportation
agencies; lack of understanding of ITS benefits; and poor visibility of ITS projects ( 1).
In Spring 2003, staff from the California Department of Transportation ( Caltrans), the
Metropolitan Transportation Commission in the San Francisco Bay Area ( MTC), the Los
Angeles Metropolitan Transportation Authority ( MTA), the Intelligent Transportation Society of
America ( ITSA), and the California Center for Innovative Transportation ( CCIT) launched a
multi- year project to test a new approach for accelerating the deployment of ITS technologies,
products, and services along major California corridors. This new approach is called California’s
Innovative Corridors Initiative ( ICI). As part of the effort, ICI partners developed a Call for
Submissions ( CFS) to solicit proposals for ICI pilot demonstration projects in conjunction with
the forthcoming 2005 ITS World Congress in San Francisco, California ( USA). The goal was to
test the viability of soliciting industry partners to implement innovative ITS demonstration
projects at no cost to participating public agencies. In return, the agencies are offering possible
access to public rights- of- way and data and a streamlined process during the required normal
permitting period. The high visibility of the ITS World Congress event is also an incentive for
industry participation.
In this paper, the authors explore public- private partnerships as a means to accelerate
ITS deployment, including legislative and initiative- based approaches to partnership. A review
of the literature revealed several case studies that involve access to public rights- of- way or other
public facilities. Three such case studies are presented to explore the institutional, political, and
legal barriers to public- private partnerships.
Building on lessons learned from the related case studies, the authors present an
overview of California’s ICI  an initiative- based approach to public- private partnerships  and
the CFS planning process, including a discussion of four possible business models, reflected in
the CFS project proposals received. The authors also review lessons learned from the first ICI
project year, which included partner development, CFS creation, public outreach, CFS release,
and proposal evaluation.
PUBLIC- PRIVATE PARTNERSHIPS AND ITS
Many ITS experts believe that significant public benefits can result from leveraging new
technologies into the statewide transportation system. Since public sector capitol projects,
including ITS elements, can take several years to implement, decisions based on currently
available technology can become outdated prior to implementation. In contrast, the private sector
may be able to finance, construct, and operate transportation facilities and services in a timelier,
more efficient, and less costly manner.
In addition to leveraging funding for transportation system improvements, public- private
partnerships “ economize resources, speed up the innovation process, and establish a culture of
cooperation that can have long- lasting benefits to the agencies and to society” ( 2). Historically,
government has been responsible for developing and maintaining transportation infrastructure
while industry has provided technology ( 3). But, the efficient deployment of transportation
systems requires cooperation between government and industry to ensure technology and
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infrastructure work together as an integrated system. “ Cooperation between government
authorities as owners of the public infrastructure, private entities as suppliers of technology, and
vehicle drivers as primary users of a service are essential for the success of any ITS application”
( 4, p. 7). However, for partnerships to be successful, all parties must understand the risks,
resource requirements, and benefits to individual partners. Often, this requires a formal
partnership agreement among the parties regarding objectives, responsibilities, resources, risks,
and benefits. As such, a number of public- private partnership agreements have been formalized.
While no single agreement will apply in every case, franchise and resource agreements are most
applicable to right- of- way access issues.
A franchise agreement is granted by the government to a private contractor to build, own
( or lease), and operate a project for a stated number of years at which time the franchisee may be
required to transfer the franchise back to the State. The franchisee will typically be allowed to
earn a pre- determined rate of return on their investment ( 5). In contrast, private companies or
public agencies use a shared resource agreement to install telecommunications hardware in
rights- of- way. Compensation to the right- of- way owner may be in the form of cash or in- kind
( barter) arrangements. In- kind arrangements may include fiber- optic conduit strands,
towers/ poles, antennas, electronic equipment, software, or the provision of telecommunications
capacity to the public agency ( 6). Under either approach, legal authority to enter into public-private
partnership agreements is required. To grant this authority and remove some partnership
barriers, several States have enacted legislation to enable such public- private partnerships. In the
following section, the authors describe the legislative approach to public- private partnerships,
including a case study of enabling legislation in California.
Legislative Approaches to Public- Private Partnerships
As of February 2004, 23 states were identified as having current public- private partnership
legislative authority, while at least two additional States have either repealed their legislation
( California) or allowed it to expire ( New Jersey) ( 7). In 2004, the Government Accountability
Office identified only six major highway and transit public- private partnership projects that had
been started or completed in the last 15 years: 1) Dulles Greenway in Washington/ Virginia; 2)
the Pocahontas Parkway in Virginia; 3) Southern Connector in South Carolina; 4) Las Vegas
Monorail in Nevada; 5) State Route 91 Express Lanes in California; and 6) State Route 125 in
California. In all six cases, the States had previously enacted enabling State legislation
authorizing private sector participation ( 8).
While some States with public- private partnership legislation have had much success,
others have struggled to produce a single project using private funding. Lessons learned from
previous State legislation may have prompted Texas and Oregon, for example, to adopt new
legislation that removes some of the impediments to public- private partnerships and increases
new project funding mechanisms. If successful, the new public- private partnership legislation in
Texas and Oregon may serve as a model for other States who lack any formal legislation or
whose legislation has not produced the results lawmakers originally intended. California, for
example, has had mixed results with its legislation, which was repealed in 2004. Following the
conclusion of the ICI demonstration, project partners might recommend new public- private
partnership legislation in California, drawing on lessons learned from the ICI and other States.
California’s experience with public- private partnership legislation is discussed next.
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California Assembly Bill 680 and SR91
Assembly Bill 680 ( AB 680) is relevant to the ICI due to outreach, solicitation, and proposal
requirement similarities and the provision that demonstration projects be privately funded. AB
680 authorized Caltrans to “ enter into agreements with private entities for the construction by,
and lease to, private entities of four transportation demonstration projects” ( 9). AB 680
authorized the Department to lease rights- of- way, grant necessary easements, and issue permits
or other authorizations that would enable the private sector to construct transportation facilities
and lease those facilities for up to 35 years ( 9).
Beyond allowing private firms to finance, design, construct and operate toll road facilities
within the State, “ the declared intent of AB 680 legislation [ was] to test the feasibility of
building privately funded transportation facilities at no cost to the state or federal government”
( 10, p. 1). Likewise, the CFS explicitly stated no funds would be awarded as a result of the CFS
solicitation, ensuring pilot demonstration projects would be fully funded by the private sector.
The four projects selected included: State Route 91 Express Lanes in Orange County,
Route 125 in San Diego County, Route 57 in Orange County, and the Mid- State Tollway in
Alameda and Contra Costa Counties. However, Route 57 and Mid- State Tollway were
terminated due to political opposition or delays. Route 125 is currently under construction and
Route 91 is discussed next.
State Route 91 ( SR91) Caltrans awarded a franchise agreement to the California Private
Transportation Company ( CPTC) to develop, finance, construct and operate the SR91 Express
Lanes. CPTC financed the $ 126 million project through private equity and two long- term loans
( 11). CPTC was authorized to collect tolls for 35 years and allowed a maximum 17 percent rate
of return. After 35 years or in the event of financial failure, the tollway would revert back to the
State. The facility was opened to traffic on December 27, 1995, ahead of schedule.
SR91 is the world's first fully automated toll facility ( OCTA) and represents the first U. S.
variable congestion pricing application ( 12). Tolls are assessed using a vehicle- mounted
transponder that transmits the vehicle’s identity to a central database via a scanning device at the
toll entrance.
As part of the initial agreement, Caltrans agreed to a non- compete clause that precluded
the Department from making improvements or adding capacity to SR91 general- purpose lanes.
The non- compete clause became litigious in 1999 when Caltrans moved “ to add general- purpose
lanes in strategic locations on SR91 to improve on and off ramp movements” on the highway
( 12). Caltrans withdrew the plans after CPTC sued to stop the project ( 12). In September 2002,
State legislation authorized the Orange County Transportation Authority ( OCTA) to purchase the
toll road from CPTC for $ 207.5 million ( 9). OCTA acquired the franchise rights ( eliminating the
non- compete clause) in January 2003.
The Federal Highway Administration ( FHWA) documented the following SR91 lessons
learned. First, public involvement during the planning process is critical to a new transportation
option’s success. Second, fostering public understanding of a “ public good” to be operated by a
private entity that is returning a profit may be challenging. Ultimately, project success depends
on user demand and service value. Moreover, projects must evolve with demand over time. Such
was the lesson learned when the non- compete clause, which served to protect the private
developer’s investment, lead to public resentment when Caltrans was unable to improve system
capacity ( 12).
While some may view SR91’ s ownership transfer back to the public sector as a set back,
others look to the project’s success ( e. g., winning 10 major industry and government awards for
innovation, design, and overall achievement) ( 9). Moreover, SR91 “ would likely not have been
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built until 2001 without private sector involvement” ( 8, p. 16). In fact, SR91 generated enough
revenue in its third year of private operation to cover operating costs and debt service ( 13).
Furthermore, in the first six years of private operation CPTC provided $ 6.8 million in tax
revenues to the county ( 9). Despite the early successes of SR91 under private ownership, the
legislature moved to repeal AB 680, ranking California amongst the majority of States without
public- private partnership legislation. However, public- private partnerships can and do exist
without legislation as the authors discuss next.
Initiative- Based Approaches to Public- Private Partnerships
Many public- private partnerships in transportation are initiated by governmental agencies rather
than legislation. In this section, the authors examine two projects, one successful and one less so
in deploying ITS technologies onto State transportation systems through private funding. Similar
to the ICI, HELP, Inc. and Connecting Minnesota are initiative- based partnerships that were fully
funded by the private sector and included formal access agreements to State rights- of- way.
Lessons learned from the HELP, Inc. and Connecting Minnesota case studies provide valuable
insight into the institutional, legal, and political issues that may arise within a public- private
partnership.
Heavy Vehicle Electronic License Plate Program ( HELP), Inc.
HELP, Inc. “ was the first major partnership between the trucking industry and state regulatory
agencies and the first program to test an integrated, multi- state intelligent vehicle highway
system for commercial vehicle operations” ( 4, p. 7). HELP, Inc. is a self- supporting non- profit
501( c)( 3) organization and an intermediary institution that allows government and industry to
contract services, via a franchise, to develop, operate, and maintain ITS technologies for
commercial vehicle operations ( 14). A Board of Directors manages HELP, Inc. and includes one
government and one motor carrier industry representative from each Member State. Each
Member State is responsible for appointing an industry representative and must abide by their
individual State laws with regard to the partnership ( James Gentner, unpublished data). At the
time of this writing, HELP, Inc. included 17 Member State partners ( Gail Peters, unpublished
data).
HELP, Inc. evolved through three development stages beginning with two concept papers
submitted to FHWA in 1981, which led to FHWA grants to study program feasibility and to
perform a proof- of- concept demonstration. The second phase began in 1985 with a series of
technical studies to test and develop HELP’s automated vehicle identification, automated vehicle
classification, and weigh- in- motion technology elements. The third stage was a FHWA-sponsored
operational field test and technology demonstration. The Crescent Demonstration
began in 1991 ( 4). At the demonstration’s conclusion, in September 1993, HELP, Inc. took over
official program management through its Board of Directors. The Board later decided that a
single franchisee would help standardize system operations throughout the Member States. In
1993, Lockheed Martin ( the Crescent Demonstration contractor) was awarded the franchise
agreement to operate and maintain the HELP, Inc. system for seven years. However, the Board
discovered that the project needed a longer deployment period to recoup its private debt ( James
Gentner, unpublished data). Thus, in 1997, the agreement was extended until 2020.
A study by Volpe National Transportation Systems Center documented the following
lessons learned during the HELP/ Crescent Demonstration:
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Staff and Decision Maker Involvement The time needed for operational tests and
demonstration projects was underestimated. Full- time involvement and leadership is necessary to
monitor and coordinate activities, while a realistic managerial, technical, and administrative staff
is necessary to support day- to- day operations. Multiple leadership responsibilities among
different States and organizations for various HELP elements created project voids, hindered
progress, and resulted in a lack of clarity about roles and responsibilities. Furthermore,
insufficient staff expertise, involvement, and authority hampered participants' credibility and
created project delays. Finally, high- level decision maker commitment was compromised by a
lack of industry champions, poor member selection and assignment of responsibilities ( 15).
Industry and Governmental Relationships Continued support and industry recruitment was
viewed as crucial to HELP Inc.’ s future success. However, a lack of trust between government
and industry inhibited partnership. Early stakeholder identification, participation, and
involvement could have helped build trust. Industry became engaged only after gaining
leadership roles and committee involvement. Intra- agency coordination was found to be just as
challenging as inter- agency coordination ( 15).
Goals and Project Plans Disagreements over goals caused apprehension and distrust between
the participating Crescent demonstration States and the federal government. Project plans and
activities should be developed and re- visited to help guide a project from inception to
completion. An evaluation plan should be developed early to guide the planning process and
support project success ( 15).
Technology and Data Confidentiality Issues A lack of interoperability standards among State
participants  each with unique regulatory requirements  was a challenge. There may be
reluctance to commit and invest in technologies that may soon be obsolete. Furthermore, there
were concerns about how States would share and use data for disparate purposes. Partners
resolved concerns over data confidentiality by delegating data collection, storage, and reporting
requirements to a third- party contractor ( 15).
While HELP, Inc. brought many intangible State benefits, such as increased facility efficiency,
incentives for carriers to comply with safety regulations and credential requirements, and
positive environmental impacts ( i. e., reduced emissions and fuel consumption) ( 15), the
Connecting Minnesota agreement intended to bring millions of telecommunication dollars to
Minnesota.
Connecting Minnesota
Connecting Minnesota was a planned Statewide fiber- optic communication network along
Minnesota’s interstate highway system. Following a flexible request for proposal ( RFP) issued in
Spring 1996, resulting in three proposals, the Minnesota Department of Transportation
( MinDOT) and the State Department of Administration formed a public- private partnership with
ICS/ UCN  a Denver- based utility developer to finance, build, and maintain the $ 195 million
project.
ICS/ UCN would have one- time access ( for 10 years) to the State’s rights- of- way to lay
fiber- optic cable along nearly 2,000 miles ( 3219 kilometers) of freeway and State highway,
connecting rural and urban areas. ICS/ UCN would be able to lease 80 percent of network
capacity to telephone companies, long- distance carriers, Internet Service Providers, and other
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service providers. After a 30- year term, under which ICS/ UCN would operate and maintain the
project, the infrastructure would revert back to the State ( 16). In exchange for access to
Minnesota rights- of- way, State and local governments would have access to the remaining 20
percent of capacity for telecommunications use and 20 percent capacity of any future additions to
the base network. Minnesota would also receive a 20 percent discount on ICS/ UCN’s best
customer rate for additional access and 10 dark ( reserve) fibers on all loops. The agreement was
estimated to save the State $ 5 million in annual telecommunication costs. The project would also
“ support new technologies used to manage traffic, monitor road surfaces and protect the public”
( 17).
Construction started in Fall 1998, and the project was to operate in segments through
final completion. However, MEANS Telecom ( one of the three initial proposers for Connecting
Minnesota, now known as Onvoy) and the Minnesota Telephone Association ( of which MEANS
is a member) filed a suit challenging the State’s legal authority to grant exclusive project rights
to a single telecommunications provider. A County District Court dismissed the lawsuit in May
1999, rejecting all arguments against the project, allowing the State to take full advantage of the
agreement. The Minnesota Supreme Court denied an appeal to review the District Court’s
decision ( 18). Also at issue was the State's right to place utilities within the interstate freeway
right- of- ways, which has historically been prohibited along high- speed roads due to dangerous
driver and transportation worker distraction during utility construction and maintenance ( 17).
The State anticipated that incumbent telecos ( private telecommunications companies)
would object to the Connecting Minnesota agreement and filed a petition with the Federal
Communications Commission ( FCC) for declaratory ruling as a preemptive measure on grounds
of consistency with the 1996 Telecommunications Act. The FCC denied the Minnesota
Telephone Association petition to preempt Connecting Minnesota, but it did not endorse the
partnership agreement. Despite overcoming several legal issues, the State terminated the
agreement in February 2001, after 250 miles ( 402 kilometers) of an operable point- to- point
network had already been installed, citing project delays due to legal and regulatory issues and
market erosion ( 18).
The project manager for Connecting Minnesota identified the following lessons learned:
Industry and Governmental Relationships Inter- agency partnering requires winning over
entrenched interests, establishing trust, clearly defining agency roles, establishing strong project
management, determining authority, and responding to the changing political environment. This
type of project involves two- way communication. The agency must engage support and dissent,
involve non- traditional stakeholders, and inform lawmakers early and often. Internal interests
requires securing high- level leadership, gaining management buy- in, establishing clear
objectives that are reflected in the RFP, recognizing competing interests of individual offices and
divisions, and joining with other ( sister) agencies ( 19).
Partnership Issues Agencies need to plan ahead for public- private ventures and keep
agency/ State RFP objectives in focus. Agencies must recognize that risks and rewards go both
ways. The agency cannot expect the private sector to manage the public’s best interest. The
private sector must be allowed to earn a profit. The agency must make it easier for the private
sector to do business with government or risk losing their investment. Other critical observations
include confirming or obtaining the authority to pursue partnerships, heading off ( or at least
ameliorating) industry objections, being forthcoming about implications for winners and losers,
and identifying and retaining political will ( 19).
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Lessons learned from Connecting Minnesota and the two other case studies presented in this
paper provided valuable insights into the ICI, an initiative- based approach to public- private
partnerships.
CALIFORNIA’S INNOVATIVE CORRIDORS INITIATIVE
In this section, the authors examine the ICI as a means to overcome some ITS barriers to
deployment and consider whether projects like the ICI can define public and private partner roles
and encourage ITS private- sector investments. ICI project partners anticipate this initiative will
further goals for a safe, reliable, and efficient transportation system by accelerating the
development, testing, commercialization, and deployment of promising transportation
technologies and systems through partnership with the private sector. Key sections include: an
overview of the CFS and process, CFS business models, and ICI lessons learned.
Call For Submissions ( CFS): An Overview
The CFS is a unique solicitation mechanism to attract the private sector to deploy demonstration
projects that illustrate traveler services that facilitate mobility, convenience, and traveler safety.
The CFS is different from a typical RFP in that no public funds will be awarded as a result of the
solicitation. Thus, respondents were required to demonstrate financial self- sufficiency when
submitting their proposal( s). In return, Caltrans and its partners offered possible access to State
rights- of- way and data, as well as assistance in streamlining project deployment. Unlike an RFP
where one bidder is generally awarded a contract, the CFS may result in several agreements with
the private sector as long as each project fits the CFS requirements and can be overseen by
public agency staff resources. The non- exclusivity of the CFS is an important factor for project
success as noted in the Connecting Minnesota case study.
CFS Proposal Requirements and Evaluation
Caltrans, MTC, and MTA collaborated in the CFS development, with Caltrans’ contracts and
legal divisions playing a leading role. The goal of the CFS was to gather necessary information
about possible projects, while encouraging innovative ideas. Caltrans and its partners held two
CFS Review Sessions to provide information about the CFS and the ICI project to the public. To
increase the level of outreach, several local, State, and National interest groups published
announcements about the ICI project in their newsletters. In early Fall 2003, sessions were held
in Oakland and Los Angeles, California. Drafts of the CFS were distributed for review,
comment, and questions during the review sessions to gain feedback from industry and public
agencies prior to the final CFS release. Approximately 150 persons attended the two sessions
including representatives from the auto industry, transportation sector, business community,
trade consultants, engineering firms, information technology sector, communications sector,
University of California, State and local government, and non- profit organizations.
The CFS was released to the public on October 15, 2003, and included a formal process
for submitting questions. A total of 39 questions were received and answered. CFS respondents
were required to submit a project plan indicating:
1) Type and extent of improvements and services offered to the traveling public or
public agency;
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2) Proposed public partner roles in project development and operation, including
oversight and any access requirements needed along State or local facilities;
3) Deployment, operation, maintenance plans and subsequent pilot project removal;
4) Private developer/ operator tasks and financial responsibilities;
5) Qualifications and experience of each of the project’s participating organizations
and key management personnel; and
6) Respondents’ experience in developing, implementing, and operating
systems/ facilities similar to those being considered for their project.
The CFS submission deadline was January 2, 2004. Technical experts from many of
Caltrans’ divisions and districts along with MTC, MTA, and CCIT staff were involved in various
proposal review phases. As announced in the CFS, all persons reviewing the proposals were
asked to sign a non- disclosure agreement as well as a statement indicating they had no conflict of
interest with the project to be reviewed. Proposals were screened for basic CFS requirements and
then assessed using the CFS evaluation criteria, which included:
1) Project benefits to Caltrans, other partner agencies, and the traveling public;
2) Degree to which the project assists with data collection, processing, and
dissemination, including data quality and integrity;
3) Project’s technical and environmental feasibility;
4) Company/ agency qualifications;
5) Project innovation; and
6) Deployment Timeframe. ( Projects must be deployed by July 1, 2005, and
continue operating through the ITS World Congress in November 2005.)
ITS World Congress Coordination
Coordination with the highly visible 2005 ITS World Congress event was identified as an added
incentive for industry CFS response. Moreover, this event will draw an international audience of
transportation professionals, business leaders, elected officials, media, and the general public,
calling attention to ITS benefits and California’s commitment to providing transportation system
improvements for its citizens.
In addition to the customary business sessions, formal presentations, social functions,
exhibit halls, and networking opportunities for government, industry, buyers, and sellers of ITS
technologies, the 2005 ITS World Congress sets itself apart from past events by including the
ICI. For the World Congress, ICI technologies will be demonstrated in the San Francisco Bay
Area and throughout California ( e. g., Los Angeles). ICI projects that are located outside of the
San Francisco Bay Area may be shown through co- venue tours that will be arranged by ITSA.
Live video feeds from the ICI projects into the exhibit hall could expose a broader audience to
off- site venues.
Current Status and Expectations
The CFS resulted in 28 proposed project ideas from the private sector to test and self- finance
pilot projects in Northern and Southern California. Approximately one- third of the initial project
proposals met the submission requirements and were approved based on the evaluation criteria
and moved into a project negotiation phase involving all requisite agencies and proposing
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parties. For projects that are advancing, partner agencies envision a multi- phased process that
includes:
1) Negotiation and agreement on roles and responsibilities, requested agency
resources, and project plan and design specifications;
2) Environmental/ encroachment permitting;
3) Project installation;
4) Operation and demonstration during the 2005 ITS World Congress;
5) Dismantling and project removal; and
6) Comprehensive, independent evaluation of the ICI project, including key
outcomes and lessons learned.
While only one- third of the proposals have progressed to negotiation and agreement, all
28 submissions may be suitable for future ITS deployment. In the next section, the authors
discuss four possible business models for future ITS deployment, which were reflected in CFS
submissions.
CFS Business Models
The CFS was designed to encourage innovation, both in terms of the types and applications of
ITS technologies, as well as the business models that industries would rely on to sustain their
technologies/ services beyond the pilot demonstration. From the 28 proposed projects, four
categories of business models resulted:
1) Self- Sustaining/ No Cost,
2) Infrastructure Modification,
3) Procurement, and
4) Data Reciprocation.
Next the authors describe each model and its applicability to the original ICI vision and
implications for a sustainable business practice.
Self- Sustaining/ No Cost Model
As part of the self- sustaining/ no cost approach, industries proposed to take advantage of access
to public rights- of- way offered by the CFS to deploy devices, which would collect information
about road and traffic conditions that the company could then sell to the broader public on a
membership/ subscription basis. These industries also proposed providing data to public agencies
at no cost. The benefit to public agencies was access to better transportation system management
data, as well as a more informed public that could make better travel decisions based on real-time
information. Under this business model, there are no direct costs to public agencies, beyond
the lost opportunity of selling/ renting access to public rights- of- way. The benefit to industry
partners is access to rights- of- way from which to collect data that they can then process and sell.
Infrastructure Modification Model
Under the infrastructure modification approach, industry partners proposed to implement, at
their own cost, the necessary equipment for a vehicle to communicate with the surrounding
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environment through Direct Short Range Communication ( DSRC) or other short distance
wireless methods. However, for vehicles to communicate with the infrastructure, there would
need to be matching equipment along the roadside, perhaps within public rights- of- way. Such
industry proposals requested that public agencies take responsibility for installing this roadside
infrastructure. While this could be at considerable agency cost, the infrastructure would be
available for a range of applications beyond just that of the industry partner. Agency benefits
might include: a strong working relationship with vehicle communication providers to align for
the best technologies, access to improved real- time data, a safer and more informed driving
public, and the ability to use infrastructure for other purposes. Although no funds would be
transferred to industry partners under this model, the agencies would need to expend some
resources installing and maintaining the communication infrastructure. Industry benefits include
the ability to communicate with their vehicles and to provide customers with for- fee services,
such as information and e- mail access.
Procurement Model
Under the procurement model, CFS respondents requested access to public rights- of- way to
demonstrate technology to public agencies, which the agencies might ultimately want to
purchase. Although the initial project would be at no cost to public agencies, there would be a
cost if an agency decided to purchase the technology after the demonstration. Agency benefits
include the opportunity to view the technology operating under real- world conditions for six to
12 months and to provide feedback in customizing the technology for their needs. Industry could
benefit through the potential sale of their product to public agencies. Risk includes that a
company is unsuccessful in demonstrating product benefits to the traveling public.
Data Reciprocation Model
Under the data reciprocation model, industry partners proposed receiving and processing data
from public agencies ( sometimes augmenting these data with their own data) for presentation in
a user- friendly manner directly to the public or via an intermediate source. In each case, the
industry partner’s long- term business model is to sell the data or gain sponsorship for processed
data made available to the public. This business model has no costs to public agencies, and
benefits might include a better- informed public and access to enhanced data.
Each of these business models suggests a unique relationship between the industry proposer and
public agency. While the CFS may not have been the most appropriate mechanism to initiate
projects falling under particular models listed above, each will be investigated in the ICI
evaluation. For example, the infrastructure modification model may be desirable for large
infrastructure or system- wide projects, such as Vehicle Infrastructure Integration, that require a
close relationship between vehicles ( e. g., automobile manufacturers) and the roadway ( public
agencies). However, such projects cannot be supported by the CFS, as they require public funds.
Following the ICI evaluation, policy recommendations will be made that could best
support each model. Early ICI lessons learned are important to next steps and future policy and
planning recommendations that could aid in streamlining the business models discussed above
( as appropriate). In the next section, the authors discuss early lessons learned.
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ICI LESSONS LEARNED
The ICI and the CFS represent a new way for public agencies and the private sector to
collaborate, potentially resulting in mutual benefits. For participating agencies ( Caltrans, MTC,
and MTA), the CFS represents a new way of doing business. Thus, there are many lessons to be
learned from this innovative process. To understand the benefits, challenges, and lessons learned
from this new business/ policy model, researchers are conducting surveys and interviews with
CFS governmental partners and private sector respondents at various intervals throughout the
partnership, solicitation, and demonstration. The first interview phase was conducted in June
2004. In this section, the authors present the initial interview results with CFS public sector
partners, including: partnership and CFS development, outreach, CFS release, and ongoing
proposal evaluation. Early successes, challenges, and lessons learned are presented below.
Early Successes
The first year of the ICI project focused on building the multi- agency partnership, outreach, and
CFS development. It is not surprising that early project successes reflect the value of creating a
strong partnership and communication among participating agencies. This innovative process
also gave public agencies an opportunity to conduct private sector outreach, which resulted in
strong interest from industry to participate in the ICI and ITS World Congress. Furthermore, the
CFS negotiation period facilitated a dialogue between the public and private sectors. Each
partner now better understands each other’s needs and operational strategies so that technology
and infrastructure might work together to benefit each sector. Early ICI evaluation results
indicate that the process has enabled the public sector to support public- private partnerships,
identify institutional partnership barriers, work through many of those obstacles, and institute
more streamlined practices in the future.
The ICI has created a forum for agencies to come together across a wide geographical
distribution to test this new business/ policy model. Recurrent meetings have allowed agencies to
realize common needs and goals, build trust, improve relations, share information, and witness
cooperation on both sides of the table. High- level ICI management support among all partner
agencies has been critical to the project’s success to date. In addition, anticipation of the 2005
ITS World Congress appears to have improved the process by encouraging all participants to
establish deadline- driven objectives and contribute to an innovative collaborative process.
Challenges and Lessons Learned
Several challenges and lessons learned have been identified over the course of this project ( to
date) and can be categorized as follows: 1) rapid project submission, evaluation, negotiation, and
deployment; 2) lack of CFS specificity; 3) need for dedicated staff resources; and 4)
confidentiality. While some of the challenges necessarily come as a result of change, others are
more controllable and may be overcome by applying lessons learned during this process to future
endeavors.
Timeline
The ICI project began in Spring 2003, which left little time for planning and outreach before
proposals were to be submitted on January 2, 2004  a date that was extended by one month to
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provide interested parties additional time to draft proposals. Overall, the CFS development,
proposal evaluation, and industry respondent negotiations were more time consuming than
anticipated ( in part because of the large number of proposals received). Agency partners
indicated that more time should have been allocated to proposal evaluation and detailed project
negotiations due to the need to engage technical staff on many proposals. Furthermore, meeting
scheduling among multiple agencies proved to be challenging.
The CFS timeline has been ambitious, but for the most part, project partners have kept to
the schedule. Scheduling is crucial given the upcoming 2005 ITS World Congress. A
recommendation for future CFS- style solicitations is to build- in more time for private- sector
outreach and project scope and agreement development.
Specificity
When agency partners crafted the CFS, the goal was to encourage innovation and to not limit the
imagination of prospective proposers. Unlike a traditional RFP, the CFS did not specify a
location, technology, or desired outcome. Without a specific problem to solve, several
respondents submitted vague proposals, which increased the evaluation timeframe.
Many agency participants interviewed felt that more CFS specificity would have resulted
in stronger proposals. However, they also recognized the need to create a process that
encouraged innovative proposals. The challenge of requiring enough proposal details for proper
evaluation, while still encouraging innovation, may be a necessary corollary of CFS- style
solicitations.
Staff Resources
Although no public funds were allocated to this project, all participating agencies have found the
ICI required greater staff time than anticipated. This type of project requires dedicated staff from
the beginning to ensure that tasks are completed; ideas are communicated; all of the necessary
departments are involved; staff is not pulled away from their full- time duties; and the agency
achieves a successful business/ policy model. A tremendous amount of coordination among
partner agencies and within each agency has occurred to reach consensus on each partnership
agreement. While the CFS has facilitated cooperation among Caltrans’ districts and their
respective regional MPO, a mechanism to involve cities, local agencies, and other concerned
stakeholders must be put in place to ensure a broad consensus in project development so that
products can have Statewide application.
Confidentiality
To encourage technology or business plan discussion, which might be proprietary, the CFS
partners felt it was important to offer industry proposers confidentiality through the CFS process.
However, providing confidentiality ( i. e., all evaluators were required to sign non- disclosure
agreements and non- conflict of interest statements) was time consuming and limited the number
of staff who could review proposals. In the future, it might be beneficial to ask for a non-confidential
project description as part of the application process to avoid proprietary conflicts
and to allow concerned staff participation during the proposal evaluation process.
Lessons learned from California’s ICI and the three case studies presented in this paper elucidate
issues related to confidentiality and other institutional, legal, and political barriers to public-
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public and public- private partnerships that exist and must be eliminated or at least minimized for
ITS to be fully integrated into the transportation system. In the conclusion, the authors identify
the major lessons learned from the three case studies and expound upon their ICI relevancy.
CONCLUSION
California’s ICI is a new way of doing business for Caltrans and its regional partners. Interviews
with participating public agency representatives reveal that there is much to be gained and
learned from this innovative process. If successful, the ICI and CFS may serve as a
business/ policy model for public- private partnerships and regional cooperation. Early findings
from the ICI reveal that the CFS resulted in: 1) 28 project proposals intended to improve
mobility and safety for California travelers; 2) inter- agency cooperation among ICI partners; 3)
additional expertise brought on by multiple- agency participation during proposal evaluation; 4) a
broader perspective at the table by engaging in negotiation with the private sector; and 5) an
opportunity for industry and government to work together beyond the initial demonstration
period, if appropriate.
In this paper, the authors identified both legislative and initiative- based approaches to
public- private partnerships, including three case studies that provide valuable insights into the
institutional, legal, and political issues that may arise with a public- private partnership. The
major lessons learned from the three case studies include:
• Government must be careful not to contract away services that may become a
necessity during a long- term agreement. Furthermore, political opposition may
arise when the public is required to pay for services it has historically received for
free;
• Short- term agreements may be insufficient to adequately deploy a project or
secure enough revenue to repay initial investment costs; and
• Government must take care not to engage in what may be construed as anti-competitive
behavior ( e. g., granting exclusive access to State rights- of- way to a
single provider).
Of direct ICI relevance, the authors found that:
• ICI partners should take heed to lessons learned from AB680 regarding services
offered to the public by the private sector. At present, Bay Area travelers have
access to free traveler information via MTC’s 511. org website. Where traveler
information supplied by industry is sold to the public, these data will need to offer
travelers a value- added service, which is unavailable to the general public for free.
• Similar to the HELP, Inc. project, ICI partners found that intra- agency
coordination was just as challenging as inter- agency coordination among Caltrans
and MPOs. Furthermore, lessons learned during the HELP demonstration and the
ICI evaluations point to the fact that full- time staff resources and additional time
are needed to support this type of endeavor. ICI partners could learn from HELP,
Inc.’ s resolution regarding data confidentiality. Moreover, the successful
operation of HELP, Inc. offers promise that one or more ICI projects may
progress as a value- added service to transportation agencies and the traveling
public;
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• Similar to Connecting Minnesota, ICI partners found the need to establish clear
CFS objectives. Moreover, the ICI has effectively realized many of the lessons
learned identified in the Connecting Minnesota project, including: 1) making it
easier for the private sector to do business with government; 2) being forthcoming
about implications for those involved; 3) joining with other ( sister) agencies; 3)
establishing trust; 4) establishing two- way communication between public- public
partners and public- private partners; and 6) clearly defining agency roles.
The authors will continue to document ICI lessons learned through additional interviews with
CFS partners and industry respondents as the ICI progresses from negotiation of detailed project
plans; to agreements to proceed; and finally to project installation, operation, and dismantling.
Continued documentation of ICI lessons learned is important to next steps and future policy and
planning recommendations that could aid in streamlining the business models resulting from the
CFS, if appropriate. Policy recommendations may also be made in support of new legislation in
California. Research and documentation of legislative and initiative- based partnerships, such as
the ICI, should be very useful for practitioners and researchers interested in public- private
partnerships as a means to accelerate transportation system improvements.
ACKNOWLEDGMENTS
The authors would like to thank Coco Briseno, James Chai, Larry Orcutt, and Frank Quon of
Caltrans; Pierce Gould of MTC; Narasimha Murthy of MTA; Neil Schuster of ITS America; and
Gail Peters and James Gentner from HELP, Inc for their vital interview input. Sri
Balasubramanian and Asif Haq of Caltrans provided invaluable advice in reviewing this paper.
The authors would also like to acknowledge Hamed Benouar of CCIT. Additional thanks go to
Caltrans— who is funding this ICI policy/ planning evaluation— and to MTC, MTA, and industry
participants overall. This paper builds on an earlier version of a 2004 ITS World Congress
conference paper.
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