Puerto Rico toller ACT argues the case for choice of UTS over TransCore in legal battle

The Puerto Rico toll authority ACT (in its Spanish initials) says in a court filling in San Juan PR that United Toll Systems (UTS) is offering a cash toll system that stands to save them at least $20m/year in theft of revenues.

"None of the other proposals... put an end to this chilling depletion of public funds," the ACT says in a filing with the state Court of Appeals to deny a TransCore motion to quash the contract award to UTS and transfer it to TransCore.

Attacks on Allen

The ACT court filing says that TransCore has attacked UTS with "unfounded allegations" against UTS's president Jim Allen, saying the attacks are "almost identical" to those on the front page of the El Vocero newspaper (April 9). El Vocero wrote that Allen made "illegal contributions" to the campaign of the Governor of Alabama (1999-2003) Don Siegelman who was later convicted on corruption charges.

Allen has said that the Governor extorted contributions from him with threats to harm a separate business, but that all the contributions he made in response were disclosed and filed with the Federal Elections Commission and were in full compliance with election law. Allen was never charged with any breach of law. The Governor was convicted on unrelated charges.

"UTS the best and only fully compliant proposal"

The ACT filing says TransCore has not met the threshold in the legal system to establish an "element of prejudice, passion, partiality or manifest error" that overrides a deference to the toll authority's decision.

The filing says that the evaluation committee established that "the proposal submitted by UTS not only met all of the Agency’s expectations for the project but that the quality and superiority of both the product and the services proposed by UTS was so marked and manifest, in relation to the other proposals, that its acquisition constituted the best deal possible for the agency, even though it had been the proposal with the highest price of the three (3) proposals presented."

They say in summary that although the highest bid UTS's was "the most profitable" to the authority.

UTS proposed an integrated system of toll collection, personnel management, real time video monitoring of every transaction, auditing, and central control, pre and post automatic vehicle classification, along with continuous upgrades of equipment over the seven year of the contract. The software also provided for objective performance measures of toll collectors and their supervisors

The toll authority was impressed by UTS' live demonstration of their system via an internet link to a toll station operating on the Miami Dade tollroads similar to those proposed for Puerto Rico.

The UTS proposal included use of modular blade boards in lane controllers and servers. These are boards that are easily replaced if defective or swapped out for upgrades. They also provide for remote monitoring of the system for problems.

Automatic vehicle classification, pre and post, with in-pavement intelligent loops (IVIS) was held to be an important safeguard against classification fraud - where the operator classifies a truck as a car, takes the truck toll and pockets the difference between car and truck tolls.

Video cameras record all toll transactions, the vaults, all entrances and exits, passages, and rooms. Everything is timestamped so pictures associated with a transaction or movement of people or money can be retrieved and displayed quickly. This Digital Video Auditing System is called a "unique system."

They say the UTS system "radically distinguished itself from the offerings of the other two bidders."

"UTS’ proposal, even though it constitutes, in financial terms, the most costly initial investment for the Agency, represents, in the HTA’s opinion, and even under the facts and the law previously mentioned, the only proposal among the three that were submitted for this bid, which submitted a genuine, intelligent, innovative, integrated, and above all proven plan of action to resolve the serious problem of loss of revenues existing in the collection of tolls."

The InTrans system currently in use along with their proposed upgrade - the cheapest proposal - was said to provide for five theft points between the cashpaying customer and the bank, ACT says.

The ACT filing asserts that TransCore "does not present any argument, NONE, that establishes or even suggests elements that constitute arbitrariness, unreason ability, or capriciousness... which would constitute the only actionable issue..."

Sources of "leakage" laid out to court

ACT's current cash collections weaknesses are described this way:

"a. Improper “Non-Revenue” Exemptions - The current exemption process is totally manual where a card is presented and signed. There is no way in the current system to audit this process except through the physical presence of the ACT. The leakage points are:

1) The fare (toll) is collected from the user but it is registered as an exemption.

2) unauthorized users without cards are exempted.

"b. Improper collection due to lack of a classification system - The classification of vehicles and the corresponding collection in the current system is a totally manual process. The classifications systems are damaged and never repaired. The leakage points are:

1) Collection of a lower fare (toll) from a vehicle with more than two axles for not having correctly classified - for example, charging a vehicle a three-axle rate when it was really a vehicle with 4-axles. In this case, the transaction is generated as a 3-axle fare collection transaction. This leakage is not intention on the part of the operator.

2) The operator charges the correct axle fare but he enters it in the system as a transaction of more than 2 axles. Under this scenario, the operator keeps the difference in the fare and the theft of the HTA’s money is intentional.

3) There is no way to verify the correct collection since there is no classification system and auditing process in the current system.

"c. Prepaid Tickets - When using prepaid tickets the operator is supposed to punch it so that it cannot be used again. The leakage points are:

1) Reuse of prepaid tickets since the operators do not punch the holes and they are re-circulated.

2) Use of fake prepaid tickets. Fake prepaid tickets have already been confiscated.

3) Reuse of tickets by operators during their same shift to then collect the fares and the money enters their pockets.

"d. Defective cash boxes - These are supposed to close as soon as they are removed and they cannot be opened until they (get to) the counting center with a special key. The leakage points are:

1) The boxes are opened due to defects that the manufacturers has not corrected.
2) Misuse of the key to open the boxes.

"e. Money Counting Machines - The system is mechanized and has been in operation since 1993. The leakage points are:

1) the machines break down continuously and the boxes with money are accessible to the operators and the person who maintain the equipment.

"f. Conveyance and Counting Center - Both operations are done by the ACT. The Counting Center does not know how much money there is in the boxes before performing the count in each box.

ACT in its filing with the court says by contrast with UTS, TransCore's proposal "did not contribute anything" on the issue of stemming revenue leakage.

Fewer lanes quoted

TransCore also bid proposing about a quarter fewer cash lanes, so its proposed per lane price was similar to UTS, and the extra electronic toll lanes needed were not ioncluded in the TransCore price, ACT says. TransCore already has the electronic toll work under an existing contract.

TIMELINE

2007-12-04 Request for Proposals

2008-02-08 Evaluation Committee called for best and final offers

2008-02-26 Evaluation Committee recommends UTS get contract

2006-03-06 presentations to Executive Director and Bid Board

2008-03-27 ACT awarded contract

2008-04-02 Lack of local certificates discovered and UTS as winning bidder asked for them before close of business - UTS argued the law didn't require the certificate requested and would handicap it in updating its technology and failed to meet the deadline

2008-04-04 Letter of Cancellation faxed saying all bidders failed to have necessary Puerto Rico certification

2008-04-04 Move to award UTS the contract under an exceptions power to acquire by negotiation goods and services "of manifest superiority" available from a sole source supplier.

The filing says: "ACT concluded that what was offered by UTS is so unique in its class that it is covered by numerous patents that impede any other proponent from being able to make it available."

In what reads like a promotional ACT tells the Court its analyses showed: "UTS offers a 'Total Management System' that not only provides us with everything the Agency needs, but that it also integrates the best of today with the best of tomorrow, offering a system that is easily, economically, and periodically updated... No one else can provide what UTS provides, not even something similar."

It says the cost of the UTS system would be more than recovered in the extra revenue gained from eliminating theft, and refers to TransCore's "sepulchral (funereal) silence" on this, saying it "speaks volumes of the lack of seriousness of its position."

COMMENT: This is a fascinating fight. We have problems getting clear translations from the Spanish including details of TransCore's complaint, so these are preliminary thoughts.

TransCore has made its mark as one of the world's great pioneers of electronic tolling, coming out of transponder systems Amtech of New Mexico and Texas and Syntonic of Pennsylvania, inheritor of IBM's early computerization of the Pennsylvania and Ohio turnpikes.

Cash toll collection has never been TransCore's thing. It has usually left what is seen as a diminishing collection mode to others. 

Allen and UTS on the other hand started in cash collection on private toll bridges in Alabama and brought to the industry a new  approach from the unique experience gained in cash toll booths they owned and operated. Hiring IT talent they built toll systems from the bottom up.

It's our sense that TransCore  is fighting a battle in San Juan it can't win. And probably doesn't deserve to win. But we're open to revising that judgment with new revelations.

TOLLROADSnews 2008-04-14