Transportation Technology Innovation and Demonstration Program (TTID):
What the Agreements Signed by State and Local Transportation Agencies Show

Jerry Werner
Former Editorial Director
National Transportation Operations Coalition (NTOC)

October 23, 2007


New -- for more about the history and recent press coverage related to this issue, be sure to check out:

The U.S. Transportation Technology Innovation and Demonstration (TTID) Program: When Politics, Competition, and the Public Interest Collide


Introduction

Earlier this year, the Sunlight Foundation sent a Freedom of Information Act (FOIA) request to the U.S. Department of Transportation, asking for documents and communication related to the Transportation Technology Innovation and Demonstration Program (TTID). This program, which was originally authorized in the huge transportation bill ("TEA-21") in 1998 and reauthorized with modifications in the 2005 transportation bill ("SAFETEA-LU"), provides up to $2 million each in federal/public funds to pay for traffic data for many of our nation's most populous and congested cities that mostly comes from new pole-mounted traffic detectors installed and operated by Traffic.com.

The stated objectives of the TTID program include developing the ability for the Federal Highway Administration (FHWA) to "measure the operating performance of the roadway system at a national level" and "facilitating public/private partnerships and the commercialization of traveler information data."

However, this program has been fraught with controversy, almost from the beginning. The $58 million earmark that was originally set up in TEA-21 and subsequent transportation and defense authorization bills could only be spent on one company (Traffic.com), effectively creating what many of Traffic.com's competitors contend is a federally subsidized monopoly.

In 2005, a number of companies went to their elected representatives, including Senator Orrin Hatch of Utah and Congressman Anthony Weiner of New York, complaining that they were unable to compete for business in the cities that received TTID earmarks because, by legislation, that business was exclusively locked in to Traffic.com. Prior to the passage of SAFETEA-LU in mid-2005, Senator Hatch spearheaded changes to the authorizing legislation for the TTID program that would add a new "Part II" designed to open up the program to competition.

However, despite the new language designed to open up the TTID program to competition, all eleven of the agreements signed in this program since the passage of SAFETEA-LU in 2005 have been for "Part I," which continues the monopoly for Traffic.com.

Recently, Senator Hatch revisited this issue to find out why the Traffic.com monopoly has persisted in spite of his earlier efforts to stop it. His continuing communication with U.S. Department of Transportation Secretary Mary Peters was the subject of a follow-on report in The Hill on June 26, 2007, entitled 'Monopoly' continues for Pa. Company, says Hatch.

The Agreements

Traffic.com is required to sign individual agreements with the appropriate state/local transportation agencies at each city identified in the ITIP/TTID program legislation before they can deploy their technology. These agreements have not been publicly disclosed until now, despite the fact that federal/public funds constitute at least 80% of the funding for this earmarked program.

Earlier this year, the Sunlight Foundation requested copies of these agreements for the cities that signed up for the TTID program via a Freedom of Information Act (FOIA) request. As of this writing (7/21/07), they have received all of the agreements except for those from Pennsylvania (where the ITIP program started), either from that FOIA request or through other sources (including the state agencies themselves). The USDOT's response also included a copy of the original task order, dated June 20, 2002, between the FHWA and Traffic.com. Since the USDOT has released these documents in response to a FOIA request, they are clearly now in the public domain.

Table 1 below lists those cities that have signed agreements with Traffic.com in the TTID Program. Note that many of these agreements refer to the "Intelligent Transportation Infrastructure Program" or "ITIP" program, which was the earlier name for the TTID program. The reports for those city names that are also web links are available for viewing or downloading. Reports are available for all cities except Philadelphia and Pittsburgh. Most of these agreements are in "PDF" format; however, note that the Salt Lake City agreement is in "TIF" format, which may require a special viewer (depending on your computer's configuration). To view any of these agreements, simply click on the city name link. To download them to your local computer from a Windows computer, place your cursor over any city name, right click, choose "Save Target As" and identify where on your local hard drive you want to save the file.

City

Local Partner

Agreement Date

Atlanta

Georgia Dept. of Transportation

5/23/06

Baltimore

Maryland State Highway Admin.

7/13/05

Boston

Mass. Highway Dept.

12/18/02

Chicago

Illinois Tollway Authority

11/21/02

Cincinnati

Ohio DOT

12/18/06

Columbus

Ohio DOT

12/18/06

Detroit

Michigan DOT

8/4/04

Indianapolis

Indiana DOT

8/30/06

Las Vegas

Nevada DOT

4/25/06

Los Angeles

Caltrans District 8

12/23/03

New Orleans

Louisiana Dept. of Transp. and Dev.?

Not yet available

Norfolk

Virginia DOT

3/7/07

Oklahoma City

Oklahoma DOT

8/26/04

Philadelphia

Pennsylvania DOT

Not yet available

Phoenix

Maricopa County (AzTech)

3/17/04

Pittsburgh

Pennsylvania DOT

Not yet available

Providence

Rhode Island DOT

12/31/02

Raleigh/Durham

North Carolina DOT

2/7/07

Sacramento

Caltrans District 3

7/21/06

Salt Lake City

Utah Dept. of Transportation

11/1/05

San Diego

San Diego Assoc. of Govts. (SANDAG)

2/10/03

San Francisco

Caltrans District 4

3/9/04

San Jose

Caltrans District 4

7/21/06

Seattle

City of Seattle

12/30/04

St. Louis

Missouri Dept. of Transportation

8/2/04

Tampa

Florida Dept. of Transp. District 7

8/15/03

Virginia (statewide)

Virginia Dept. of Transportation

10/22/02

Washington, DC

DC Dept. of Transportation

9/23/03

Table 1: The cities (and representing transportation agencies) that have signed TTID/ITIP agreements

The agreement between FHWA and Traffic.com (Contract No. DTTS59-99-D-00445, Task Order No. T020013) is also available here for viewing or downloading.

Key Elements of These Agreements

1. The Local Agency Funding Match (also called the "non-Federal match")

Why the details of the local funding match are important. According to a recent "lesson-learned" from the U.S. Dept. of Transportation own "ITS Lessons Learned Knowledge Resource" ("ITS" stands for "intelligent transportation systems"), earmarked ITS projects like the TTID program require that state and local agencies that are the recipients of earmarked funding must contribute their own funds in order to access those federal funds. Typically, earmarked highway programs require what is often called an "80/20 split," that is, 80% of the funding is provided by the U.S. Dept. of Transportation and 20% is provided by the state/local agencies involved.

Here's the exact wording in the USDOT's May 2007 "lesson learned" (emphasis added):


The funding mechanism and its execution have enormous influence on the success of ITS projects. In the case of ITS Earmark projects, since the a portion of the funding is designated by Congressional action, state and local agencies are required to contribute matching funds or the Earmark funding will remain unspent until Congressional action rescinds the funds. Since rescinding funds is difficult and undesirable it is more likely that the project may be delayed until matching funds become available.

The intent of the local funding match is clear: making the state or local partners contribute their own funding helps ensure that the project is worthwhile to those partners because it meets a real need.

What the agreements show. Here is wording that is typically found in these agreements (in this case, excerpted from the Ohio Dept. of Transportation agreement):

Federal funding will cover Eighty percent (80%) of the cost of the PROJECT, but not to exceed $2,000,000 per metropolitan area, the balance of the funding to come from private sector partners.

A few of these agreements use slightly different wording, such as the terminology "private sector sources" instead of "private sector partners." The Baltimore and Providence agreements say that the balance of the funding is to come from "STATE, local government, or private sector partners." The Oklahoma City agreement, comes right out and says "the balance of the funding to come from Mobility Technologies." (Mobility Technologies is an earlier name of Traffic.com.) Only two of the agreements we have received from the FHWA so far, for San Diego and Tampa, clearly state that the state/local partner (SANDAG and Florida DOT, respectively) will cover the 20% local match. (Note: the USDOT's June 22 response to Senator Hatch's May 10 letter to USDOT Secretary Peters, by USDOT Acting General Counsel Rosalind A. Knapp, said that the state/local partner is also covering the 20% local match in Providence.)

By relying on "private sector partners" (almost certainly Traffic.com in each case) to provide the 20% local funding match in these projects, the USDOT is choosing not to follow its normal policy and particularly its own guidance (issued as recently as May 2007) for ITS projects. By not requiring any direct contribution by the state/local partner, local agencies effectively see participation as "free." In fact, the chief ITS engineer from one state DOT told me that his agency only agreed to participate in this program after its own local match requirement was "waived."

Clearly, waiving the local match, from the perspective of the local partner, helped Traffic.com recruit cities to participate in the TTID Program that would not have participated had they had to commit $500,000 of their own funds to this program. While this added level of participation undoubtedly benefits what Senator Hatch characterizes as Traffic.com's monopoly -- which is strengthened the more cities that sign up for the program -- this added participation actually works against the public interest, because it makes access to real-time traffic data more problematic to other traveler information vendors in those cities (explained further below).

1a. A unique way to handle the local match

While all but a few of the agreements call for the "private sector partners" to pick up the 20% local funding match (typically $500,000), the contract between Florida DOT District 7 (Tampa) and Traffic.com is a notable exception. This agreement calls for FDOT itself to provide the local match. Excerpting directly from the agreement:

WHEREAS, the DEPARTMENT is willing to provide a maximum amount of $500,000 to MOBILITY TECHNOLOGIES as state match to federal aid for DATA Services, as defined in Section 11 DATA SERVICES, under this Agreement.

This agreement even says "MOBILITY TECHNOLOGIES shall submit invoices to the DEPARTMENT for twenty percent (20%) payment at the same time it submits invoices to FHWA for eighty percent (80%) payment."

This agreement is somewhat different than many of the others in that it specifically calls out that Traffic.com will be providing "travel time data" to FDOT for non-commercial use in its 511 (national traveler information number) service and other purposes. (Travel-time data, which typically indicates how long it will take a driver to traverse a specific stretch of highway, is often provided on overhead changeable message signs and on the new 511 service.) However, the agreement stipulates that this travel time data is only provided to the agency for free for the first year, and then at a significant annual fee every year after that. Here is the exact wording:

The first year of the license is without additional charge. Additional years of travel time DATA may be licensed by the DEPARTMENT for non-commercial use for a fee of $180,000 per year (adjusted by consumer price index) or at a price of 90% of the commercial fee charged commercial users in the Tampa Bay area for similar services, whichever is less.

So, despite the public-sector investment of up to $2,500,000 for data services in this project ($2,000,000 from the federal government and $500,000 from the state), after the first year of receiving travel-time data from Traffic.com, the Florida Dept. of Transportation has to pay $180,000 per year for that same data every subsequent year.

Interestingly, the U.S. Dept. of Transportation's own "ITS Lessons Learned Knowledge Resource" includes a lesson-learned specifically pointing out some of the "challenges" in the FDOT/Tampa agreement, entitled "Consider data ownership issues early when contracting with the private sector data providers and avoid limited use clauses – Florida DOT's experience with public/private traffic monitoring"

2. Data Use and Sharing Restrictions

These agreements typically call for $2,000,000 in federal (public) funding to pay for data services for a number of years (typically 10) from newly installed pole-mounted radar detectors, which are primarily used to detect the presence and speed of freeway traffic. While public funds are being used to purchase this traffic data, these agreements typically severely limit the ways that the local agency partners can use that data in a number of ways:

3. "Revenue Sharing"

Most of the agreements with Traffic.com (as mentioned earlier, also called "Mobility Technologies") include a provision for the sharing of "annual commercial revenue" that is attributable to the TTID detectors from the sale of data to other commercial entities. (While "commercial entities" is not typically defined, it likely refers to Traffic.com's competitors in the traveler information business, including Westwood One, Inrix, Metrocommute, and TANN). Here is part of this description from the St. Louis (Missouri DOT) agreement:

15. (a) MOBILITY Technologies shall reinvest annual commercial revenue from the PROJECT attributable to the ITIP sensor system in the St. Louis metropolitan area ("REVENUE") in accordance with the following formula established by the FHWA, which shall be applied separately for each metropolitan area and which shall not be subject to periodic renegotiation by the parties:

(1) 0% for REVENUE up to $250,000
(2) 5% for REVENUE between $250,000.01 and $1,000.000.
(3) 10% for REVENUE above $1,000,000

These funds are typically not provided back to the state DOT to use as the agency wishes, however. (Two exceptions we have found so far include the FDOT/Tampa agreement described above, in which the shared revenues are deposited into the State Transportation Trust Fund, and the Indianapolis agreement.) Again, quoting from the St. Louis agreement:

15. (d) MOBILITY TECHNOLOGIES, after consultation with the STATE, shall reinvest the amount of the REVENUE share exclusively for needs and activities related to the PROJECT. Examples of acceptable expenditures include, but are not limited to, operation and maintenance of existing ITS equipment as described above in this subparagraph, defrayal of costs related to integration of legacy and new systems and DATA SERVICES, installation of additional sensors and different technologies to the PROJECT.

In the vast majority of these agreements, the amount subject to "revenue sharing" can only be used for activities related to the "PROJECT," including defraying Traffic.com's own operations and maintenance costs or installing additional sensors whose data the public-sector partner will still be restricted from fully utilizing.

4. Marketing Program

Additional information received from one state DOT provides insight into what Traffic.com calls its "Marketing Program." Here's the wording from page 5 of that document:

The contractor shall market ITS Integrated Surveillance and Data Management Infrastructure Services with approval from the COTR. In accordance with the marketing strategy, the contractor will have the ability to market ITIP Services to private sector organizations. The contractor may be required to develop marketing strategies and action plans which involve identifying contacts, tasks, and potential users of traveler and roadway performance information/data. It may involve frequent contact with users, development of user profiles and reports on progress of the marketing strategy. It is to the contractor's advantage to prospect new business opportunities.

The "integrated" in "ITS Integrated Surveillance and Data Management Infrastructure Services" refers, in part, to the integration of data from the new pole-mounted detectors that Traffic.com installs with the typically vast amount of data that the public-sector agency partner already collects, typically from loop detectors imbedded in the pavement. So Traffic.com is essentially acting in a "gatekeeper" role with respect to marketing and distributing this "integrated" data to any other private-sector company that wants it, including companies that compete against Traffic.com in the traveler information business (e.g., Inrix, Metrocommute, Westwood One, TANN) or to media outlets (particularly radio and TV stations) that would like to provide traffic reports to the traveling public.

In effect, Traffic.com is responsible for marketing traffic data to their arch competitors in the traveler information business. While the excerpt above says "It is to the contractor's advantage to prospect new business opportunities," that is clearly not the case with respect to the traveler information business. Clearly, Traffic.com has a competitive advantage in that business over its competitors if it can fully utilize the data from these new pole-mounted traffic detectors and its competitors cannot. Traffic.com obviously has a huge conflict of interest in this case.

Summary

While the Transportation Technology Innovation and Demonstration (TTID) program has important goals – among them, enabling the U.S. Dept. of Transportation to better monitor the performance of our nation's roadways and increasing the amount of information about traffic conditions to travelers -- the picture looks quite different when one reads these agreements in detail and talks with companies other than Traffic.com that provide traveler information on a regional or national scale. A detailed review of the agreements between state and local transportation agencies and Traffic.com clearly shows that the terms of these agreements in several important areas are designed to primarily benefit Traffic.com (which Senator Orrin Hatch says has been the beneficiary of a federally supported monopoly) at the expense of the public interest.

I welcome all feedback on this analysis specifically or on the purpose and implementation of the TTID program in general. If you wish to remain anonymous, please let me know that in your email message. I also encourage you to share your views about this program or other transportation operations topics in the Talking Operations Forum.

Jerry Werner can be reached at:
512-295-6768
FAX: 512-295-6769
jerrycw@attglobal.net