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Draft Report

Procuring, Managing, and Evaluating the Performance of Contracted TMC Services

Chapter 1 –



Transportation Management Centers (TMCs) are the hub where transportation operating agencies operate, manage, and maintain the transportation system.  These centers use a combination of technologies, systems, and staff to perform their daily operations.  The staffs of operating agencies are a precious resource, and many operating agencies are looking at operating strategies that will allow them to maintain or increase functionality with use of less staffing resources.  One of these strategies is outsourcing or contracting for the staff services needed in a transportation management center.  

What is Outsourcing?

Outsourcing is a common tool used in business to reduce cost, increase productivity, improve the delivery of goods and services, and provide a more agile business readiness to changing market needs and opportunities.  In business, outsourcing involves subcontracting a process, such as the design or manufacturing of a product to a third-party. (1)  

Outsourcing can also include transferring the management and/or day-to-day execution of an entire business function to an external service provider.  The client organization and the supplier generally enter into a contractual agreement that defines the transferred services.  Under the agreement, the supplier acquires the means of producing a product (which may include the personnel, the equipment, the raw materials, and/or the technology) or performing a service.  The client agrees to procure services from the supplier for the terms specified in the contract.  

Notable functions outsourced by many companies include customer support and call center functions (like telemarketing), computer drafting, market research, parts manufacturing, design, and web development.   Additionally, other functions commonly outsourced by businesses include information technology, human resources, facilities, real estate management, and accounting.  

In the transportation industry, outsourcing can be defined as “contracting with either private or public sector vendors and service suppliers to obtain services that have traditionally been, or would otherwise be, performed by staff of the state or local transportation agency.”(2)  The primary difference between outsourcing and other forms of securing services or accomplishing tasks is that the public agency retains ultimate responsibility for the quality, reliability, and cost-effectiveness of the services or activities provided, even though the contractor entity (i.e., a contractor) is responsible for performing the work activities.(2)  

Outsourcing should not be confused with public-private partnership arrangements.  With public-private partnerships, the private firm generally takes effective ownership of a facility and

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