· AFC System or . Automated Fare Collection System: means the Automated Fare Collection System to be introduced by the City, being the set of technology and processes that enable

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Automated Fare Collection Strategy 07 November 2012

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TABLE OF CONTENTS 1. Introduction ............................................................................................................................................. 9

1.1. Aim of the AFC Strategy................................................................................................................... 9

1.2. Scope of the AFC Strategy ............................................................................................................... 9

1.3. Development process of the AFC Strategy .................................................................................... 10

1.3.1. Desktop study and analysis of existing policy documents. ............................................... 10

1.3.2. TRT and TBS Project Team Workshop Discussions ............................................................ 11

1.3.3. Consideration of Options and Strategic Decisions ............................................................ 11

1.3.4. Drafting of the AFC Strategy .............................................................................................. 11

2. Background & Context ........................................................................................................................... 12

2.1. Tshwane Bus Services (TBS)........................................................................................................... 12

2.1.1. Tshwane Bus Services Current Fare Structure .................................................................. 13

2.1.2. Tshwane Bus Services Inputs ............................................................................................. 13

2.2. Tshwane Rapid Transit (TRT) ......................................................................................................... 15

3. The Fare Collection Solution .................................................................................................................. 16

3.1. Strategic Options ........................................................................................................................... 16

3.2. The AFC System ............................................................................................................................. 17

3.2.1. Objectives of Automatic Fare Collection ........................................................................... 17

3.2.2. System Design Principles ................................................................................................... 17

3.3. High Level Business Framework .................................................................................................... 17

3.4. Regulatory / Legislative Framework .............................................................................................. 19

3.4.1. The Constitution of the Republic of South Africa, 2006 .................................................... 19

3.4.2. The National Land Transport Act 5 of 2009 ....................................................................... 19

3.4.3. Regulations Relating To Integrated Fare Systems, 2011 (Government Notice R511 in

Government Gazette 34363 of 17 June 2011) ...................................................................................... 20

3.4.4. Local Government: Municipal Finance Management Act 56 of 2003 (Act 56 of 2003), (the

MFMA) and the relevant Division of Revenue Act, (DORA) .................................................................. 20

4. AFC System Drivers ................................................................................................................................ 21

4.1. External Drivers ............................................................................................................................. 21

4.1.1. TRT Fare Policy ................................................................................................................... 21

4.1.2. TRT Fare Structure ............................................................................................................. 22

4.1.3. Fare Levels and Proposed Fares ........................................................................................ 24

4.1.4. Fare Media ......................................................................................................................... 25

4.1.5. Fare Rules .......................................................................................................................... 26

4.1.6. TRT Ticketing Strategy ....................................................................................................... 27

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AFC Strategy: October 2012 3

4.2. High Level Policy Statements......................................................................................................... 28

4.3. Internal Drivers .............................................................................................................................. 28

4.3.1. Distribution Strategy ......................................................................................................... 28

4.3.2. Access Control ................................................................................................................... 29

4.3.3. Interim ticketing solution .................................................................................................. 30

4.3.4. Location Services ............................................................................................................... 30

4.3.5. Communication Infrastructure .......................................................................................... 30

4.3.6. Penalties and Fines ............................................................................................................ 30

4.3.7. Risk Management .............................................................................................................. 31

4.3.8. Training .............................................................................................................................. 31

4.3.9. Ticket Inspectorate ............................................................................................................ 31

4.3.10. Customer Service ............................................................................................................... 32

4.3.11. Cash In Transit (CIT) ........................................................................................................... 32

4.3.12. Commercial Requirement.................................................................................................. 32

5. The Responsibilities of the AFC Agent ................................................................................................... 33

5.1. “Design” the AFC Agent System .................................................................................................... 33

5.2. “Build” the AFC System ................................................................................................................. 34

5.3. “Install and Implement” the AFC System ...................................................................................... 35

5.4. “Operate” the AFC System ............................................................................................................ 35

5.5. “Maintain” the AFC System ........................................................................................................... 36

5.6. AFC Agent Responsibility Exclusions ............................................................................................. 37

6. High-Level System Overview ................................................................................................................. 38

6.1. Overview ........................................................................................................................................ 38

6.2. Fare Media (CoT Card, Branding) .................................................................................................. 38

6.3. Equipment ..................................................................................................................................... 39

6.3.1. Issuing Equipment ............................................................................................................. 39

6.3.2. Acquiring Equipment ......................................................................................................... 40

6.3.3. Certification ....................................................................................................................... 40

6.4. Links to other TRT / TBS systems ................................................................................................... 40

6.5. Integration ..................................................................................................................................... 41

6.6. Redundancy / Security Considerations.......................................................................................... 42

6.7. Flexibility to cater for changing TRT/ TBS requirements ............................................................... 43

6.8. Approach to future integration with other systems (Gautrain, Rea Vaya) ................................... 43

7. Funding Options and Financial Implications .......................................................................................... 44

7.1. Funding Options ............................................................................................................................ 44

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7.2. Sources of Funding ........................................................................................................................ 44

7.3. Revenue Generation ...................................................................................................................... 45

7.4. Financial Model ............................................................................................................................. 46

7.4.1. Roll out of Buses and Stations ........................................................................................... 46

7.4.2. ...................................................................................................................................................... 46

7.4.3. Key Revenue Assumptions ................................................................................................ 46

7.4.4. Capital Expenditure Assumptions ...................................................................................... 47

7.4.5. Operating Cost Assumptions ............................................................................................. 48

7.4.6. Financial Forecasts and Funding Scenarios ....................................................................... 49

8. Contractual Arrangements .................................................................................................................... 53

8.1. Length and Form of Contract ........................................................................................................ 53

8.2. Approach to Banking Services ....................................................................................................... 54

8.3. Performance Measurement and Monitoring ................................................................................ 55

9. Implementation of the AFC Agent ......................................................................................................... 56

9.1. Work Programme & Roll Out ......................................................................................................... 56

9.2. System Pilot ................................................................................................................................... 56

9.3. Risk Assessment............................................................................................................................. 56

10. Summary of decisions requiring approvals ....................................................................................... 59

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DEFINITIONS

In this document, unless the context indicates otherwise, the words and expressions set out below shall have the meanings assigned to them and cognate expressions shall have a corresponding meaning, namely:

AFC Agent or Automated

Fare Collection Agent: means the contractor that will be responsible for the electronic fare payment system and equipment as described within this document.

AFC Back Office: means a single centre that has centralised responsibility for the integrity, security, registration, settlement data collection and forwarding within a Fare Management System.

AFC: means Automated Fare Collection.

AFC data structure: means the automated fare collection data structure, which utilises specific tags on the EMV chip of bank issued fare media for electronically recording and retrieving public transport-related data.

Automated Fare Collection or AFC: means a fare collection system which is automated and which- (a) enables the electronic collection of public transport fares and associated data; and

(b) comprises a bank issued fare media system;

AFC Strategy means the Automated Fare Collection Strategy contained in this document.

AFC System or

Automated Fare Collection System: means the Automated Fare Collection System to be introduced by the City, being the set of technology and processes that enable the automated collection of fares, the accounting of revenues and the collection of user information in respect of fare system.

Authorised Reseller: means a 3rd party vendor, station ticket office, walk in centre ticket office, and EMV Low Value Payment top-up agents.

Back Office Centric means the fare collection model where the smart card holds only a card ID, which links the card holder to an account with the card issuer and/or transport agency responsible for collecting the fares.

Base Fare: means the initial fare deducted at tap on.

Bank Issued Fare Media: means a participating bank issued payment instrument based

on EMV specifications and conforming to the requirements of the AFC data structure.

BOC or Bus Operating Company: means the company or companies established or to be established by or on behalf of the public transport operators affected by the coming into operation of the TRT that provides the bus operating services to the TRT.

BRT or Bus Rapid Transit: means a high-capacity urban public bus rapid transit system.

Card Centric means the fare collection model where the smart card holds data regarding the Commuter (optional), loaded monetary values, transit information such as boarding and alighting times and positions, and transport products such as weekly or monthly travel passes.

Cash in Transit (CIT): means the process of transporting cash, from ticket offices to a secure location for sorting and counting.

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City or CoT: means the City of Tshwane Metropolitan Municipality, a municipality described in section 2 of the Local Government: Municipal Systems Act 32 of 2000.

Concessionary Fare: means the fare due or paid by a Commuter classed in a category entitled to a reduced fare as identified within the Fare Policy.

Conditions of Carriage: means the terms that Commuters are deemed to have accepted when purchasing their fare media to travel on TRT or TBS.

Control Centre: means the transport control centre where the TBS and TRT services are monitored, controlled and managed through, amongst others, surveillance and control strategies.

Commuters: means users of the TBS and TRT services.

Customer Service Centre: means premises where Commuters enquire about TRT and TBS services, have queries resolved, submit feedback, buy and top-up fare media and have their fare media identification registered (as applicable).

Distance Based Fare: means fares are calculated according to the distance travelled by the Commuter, being the distance between the boarding stop and the alighting stop of the Commuter.

Division of Revenue Act: means the relevant Division of Revenue Act promulgated annually in respect of each financial year that provides for the equitable division of revenue to be distributed nationally among the national, provincial and local spheres of government.

E-ticket: means an electronic bus ticket that a Commuter purchases online.

EMV or Europay MasterCard Visa: means the integrated circuit card specification for chip-based bank issued fare media and point of sale ("POS") acceptance devices, developed by Europay, MasterCard and Visa that defines a set of requirements to ensure interoperability between payment chip cards and terminals.

EMV Fare Media or EMV Smartcard: means a bank issued pre-authorised contactless debit card.

Fare Collection Point means a specific location where Commuters purchase fare media or top up existing cards with value.

Fare Integration: means the ability of a fare system to charge a commuter once for a journey that utilises the service of more than one transport operator.

Fare Level: means the amount paid by Commuters for their trip.

Fare Management: means the responsibility for and control of the lawful charges established by the City of Tshwane for the use of its transport facilities.

Fare media: means Bank issued payment instrument with DOT EFC data structure, used for storing:

1. electronic value in an e-purse. 2. transit products in the form of e-tickets purchased by

commuter. 3. Personal details if the card is registered. 4. Payment of travel fares or for purchasing other

products/services.

Fare Media Integration: means interoperable fare media and refers to the capability of different fare collection systems to accept the same fare media (in this instance a bank‐issued smartcard containing a prescribed AFC data structure as per the NDoT Regulations).

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Fare Policy: means the statement of goals, objectives, principles and other fundamentals that determine the manner in which fares are charged to commuters using the TRT and TBS service.

Fare Product: means transit packages or products that can be purchased by a commuter, in the form of trip-linked or time-linked products which are stored electronically on the fare media.

Fare Rules: means the detailed fare usage rules which enable the implementation and operation of the Fare Policy.

Fare Structure: means the structure used to determine the fare levels, such as distance based, flat rate or a zonal rate.

Free Transfer: means whenever the Commuter changes vehicles, and the new vehicle operates in a geographical area that is covered by the same fare, the Commuter does not have to pay extra. Or in case of a limited time period) between the alighted mode and boarded mode;

Free Transfer Period: means the limited time period between the alighted mode and boarded mode within which a Free Transfer is allowed.

Go live: means the date on which the face collection system commences operation.

Hand Held Ticket Reader: means the equipment that validates cards while the Commuters are travelling.

Hybrid Model means a model for fare collection that is a combination of card-centric and back office-centric models.

Inspector: means a person authorised to check whether Commuters have valid fare media or transit products, indicating that they have paid the fees due for travel on TRT or TBS.

IRPTN or Integrated Rapid Public

Transport Network: means a system in a particular area that integrates public transport services between modes, with through-ticketing and other appropriate mechanisms to provide users of the system with the optimal solutions to be able to travel from their origins to destinations in a seamless manner.

Interoperable: means the ability to travel on multiple operator services with a single ticket.

Journey: means trip(s) undertaken from origin to destination by a Commuter in the allowed travel time.

Level 4 Back Office: means the “Apportionment Back office”, where, since systems are interoperable and therefore commuter fees paid to different transport owners with the same smartcard, Commuter fees are apportioned and transactions communicated to the owner specific back offices.

Limited Multi Trip Fare Product: means a single trip with a single/specific return journey.

Local Area Network (LAN): means a computer network interconnecting computers covering a small physical area.

Low Value Payments (LVP): means that commuters are able to load monetary value up to maximum value of R1 500 onto the smartcard, subject to a maximum of R 3000 per month as directed by the Payments Association of South Africa (PASA).

LVP Merchant: means a merchant who has the technology to sell and top-up LVP cards.

Mode: means form of transport.

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Off Peak Fares: means a discounted fare price due to low demand.

Participating Banks: means banks that are members of the Payments Association of South Africa and the relevant payment clearing house.

Penalty Fees: means an extra fee or a correction fee payable when the Commuter travels on a bus without the valid fare media or product or avoids paying the correct fee.

Seamless Travel: means the opportunity for Commuters to use public transport with a minimum of inconvenience, according to their own journey plan, using any combination of transport mode(s) and operators.

Single trip: means the single distance travelled by a Commuter between two points in one vehicle.

Single Trip Fare Product: means one journey is loaded onto the card, which includes a single check-in and check-out.

Stored value: means currency saved on an electronic medium such as a smartcard.

Strategy: means this Strategy document.

Structure Integration: means a single fare structure accepted by a collection of transport operators.

System Pilot: means testing the AFC solution in the operating environment through the simulation of normal operating conditions, in order to test and monitor the system's performance prior to “go live”.

TIP or Terminal Integration Process: means a Mastercard’s payment application software certification requirement

TVM or Ticket Vending Machine: means point of sale ticket vending equipment.

Transfer: means that a Commuter alights one mode and boards another mode (irrespective of the kind of mode) to continue on their journey.

Travel Pass: means weekly or monthly travel passes which enable commuters to travel in specific geographical areas, during specific weeks or months.

Trunk Route: means a lane designated for the predominant use of a rapid transport trunk bus.

TBS or Tshwane Bus Services: means the bus service which is currently operated and managed by the CoT under the name and style of Tshwane Bus Services.

TRT or Tshwane Rapid Transit: means the bus rapid transit system, introduced, operated and managed by the City.

Vendors / Merchants: means the authorised reseller of fare media/ 3rd party vendor / station ticket office / walk in centre ticket office / EMV Low Value Payment top-up agents, as the case may be.

Zonal Fare Structure: means a fare structure where fares are calculated according to the number of geographical zones that are crossed during a Commuter trip or –journey.

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1. INTRODUCTION

The City of Tshwane (CoT) is developing its public transport services through the development of an Integrated Rapid Public Transport Network (IRPTN), which is intended to transform the public transport system in the CoT by providing a high quality, affordable transport service to the public. The IRPTN system will also be aimed at: 1

1. Reducing the overall journey times for public transport users. 2. Improving access between residential areas, major economic nodes and the CBD of Pretoria.

A key component of the IRPTN is a Bus Rapid Transport (BRT) network, which, in the case of the City, will be known as the Tshwane Rapid Transit (TRT) system. The TRT will operate an Automated Fare Collection System (AFC System) using EMV technology. It is proposed that the design, building, installation, operation and maintenance of the AFC System will be the responsibility of an Automated Fared Collection Agent (AFC Agent), to be appointed by the City. The appointed Agent will manage the entire electronic ticketing system and equipment.

1.1. Aim of the AFC Strategy

The AFC Strategy is a critical document that provides the founding principles, objectives, strategic direction and impetus for the AFC Agent who will be appointed to perform the fare collection function for the City's TBS services as well as the TRT services. The primary aim of the Strategy is to provide a platform from which the AFC Agent’s mandate can be further developed and defined, within the CoT’s strategic intent for the AFC Agent.

The Strategy takes into consideration the existing planning, development and work completed to date. It then indicates the specific options which were considered during the strategy development process in proposing the roles and responsibilities of the AFC Agent, within the context of the broader TRT and TBS structures and role players. The outcome thereof is incorporated into this Strategy document, which outlines the envisaged functions of the AFC Agent.

1.2. Scope of the AFC Strategy

The Strategy has incorporated the status quo, existing planning and research completed and policy related documents currently under development or completed relating to the CoT IRPTN, Automated Fare Collection and the AFC Agent to date. The Strategy covers all the critical strategic elements of AFC and a AFC Agent, indicating the CoT’s intended approach toward AFC and the management thereof.

More specifically, the Strategy covers the following:

Background and Context (of fare collection in CoT)

The need for AFC

The proposed CoT AFC Agent Solution

High level business framework

Regulatory and Legislative Background

Process followed in developing the Strategy

The AFC Agent: o Purpose o Proposed Responsibilities

High Level System Overview

Contractual Arrangements

Implementation of the AFC Agent

1 SOW - Appointment of a BRT fare system Consultant for the City of Tshwane (IRPTN) 30 July 2012

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1.3. Development process of the AFC Strategy

The development of the AFC Strategy consisted of the following phases:

Desktop study and analysis of existing relevant documents, reports and information.

Workshop discussions between the TRT and TBS Project Team, Strategic Advisers and relevant stakeholders, focussing on:

o The outcome of the desktop study and analysis, considering and identifying the potential strategic options;

o Further potential strategic options.

Deciding on the critical strategic issues and strategies relating to the AFC Agent.

Drafting the AFC Strategy.

1.3.1. Desktop study and analysis of existing policy documents.

The development of the AFC Strategy commenced at a time when a number of CoT policy and strategic documents regarding IRTPN, ITS, BRT and AFC had already been developed. These include:

1. Conceptual high level business plan. (26 April 2012). 2. Fare Policy and Structure for the IRPTN: Phase 1 BRT (August 2012). 3. Fare Policy and Structure for the IRPTN: Phase 1 BRT - Addressed to the CoT Mayoral Committee (Ref

V9/2/2/3/6). 4. Draft ITS Strategy and Implementation Plan (June 2012). 5. Preferred BRT Scenario. IRPTN Project Management Unit: Systems Technical Note 20 (29 July 2012) 6. Project Report: Ticketing Strategy (16 April 2012). 7. System Architecture Draft: Bus Rapid Transport - Intelligent Transport Systems (September 2012). 8. Tshwane Mode Choice Model Overview. Project Management Unit: Systems Technical Note 21 (20

August 2012).

These documents do not all relate to the exact same subject matter, are not all in the same stage of completion and in certain instances, recommend or provide for more than one solution or potential

AFC Strategy

Consider different strategic options

TRT and TBS project team Workshops

Existing policies &

documents

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strategic approach. These differences were considered throughout this phase, as well as the fact that certain documents had not yet received final approval at the time of finalising the AFC Strategy document.

1.3.2. TRT and TBS Project Team Workshop Discussions

The outcome of the Desktop Study and Analysis was discussed and work shopped by CoT, Strategic Advisers and relevant stakeholders in order to identify the crucial strategic issues relating to AFC and the AFC Agent. The various strategic options relating to these issues were also discussed. In addition, a series of workshops were held to consider other issues that had not necessary been considered before and propose strategic solutions based on expert knowledge and experience in the field, considering the unique TRT environment.

1.3.3. Consideration of Options and Strategic Decisions

During the workshops, the most crucial strategic decision related to the AFC Agent was discussed. This considered whether the AFC Agent would be appointed as an entity that would be responsible only for AFC system, or part thereof, or be appointed to provide a full “turnkey solution” to TRT and TBS, which would include the AFC system, as well as other fare collection services, such as cash in transit, fare media distribution and customer services. For Tshwane it is proposed that the AFC Agent should provide the full turn-key solution. The other strategic decisions flow from this proposal and relate to the specific AFC System and specifications and all other AFC Agent responsibilities.

1.3.4. Drafting of the AFC Strategy

The Strategy was drafted only after the above process was followed, relevant information had been work shopped and discussed by the TRT / TBS projects team whilst considering the specific needs for CoT.

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2. BACKGROUND & CONTEXT

The CoT is currently in the process of developing an IRPTN. Over the last few years, a significant amount of preparatory work has been done in order to support the business processes to be followed by the different role players, and set up a structure for the future bus services to be delivered to the public. The services will need to comply with the relevant regulations and legislation. In particular Regulations Relating to Integrated Fare Systems 2011 published under Notice R511 in Government Gazette No 34363 dated 17 June 2011 apply, that the IRPTN needs to operate an AFC System utilising Europay MasterCard Visa (EMV) technology.

The City of Tshwane Council resolved that the management and operation of an effective fare collection system, which encompasses automatic fare collection and technology, should be contracted to an AFC Agent.

The AFC Agent will provide the fare collection services in respect of the two bus systems of the City, being the current Tshwane Bus Service (TBS) and the new TRT. The two bus systems will in essence be brought together as a service to the public through one distinctive payment system, the AFC System. This system requires an AFC Agent to perform the fare collection function on behalf of the CoT.

This document outlines the current strategic thinking for the AFC Agent, and more specifically its roles and responsibilities within the context of fare collection, but also the broader BRT. The AFC Strategy indicates the potential options relating to the fundamental strategic issues that were considered by the broader TRT and TBS project team and stakeholders, and proposes an option which best meets the City’s objectives.

2.1. Tshwane Bus Services (TBS)

TBS operates under the City’s Department of Roads and Transport. Currently TBS has a mixed fleet of 398 buses, but this expected to be rationalised as TBS replaces these buses with newer models. TBS employs more than 400 staff members, consisting of about 290 drivers, the balance being workshop and administrative staff. The current fare collection process is manual, which has serious inherent risks associated with the handling of cash and paper tickets. Figure 2 below illustrates the current fare collection process.

Figure 2 Current Fare Collection Process for TBS

Start Shift

•Driver collects bus kit with tickets, cash and the waybill from the prior shift•Driver signs Service Sheet and Waybill

Sale of Tickets

•Driver sells and clips tickets as passenger embark•Driver record tickets sold on the Waybill (first and last ticket during the trip)

•Inspectors conduct random point surveys•Monthly and weekly tickets are clipped as passengers embark

Cash-in

•Reconcile number of tickets sold with the cash and the remaining tickets•No clipped tickets are accepted by the cashier

•Serial numbers of the tickets are recorded (Sold vs remaining tickets)

Buy tickets and float

•Total value sold R2160 including R20 float•No change must exceed R20

•Driver keeps remaining tickets and float in the locker at the end of the last shift

Banking of cash

•Ensure total cash book agrees with the receipt and deposit slip•Supervisors signs off the slip and cash book

•CoT bag sealed in front of supervisor with a duplicate receipts in the bag•Money collected by fidelity guard

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In 2011 TBS commissioned external consultants (NTI) to analyse their operations and recommend process and system improvements. This NTI report highlighted several operational and financial risks with Revenue Management as one of the areas that need urgent attention. It is in this context that the City has taken a decision to implement an Automated Fare Collection System in the TBS operation.

2.1.1. Tshwane Bus Services Current Fare Structure

Figure 3 TBS two stage fare structure.

TBS has a two stage fare structure, consisting of a flat fare for the different categories up to the edge of the CBD and a flat fare from the CBD to any point beyond the CBD up to the bus terminus as illustrated in figure 3 above. From the last CBD stop to any stop beyond the CBD up to the terminus, the same CBD rate applies.

Although this fare structure is fairly simple in its design, it is complicated by the combination of categories of Commuters and categories of tickets. These include adults, scholars, disabled and pensioners, as well as monthly and weekly tickets across both zones.

The following special fare categories are provided for:

Children under 5 years - free of charge

Scholars (4-18 yrs) – 50% off monthly tickets, 34% off weekly tickets.

Disabled – 48% off monthly tickets, 21% of weekly tickets.

Persons between 60 and 67 years – R 120/month except peak periods.

Persons over 68 years – free, except peak periods.

The underlying reasoning behind this fare structure is to accommodate vulnerable groups such as scholars, disabled people and the elderly.

The proposed AFC System must not only accommodate this complex fare structure but must have the capability to be changed from time to time as for example economic conditions, by-laws and Commuter demand change.

2.1.2. Tshwane Bus Services Inputs

The following were the primary requirements which TBS identified prior to the integration with the TRT requirements. These are based on the requirements of TBS Commuters, drivers, finance, and other stakeholders. This is not a technical specification but an articulation of the stakeholder’s requirements and informed by their day to day experiences.

CBD

First Stop

CBD

Last Stop

of CBD

Terminus

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Fare Media

The Fare Media should meet the following requirements:

Eliminate cash and ticket handling by the driver;

Eliminate storing of tickets and cash overnight in a locker;

Automate the recording of sales ;

Eliminate use of paper or disposable tickets;

Increase the throughput at the bus entrance as the commuters embark;

Introduce a bank issued fare media which is EMV compliant;

Easy loading of value into the fare media. Preferably use existing retail infrastructure;

Easy management of fare media stock and utilisation;

Fare media must be able to handle multiple fare structures;

The Fare media must be interoperable between the different modes of transport (taxi, bus, train, BRT); and

Increase revenue collection while minimising fare evasion.

Reporting

The reporting requirements are listed below:

Automated daily sales reporting;

Integrated reporting into the City’s SAP system;

Reliable storage of data for the required period;

Public transport data must be collected electronically through the AFC System, concurrent with payment;

Data system must comply with the policies and standards for achieving interoperability and seamless information flow across government, as set out in the “Minimum Interoperability Standards (MIOS) for Information Systems in Government”; and

Data must be collected for planning and operational purposes and include data per transaction on location, fare and Commuter. Examples of reports required are as follows: o Revenue per bus o Fees and banking charges o Revenue per route o Revenue per depot o Exception reports (e.g. Surplus and shortage report).

Banking

The following was required:

Reduce/Eliminate daily cash banking;

Direct deposit from commuter to the bank;

Reduce bank charges and fees;

Eliminate manual counting of cash;

The AFC is uses bank issued fare media; and

Payment system must adhere to the banking and payment regulatory framework.

Commuter Service

The following Commuter service needs were identified or recommended:

Convenient access to purchasing of the fare media;

Speed up the boarding and disembarking; and

Value-added services. For example: o Use of the value for small purchases (groceries, airtime, parking etc) o Access fare value through other credit facilities (e.g. retail account) o Easy loading of value through banks account and other retail outlets.

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2.2. Tshwane Rapid Transit (TRT)

The objective of the TRT is to ensure the effective and efficient implementation of the new IRPTN service in the City. According to the High level Business Framework for the BRT/IRPTN Project, adopted by the COT Council on 26 April 2012: the required investigation in terms of section 78 of the Local Government: Municipal Systems Act 32 of 2000, needs to be conducted to determine the appropriate institutional structure for TRT. This could either be an internal or an external mechanism, established to manage and take full control of TRT. It was further resolved that in the interim and until such time as the section 78 investigation has been finalised, TRT will be managed and controlled through an internal department of the City, which will control and manage external service providers, for example the Bus Operating Company, the AFC Agent and the Station Management Contractor. The outcome of the section 78 investigation is currently unknown.

The following functions may typically be executed by TRT:

Operations

Back Office Functions

Fare Establishment

Finance and Administration

ITS

Marketing & Communications

Legal & compliance

Planning

The TRT operations team will manage the operations through contracts with the likes of, amongst others, the AFC Agent, Bus Operating Company and the Station Management Company.

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3. THE FARE COLLECTION SOLUTION

3.1. Strategic Options

The manner in which an AFC System is deployed and managed can vary significantly depending on the CoT’s objectives, but most significantly on the risk appetite of the CoT. The AFC System forms the key component of the fare collection system, which encompasses more than just an AFC System, but includes other, related and complementary services, such as cash-in-transit, ticket inspectorate, customer services, an issuing bank and an acquiring bank. In considering the structural arrangement, through which fare collection would be performed, several options were considered, all of which would provide the same service, but each has different implications for the CoT. The table below outlines the fare collection options considered for the TRT and TBS.

OPTIONS A B C Description AFC Agent provides AFC

equipment, CoT operates fare collection system.

AFC Agent provides, operates and maintains AFC equipment, CoT manages non AFC fare collection functions.

AFC Agent provides all fare collection services (turnkey).

Responsibility AFC Agent

CoT AFC

Agent CoT

AFC Agent

CoT

Design AFC System

Build AFC System

Install AFC System

Operate AFC System

Maintain AFC System

Ticket Inspectorate

Customer Services

AFC System Training

Interim ticketing solution

CIT

Issuing Bank

Distribution

AFC System Pilot

Reconciliations

Marketing

Contract management

Risk Low High Medium Medium High Low

A key requirement for the CoT (in the context of fare collection) in the development of a BRT/IRPTN, is to minimise the CoT’s risk. With the full fare collection service outsourced to a AFC Agent, as in option C above, the contractor (the AFC Agent), is fully responsible for all components of fare collection on the system. In order for automatic fare collection to be effective and to achieve all the objectives, the whole process must be driven by an entity or entities that have the necessary knowledge, expertise, capacity and skills to ensure its success. Apart from achieving the AFC objectives, there are other related factors that require consideration. The AFC Agent would be responsible for the appointment and management of staff members operating and maintaining the AFC System. The appointed AFC Agent needs to have the necessary AFC system, knowledge and skills to design, build and install, operate and maintain the AFC System. The turnkey approach would also prevent the duplication and possible confusion of roles between the AFC Agent and the CoT, which may occur if the full responsibility of fare collection is shared between the AFC Agent and the CoT or between the AFC Agent and another appointed entity. A full

...or.... ...or...

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turnkey solution would also result in a complete risk transfer to the AFC Agent and centralise the management and operations of this highly technical system.

Considering the current and future capacity of the CoT to support the installation and operation of a new AFC System, it is strongly recommended that the AFC Agent be appointed to provide a turnkey solution for AFC. A highly effective business and organisational structure is required to ensure that all objectives are achieved.

3.2. The AFC System

The AFC System forms the backbone of the fare collection system, and the efficiency and efficacy of the AFC System is paramount to realising the full benefits available through this service when applied to the TBS and TRT systems. For that reason, the AFC System is critical to the success of the IRPTN. AFC systems have been successfully implemented internationally and elsewhere in RSA, and are recognised as an effective and efficient system to maximise revenue collection and minimise fare evasion.

3.2.1. Objectives of Automatic Fare Collection

Key objectives of the AFC System are:

Maximise fare collection

Minimise fare evasion

Alignment to regulatory environment

Decrease fare collection and related costs (operating costs)

Simplify purchase and payment process

Ensure correct fares are collected

To be cashless

Increase ridership

Interoperability

Improved commuter convenience and Commuter service

Streamline and simplify fare administration

Enable greater revenue collections with decreased labour volumes

Increase system flexibility and affordability

Create a pleasant commuter experience

Increase security and safety of IRPTN staff and Commuters

3.2.2. System Design Principles

The AFC System design will be founded on the following principles:

Proven efficiency

Reliability

Scalability

Flexibility

Security Excellence

Robustness

Interoperability

Integration with other ITS systems

Bank issued fare media acceptable (EMV compliant)

Cashless system

Flexibility in fare structure

Confidentiality

Fast process

Cost effectiveness

Minimum disruption to stakeholders to be caused

Compliance to local and international standards

3.3. High Level Business Framework

The development of the IRPTN is intended to transform the public transport system in Tshwane by providing a high-quality and affordable public transport system in line with National Policy, with the intention to reduce overall journey times for commuters and to improve access between residential areas and major economic nodes in Tshwane.

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The following diagram reflects the high level business framework for the BRT system and their respective relationships with the CoT in the context of the BOC, AFC Agent and Station Management. TRT and TBS are not directly linked though both fall under the control t of the CoT.

Figure 1: High level business framework for the BRT System

2

The different role players responsible to ensure effective fare management are the CoT (TRT and TBS), the Bus Operating Company (BOC), the Station Management Contractor and the AFC Agent. Each of these role players will contain different functional teams and units.

The BOC will be a private sector orientated bus operating company who provides bus operating services with a standardised fleet of buses. It will comprise of current affected public transport operators (minibus taxi and bus operators) along the TRT corridor. Some or all of the affected operators will be transformed into shareholders within the BOC, while others who choose not to become shareholders will receive fair compensation.

The Station Contractor will provide services at all closed TRT stations along the trunk route. It will fulfil the role of general station management and maintenance, provide security services, act as the system ‘ambassador’ and connect with Commuters while performing their tasks.

The AFC Agent is responsible for managing and operating an effective fare collection system which will encompass automatic fare collection, EMV, and top up vendors. The appointment of the AFC Agent agent through the Supply Chain Management policy of the CoT, will serve to outsource both the management of fare collection as well as the associated risk of fare evasion.

2 Conceptual High Level Business Framework for the Bus rapid Transport/IRPTN Project, Ref No: V9/2/2/3/6/10

BRT DEPARTMENT and Control Room

Fare Collection

Agent

Station management

`

AFC Contractor

LVP Merchants

Stations / Ticket Offices

Issuing / acquiring Bank

Station Maintenance

Station Management

Station Security

Taxi Operators Bus Operators Tshwane Bus

Services

Bus Operation Company

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3.4. Regulatory / Legislative Framework

3.4.1. The Constitution of the Republic of South Africa, 2006

Schedule 4, Part B of the Constitution lists “municipal public transport” as a local government matter to the extent set out in section 155(6)(a) and (7) of the Constitution. Municipal public transport is therefore a municipal service area, mandated by the Constitution.

3.4.2. The National Land Transport Act 5 of 2009

Public transport is a constitutional capacity awarded in different scopes and forms to all three spheres of government, with the more specific legislative function captured and specified in various pieces of legislation, the most important being the National Land Transport Act 5 of 2009, (the NLTA).

Section 11 of the NLTA inter alia allocates the following functions to the municipal sphere of government being:

11(1)(c)….

“(xviii) the planning, implementation and management of modally integrated public transport networks and travel corridors for transport within the municipal area and liaising in that regard with neighbouring municipalities;

(xx) introducing, establishing or assisting in or encouraging and facilitating the establishment of integrated ticketing systems, the managing thereof including through-ticketing and determining measures for the regulation and control of revenue-sharing among operators involved in those systems;

(xxi) subject to standards set by the Minister under section 5(5), if any, set standards for interoperability between fare collection and ticketing systems in its area;

(xxiii) in the case of gross cost contracts for subsidised services, determining fare structures and fare levels and periodically adjusting fares after publishing the proposed adjustment for public comment;

(xxiv) determining concessionary fares for special categories of passengers in the prescribed manner;

(xxv) exercising control over service delivery through-

(i) the setting of operational and technical standards and monitoring compliance therewith; and

(ii) the monitoring of contracts and concessions;

(xxvi) concluding subsidised service contracts, commercial service contracts, and negotiated contracts contemplated in section 41 (1) with operators for services within their areas;

(xxvii) developing and managing intelligent transport systems for their areas in the prescribed manner;…”

If a municipal sphere of government has at the date of the promulgation of the NLTA performed a function listed as a national government function (this includes acting as contracting authority for subsidised service contracts, interim contracts, current tendered contracts and negotiated contracts already concluded) the municipality may continue to do so (section 11(5) of the NLTA).

It is therefore be clear that the NLTA provides a clear legislative framework for the scope of the proposed AFC Strategy and services required by the City.

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3.4.3. Regulations Relating To Integrated Fare Systems, 2011 (Government Notice R511 in Government

Gazette 34363 of 17 June 2011)

These Regulations were published by the Minister of Transport under Section 8(1)(b) of the NLTA in consultation with the MECs for Transport. These Regulations were issued to determine and set the requirements for AFC Systems and the implementation of such systems in public transport projects. The Regulations set inter alia the minimum interoperability requirements for AFC Systems and the management and ownership of data collected through such systems. The key principle governing the Regulations can be summarised as follows:

To achieve an integrated AFC System for public transport that is interoperable nationally, containing the following elements:

o AFC must be implemented through any Bank Issued Fare Media; o AFC must be interoperable through all Participating Banks; o Clearing and settlement of payment transactions must take place through the National

Payment System in accordance with the National Payment System Act, 1998 (Act No. 78 of 1998);

o Banked Commuters must be able to use Bank Issued Fare Media obtained as a result of their relationship with any Participating Bank;

o Unbanked Commuters and those Commuters who do not bank with a Participation Bank, must be able to obtain prepaid stored value Bank Issued Fare Media from a Participating Bank or a third party card issuer operating in conjunction with a Participating Bank;

o The payment system must adhere to the banking and payment regulatory framework; o The DoT AFC Data Structure must be loaded onto all Bank Issued Low Value Payment

enabled Fare Media.

Any AFC Agent services would therefore have to comply with the regulatory framework set out in these Regulations.

The National Department of Transport Electronic Fare Collection Guideline Document, October 2008 (public draft), highlights the following points:

Ensure interoperability between various public transport modes to ensure seamless travel.

AFC should be flexible to meet the diverse needs of commuters and offer suitable travel products.

Apart from regular fares, concessionary fares may form part of the fare types being available to Commuters.

3.4.4. Local Government: Municipal Finance Management Act 56 of 2003 (Act 56 of 2003), (the MFMA)

and the relevant Division of Revenue Act, (DORA)

Municipalities derive income from various sources such as, but not limited to:

(i) Own revenue generated by means of rates and taxes;

(ii) Equitable share allocations from the National Government; and

(iii) Special funding such as grants that are accompanied by conditions attached to the expenditure, normally restricting the utilisation of the funds to specific matters. Such funds may only be utilised for the exact purpose allocated to the municipality.

The MFMA regulates the way municipalities utilise funds allocated to or raised by municipalities for services such as public transport. Any AFC System implemented or commercial transaction associated with the procurement or set up of such a System would therefore have to comply with such legislative restrictions and/or requirements.

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4. AFC SYSTEM DRIVERS

The AFC Strategy is informed by key policies, strategies and decisions that have been made, since the commencement of the project, many of which bear reference to the AFC Agent and fare collection in general. This section of the AFC Strategy outlines the external (existing reports, policies, strategy documents) and internal (BRT project team decisions and proposals) which have influenced the strategic direction for the AFC Agent, as well as the specific responsibilities proposed for the AFC Agent.

4.1. External Drivers

4.1.1. TRT Fare Policy

The Fare Policy for both TRT and TBS are subject to the CoT’s general Fare Policy. To the extent that TBS’s Fare Policy will require amendment, it will take cognisance of the TRT policy and the CoT’s direction.

During the development of the TRT’s Fare Policy, consideration was given to various policy directives of the National and Provincial spheres of Government to ensure that the TRT’s policy framework supports the local, provincial and national objectives. The Fare Policy is however defined in more detail on matters pertaining to the BRT system itself, the CoT environment and its specific needs. The CoT’s approval of its Fare Policy Principles is imperative to support further development of the proposed fare regime.

The Fare Policy and Structure for the IRPTN3 report outlines the guiding documents on the National and Provincial spheres of Government, which included the following:

White Paper on Transport Policy (1996);

National Land Transport Act (NLTA, 2009);

Division of Revenue Act (DoRA);

National Land Transport Act, 2009 Regulations relating to Integrated Fare Systems, GN R511 GG34363/17-6-2011; and

Integrated Fare Management (IFM) Framework prepared for Gauteng Department of Roads & Transport, February 2012.

The Fare Policy was also informed by the Integrated Transport Plan (2006-2011) and has been developed to support the Metropolitan Spatial Development Framework (MSDF) objectives. In this respect the urban edge is defined as a virtual development boundary and serves to control urban sprawl. This is done by mandating that the area inside the boundary be utilised for higher density urban development. Similarly the area outside the urban edge should be utilised for lower density, green open spaces and/or agricultural use and/or conservation or no development.

The TRT system will also support the MSDF by ensuring that the network, in particular the trunk line, supports the more densely populated zones in the CoT. The entire TRT system, inclusive of feeder routes should not penetrate outside the urban edge. In addition, the fare structure may endeavour to assist the longer distance travellers by ensuring that the shorter distance travellers cross subsidise the longer distance travellers, but only up to a point within the urban edge.

The typical elements of a Fare Policy, including statements on the Purpose, Vision, Goals and Objectives and finally Strategies, are set out in detail in the Fare Policy. The Fare Policy provides the necessary guidance required to develop the Fare Structure, Fare Levels, Fare Rules and a TRT Fare Regime together with modifications to the TBS Fare Regime. The Policy recommends the Fare Structure from which the Fare Levels are considered and calculated.

3 Fare Policy & Structure for the IRPTN: Phase 1 BRT, Consolidated Report Aug 2012

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4.1.2. TRT Fare Structure4

4.1.2.1. Fare Structure Influences

An appropriate fare structure for the City's IRPTN will be focused on:

The minimization of the operational subsidy requirement;

Redressing of historical imbalances; and

Sustainability of quality service and affordability issues.

Treasury Conditions as set out in the DoRA, the socio economic status of the different users (advantaged and disadvantaged) as well as the future objectives of Public Transport for the City have been considered. The CoT approach calls for finding the balance between affordability, financial sustainability of the system and service quality, presenting a challenge for the Municipality and it needs to be considered carefully. While it is possible to adopt a fare structure that appropriately redresses historical imbalances through affordable fares, it had to also be acknowledged that the cost of operating an improved quality system like TRT or an upgraded TBS system is not cheap and therefore it will be a challenge to recover the cost entirely from the fare box. It is therefore imperative for the CoT to adopt a Fare Structure that strongly supports the policy objectives.

4.1.2.2. Structure

The proposed zonal fare structure, where a certain rate is charged to the commuter for travelling within a certain zone, is proposed as the most favourable structure for TRT for the following reasons:

It is able to combine the features of a flat fare and distance based fare and could harmonise affordability and optimization of revenue and could reduce subsidy requirements;

The structure is easy to understand and implement;

It could present the same advantages to contain urban sprawl as for the distance based fare structure option depending on the composition of the access and distance base elements.

For the proposed zonal fare structure, a flat fare is charged for embarking and disembarking within a single zone and each specific zone has its own base fare. This effectively means that the further away from the embarking zone a commuter travels the more distance becomes a factor which means that fare level becomes more expensive.

Other options, for instance a straight-out flat fare or pure distance base fare regime, have been considered but were not proposed for the Tshwane fare structure. The flat fare structure means that a Commuter pays a fixed amount regardless of how far or long the specific trip is on a specific service. The distance based fare structure is based on fares being calculated according to the distance travelled by a commuter. This is typically the distance between the boarding stop and the alighting stop of the Commuter.

The zonal fare structure is the preferred fare regime as against a complete flat fare or a pure distance based fare regime for the system as is seen as a hybrid model between the two5. The TBS structure is likely to remain the relatively simple zonal structure that it is currently. Ideally in the longer-term the TRT and TBS structures should merge into one fare structure and become aligned. However, the possibility of a distance based fare structure exists, and consequently the AFC Agent must be capable of implementing this strategy as well.

4 Fare Policy & Structure for the IRPTN: Phase 1 BRT, Consolidated Report Aug 2012

5 IRPTN Project Management Unit: Fare Policy & Structure for the IRPTN Phase 1 BRT Ref: V9/2/2/3/6

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4.1.2.3. Composition

The composition of the fare structure consists of:6

a base (access) fare for each initial boarding (trunk, complementary and feeders);

a distance based kilometre fare (to be confirmed for TBS and TRT); and

the base (access) fare will apply as a flat fare for short internal zone trips, i.e. for travelling within a zone on a feeder service without accessing the trunk or making use of the trunk within a zone. The intention is that this fare will be similar to the typical average short distance local trips of the taxi industry.

In the case of TBS, the current zones may be reviewed going forward. For TRT there are currently six zones proposed for Phase 1. These zonal boundaries will be reviewed and the carefully considered, in order to promote the Fare Policy objectives. This will contribute to the flexibility of the structure and therefore will be considered as a technical requirement in the system setup. Some of the larger zones may be split into sub-zones7. Any zone crossed will activate the appropriate fare to be charged to the commuter. End points of zones will be indicated by major station stops and will be immediately identifiable.

As is the case with current TBS policy, the structure will make use of discounted fares for certain categories of commuters. Potential categories / structures identified are expanded below.

4.1.2.4. Products

The use of fare products will be investigated further with the appointed AFC Agent. Typical products which may be introduced on the system may include:

Time Based Products

Single and Limited Multi Trip Fare Products

Valid for a number of inbound and outbound trips on a specified route. It is valid for a period expiring on the date specified thereon. A fixed fare price is charged for the product at a discount.

Off-peak Fare Product available to commuters at a discounted rate.

Services charge commuters different fares depending on the demand during the time period when the service is used. A discounted rate is charged for off-peak time periods.

Complimentary Passes

A specific group of commuters are targeted for discounted or free passes (typically due to their age)

Concessionary Fare Products

Concessionary Fare Products

A product only suitable for utilisation by specific Commuters who qualify for discounted fares.

Other Products

Loyalty Schemes Tourism Deals

4.1.2.5. Discounts for Concessionary Fares

Concessionary fares are geared to attain specific strategies in terms of specific identified market segments, such as people with special needs. Concessionary fares on the system will be considered for its social contribution by making the system accessible to more users as well as for the impact on the finances of the system.8 It is recommended that the TRT concessions are aligned in this regard.

6 Fare Policy & Structure for the IRPTN: Phase 1 BRT, Consolidated Report Aug 2012 pg 140

7 Fare Policy & Structure for the IRPTN: Phase 1 BRT, Consolidated Report Aug 2012 pg vii


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4.1.3. Fare Levels and Proposed Fares

The fare level refers to the amount of money charged to the Commuter for using a public transport service. A crucial issue for consideration here is which costs are classified as costs of operation. The current DoRA directive in this respect is that the fare revenue should cover the direct operating cost of the Operator, excluding the capital cost of the bus. The fares charged to Commuters constitute operating revenue (i.e. the majority of revenue), and may be supplemented by additional revenues from, for example, advertising and rental of commercial space. The estimation of fare levels is often an iterative process where fares, other income and subsidies are calculated until a balance with sufficient political support is achieved.9

A proposed approach to calculating the various fare levels is set out in the table below.

Type Fare Structure Fare Level

DEFAULT FARES

Commuter travels only in one zone (starting and ending in the same boarding zone)

Zonal rates charged when initially embarking in a specific zone and then disembarking in the same zone called a Zonal Flat Rate.

Flat Rate equivalent to the access fare value; applicable from any point in that zone to any other point in that zone;

Commuter travels in more than one zone (cross zone boundaries)

Zonal rate charged when initially embarking in a specific zone & then disembarking in a different zone called a Cross Zonal Rate.

Flat Rate, applicable to a trip from any point in the origin zone to any point in the destination zone; with a value equivalent to the access fare and additional fare for every zone boundary being crossed.

CONCESSIONARY FARES

Pensioner travels only in one zone (never out of this zone) Only off peak & weekends

Zonal Flat Rate Flat Rate as per the default fares less % discount

Pensioner travels in more than one zone (cross boundaries) Only off peak & weekends

Cross Zonal Rate Flat Rate as per the default fares less % discount

Toddlers travels only in one zone (never out of this zone)

Zonal Flat Rate Free

Toddlers travels in more than one zone (cross boundaries)

Cross Zonal Rate Free

Children/scholars/students travel only in one zone (never out of this zone) Only off peak & weekends

Zonal Flat Rate Flat Rate as per the default fares less - discount

Children/scholars/students travels in more than one zone (cross boundaries) Only off peak & weekends


Pensioner travels only in one zone (never out of this zone) Only off peak & weekends

Zonal Flat Rate Flat Rate as per the default fares less % discount

Pensioner travels in more than one zone (cross boundaries) Only off peak & weekends


MULTI JOURNEY DISCOUNTED FARES

Weekly Product (10 trips)

Weekly Zonal Flat Rate Flat Rate for the product as per the default fares x10 – %Discount


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travels only in one zone (never out of this zone)

Weekly Product (10 trips) travels in more than one zone (cross boundaries)

Weekly Cross Zonal Rate Flat Rate for the product as per the default fares x10 – % Discount

Monthly Product (44 trips)

Monthly Zonal Flat Rate Flat Rate for the product as per the default fares x44 – % Discount

Monthly Product (44 trips)

Monthly Cross Zonal Rate Flat Rate for the product as per the default fares x44 – % Discount

4.1.4. Fare Media

Fare media refers to the physical media of the ticket. In theory this could be paper based, token, smartcard or a Near Field Communication (NFC) enabled Smartphone which will comply with NDoT Regulations. In line with the NDoT Regulations published in June 2011, all fare media used for payment of public transport must be EMV compliant. Accordingly, the AFC System which is to be developed for the TBS and TRT must be EMV and NDoT compliant. The principles of the fare rules will guide the strategy to be implemented as part of the AFC System. This enables the Commuters to use this fare media, in the form of a smartcard, to pay for public transport services, and to pay for other low value goods and services at any retail accepting the specific card scheme’s smartcards.10

4.1.4.1. Fare Media Strategy

The CoT intends to implement an AFC system that is an EMV enabled solution in compliance with the DoT Regulations. This will ultimately lead to an interoperable smartcard that will be reloadable, supported by a financial institution and will be useful for a variety of fare products. These smart cards will work in conjunction with access control systems at entering and exiting points of the stations on the trunk routes, and dependant on access control option chosen, potentially feeders as well.

The AFC Agent must work with the issuing bank to provide Commuters with a Contactless EMV compliant card, as well as with other banks who issue EMV cards, to collect the TRT and TBS revenue from their Commuters who use the system in order to align with the IRPTN objectives.

The AFC System must be specified and designed such that it is easy to introduce new products at any time. In accordance with the Gauteng Department of Roads and Transport’s Integrated Fare Management (IFM) Framework, the functional design of an AFC System must enable three forms of integration:

1 Fare Media Integration: This could also be called interoperable fare media and refers to the capability of different fare collection systems to accept the same fare media (in this instance a bank‐issued smartcard containing a prescribed AFC data structure as per the NDoT Regulations).

2 Structure Integration interoperable fare media and refers to the capability of different fare collection systems to accept the same fare media (in this instance a bank‐issued smartcard containing a prescribed AFC data structure as per the NDoT Regulations).: This type of integration refers to the adoption of a single or compatible fare structures (such as flat fare, distance‐based, zonal, or time‐based fares) by different transport Operators.

3 Fare Integration: Integration of fares refers to the ability to charge a Commuter once for a journey that uses the services from more than one transport operator.

The product types and structure must enable all three forms of integration. The development of new products is the responsibility of the City. The implementation of new products, both in the Commuter

10

Fare Policy & Structure for the IRPTN: Phase 1 BRT, Consolidated Report Aug 2012 pg 76

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domain and in the back office is the responsibility of the AFC Agent. The City will agree with the AFC Agent what product changes are required.

4.1.5. Fare Rules

Fare rules are introduced in order to integrate different services, operators and modes. The objective of the fare rules is to provide the CoT with rules that govern the operations of the AFC System, in particular those which govern the calculation and operations of the fares. Fare rules are designed to be flexible, scalable and expandable and therefore will be reviewed continuously and amended from time to time to ensure its alignment with the Fare Policy and its applicability as the fare system evolves. Any material amendments must be approved by the CoT. The Fare Rules will be provided to the appointed AFC Agent. The rules will be designed to be more flexible and accommodating to the public by doing away with rigid validity periods, thereby creating goodwill as promoted in the Fare Policy.

The Fare Rules apply to all bus transport services provided by TRT and TBS. The Fare Rules will not apply to the following transport institutions:

Metro Rail.

Shuttle Service.

Metered taxis.

In the case of the TRT and TBS, some of the typical Fare Rules that are important are those relating to11:

Transfers;

Validity periods;

Timing and approach to fare increases; and

Commuter qualification for concessionary fares.

4.1.5.1. Transfers

The decision to provide and facilitate transfers between the TRT and TBS services (including inter-service transfers) can have a high impact on the systems usage levels as well as on the service price. While Commuters value the possibility of transferring highly, it does have operational and administrative challenges. The CoT strives to provide more people with access to public transport, which approach would require a feeder and distribution service to be operational. Free transfers (or not charging another access fee) will be allowed within a certain time frame in order to encourage people to use the feeder services, and to make transfers as seamless and painless as possible for the commuter.12 In an effort to promote the new TRT and TBS services as a whole, the timeframe for free transfers will be standardized within the CoT from the onset in that transfers are free of charge within a particular timeframe. Once the timeframe has passed the access fee will be charged again. This timeframe may be adjusted as required.

4.1.5.2. Validity Periods13

Validity period relates to the time period that the different products will be valid for.

Pay as you go

For ‘pay as you go’ users can load a certain amount (A maximum of R 1500 per load as per the Regulations in terms of the Financial Intelligence Centre Act, 2001) on the smart card and the value can be used on the system up to a point when the value runs out. The value on the smart card does not expire. However the

11

Fare Policy & Structure for the IRPTN: Phase 1 BRT, Consolidated Report Aug 2012 pg 76 12

Fare Policy & Structure for the IRPTN: Phase 1 BRT, Consolidated Report Aug 2012 pg 76/112 13

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smart card expires after three years, at which time the balance on the smart card may be transferred to a new smart card.

Weekly and monthly products

Weekly or monthly products will have a buffer period built into the product validity period, to allow for unforeseen circumstances, which may prevent the user from utilising the full product in the validity period. The AFC System will introduce less rigid validity periods that are currently in use in other transport services. The following discounted travel passes are currently being considered by TRT:

A 10 trip weekly pass with a 10% discount, valid for 7 to 10 days.

A 44 trip monthly pass with a 20% discount, valid for 35 to 40 days

4.1.5.3. Fare Increases

Any future fare increase will as a first priority cover all operational costs (as per the current DoRA conditions), or if that is not possible, the ratio between fare income and operational subsidy should gradually decrease over a number of years until such time that operational cost coverage can be achieved. Fare increases will happen in a standardized, transparent and predictable manner, based on a formula and process that can be defended with integrity if required. Escalation time frame for the fare levels will be set out in the Fare Policy and will include a process of public participation, at the commencement of the financial year of the vehicle operator, which in all probability should be on 1 July of each year. The Fare Adjustment Formula will be specified in the Fare Policy.

4.1.5.4. Commuter Qualification for Concessionary Fares

Concessionary fares are typically based on a specific market segment. This market segment usually includes pensioners, children, scholars and people with disability. Concessionary fares on the BRT system will have to be considered for its social contribution by making the system accessible to more users as well as for the impact on the finances of the system. The Fare Policy and Structure for the IRPTN Phase 1 BRT, proposes the following:

People over the age of 60 are allowed a 20% discount on all trips when travelling during the off peak and over weekends. No discount is applicable during peak period travel.

All children under the age of 3 are allowed a 20% discount on all trips when travelling in the off peak and over weekends.

Scholars get a 20% discount on all trips when travelling in the off peak and over weekends

People with disability do not qualify for concessionary fares.

4.1.6. TRT Ticketing Strategy

The TRT Ticketing Strategy14 presents a high level overview of the AFC System to be used for the TRT project. The Ticketing Strategy was developed within the structure of the Fare Policy, and it outlines a number of the requirements and processes for the AFC System which have informed this Strategy. These include:

Proposed Fare Structures

Details of the AFC, including:

o Branding

o Cost of smart cards

o Registration

o Smart card Purchase and Top-up Infrastructure

o Bank Top-up fees

14

City Of Tshwane, IRPTN Project Report, Ticketing Strategy, 16 April 2012

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Ticketing functional requirements including among others:

o Transfer between Feeder / Trunk / Complimentary Services

o Access charges

o Maximum Fare

o Penalty fares

o Minimum balance to travel

o Low Balance Warning

o Negative Balances

o Payments to Operators

o Future Fare Structures (flexibility for new pricing mechanisms etc.)

o Trunk Route Stations

o Hand-Held Ticket Readers

o Multiple Language Support

The Ticketing Strategy will continue to be a key input in the preparation of the relevant technical specifications, fare rules and fare policy amendments.

4.2. High Level Policy Statements

The development of the AFC Strategy has incorporated the following principles, based on the high level policy statements flowing from the Fare Policy:15

The fare structure will support the principle of containing urban sprawl, and also appreciate and support contradicting policy principles such as providing affordable transport to low income displaced communities.

The system will be financially sustainable within budget constraints.

The principle of cross subsidization is unavoidable in terms of concessionary user groups, long and short distance Commuters and socio economic differentiation and will therefore recognize discounted fares for regular users.

Revision and annual increases in fares will be based on a transparent process, inclusive of public participation.

The national policy directive that the fare levels should be benchmarked against the existing minibus taxi fares is supported and has been incorporated.

4.3. Internal Drivers

4.3.1. Distribution Strategy

A fare media distribution strategy is important to ensure that there is sufficient market penetration and that fare media and top-up facilities are easily accessible Commuters. The distribution strategy extends beyond simply delivering fare media to points of sale, but rather encompasses the entire distribution process, from ordering, distribution and sale of fare media (ticket offices/kiosks, ticket vendors, TVM’s and the equipment and technology at points of sale themselves).

Making the fare media easily accessible to those who wish to use the TBS and TRT systems, will contribute significantly to improving access between residential areas, major economic nodes and the Tshwane CBD, which is a key aim of the IRPTN.

Several options were considered when determining responsibility for fare media distribution, which included outsourcing to a third party (not the AFC contractor), the COT performing this role, utilising TRT

15

Fare Policy & Structure for the IRPTN: Phase 1 BRT, Consolidated Report Aug 2012

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and / or TBS staff, or letting the AFC Agent perform this role. Whilst these options are plausible, the intention of the CoT is to have the AFC Agent provide a turnkey solution which reduces the CoT’s risk. Removing the fare media distribution from the AFC Agent, and ultimately the AFC contractor, is undesirable as it would result in responsibility and accountability complications between the parties involved, as well as increased risk in the instance of the CoT, (TBS or TRT) performing this role. It is subsequently proposed that fare media distribution is performed by the AFC Agent.

Under the above arrangement, to ensure an effective distribution strategy will require the interactive participation of three main roles players: The CoT, the AFC Agent and the Issuing Bank.

The City of Tshwane

CoT will not be directly involved with the distribution ‘process’, however as the effectiveness of the strategy has direct cost implications for the CoT, input will be provided to the AFC Agent where necessary, and through formalised processes.

The AFC Agent

As part of the distribution strategy, the AFC Agent will be responsible to:

Order the smart cards from the Bank and nominate a central delivery point.

Deliver the smart cards to the various authorised resellers;

Manage and run Ticket Offices, Station Kiosks and Customer Care Centres where commuters can buy and activate their Cards;

Provide the necessary equipment to enable smart cards sales and activations at stations;

Provide for smart card sales and top up services at Station Kiosks;

Provide for TVM’s at the Stations; and

Contract vendors where necessary to sell smart cards to commuters.

The Issuing Bank

(as part of the AFC Agent)

As part of the distribution strategy the Issuing Bank will be responsible to:

Order the cards from the manufacturer;

Issue and deliver the cards timeously at the point indicated by the AFC Agent;

Provide a network of LVP merchants who will provide top up facilities along the TBS and TRT routes along with smart card sales

The location of fare media sales and loading points must be strategically situated to support the TRT and TBS systems. This requirement translates into these points being situated in close proximity to the TBS and TRT stops, along with key strategic points of congregation within the service area. The exact number of sales points as well as the location criteria will be determined with the appointed AFC Agent.

4.3.2. Access Control

TBS is currently an “open system” with no physical access controls (gates, turnstiles...) in place, which poses significant risk of fare evasion. Minimising fare evasion is one of the CoT’s key objectives for the IRPTN system, and access control forms the cornerstone of that strategy. The introduction of physical access controls on the TBS buses would prove problematic due to the high Commuter volumes and single entry / exit doors on the buses. An access control system, which accommodates the high volumes of bi-directional Commuter traffic, is required on the TBS system. The AFC Agent is required to propose options for the TBS service, which allow high volume, bi directional Commuter traffic.

The TRT service will be a closed system on the trunk routes, where gates will provide controlled access to the service at stations. However, on the feeder and complementary routes, Commuters will have to validate their cards on the vehicles. Consequently, on these routes access control is required for kerbside Commuter loading in the same manner as TBS, and the appointed AFC Agent must propose options to the City in this regard.

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4.3.3. Interim ticketing solution

Provision must be made for the risk that the AFC System is not ready for operation in April 2014, the planned system “go live” date, in the form of an interim ticketing solution. The use of the current TBS ticketing system is a potential consideration since it is operational already, TBS staff are already familiar with it, and it would be scalable with minimal effort and cost. However, the AFC Agent should propose an interim ticketing solution, anticipated to be a basic Contactless EMV compliant e-ticket solution. Should this solution be rolled out due to circumstances beyond the AFC Agent’s control, the CoT will discuss the solution with the AFC Agent and agree costs and terms and conditions. Should the interim ticketing solution be required due to AFC Agent related delays, the cost of implementing this solution will be carried by the AFC Agent. Penalties may be imposed in this event. It is anticipated that if the AFC System in not operational by February 2014, the interim ticket solution will need to be implemented. This is the key milestone, as the AFC System pilot should run for at least 8 weeks. If the AFC System pilot in not underway by February 2014, then the probability of the AFC System going live in April 2014 is highly unlikely, and consequently the interim fare collection solution must be deployed.

4.3.4. Location Services

The AFC System requires location data in order to determine Commuter fares. This location data can be sourced from the Advanced Public Transport Management System, or it can be generated and reside in the AFC System itself. The implications of obtaining this data from the APTMS system are that a data interface between the AFC and APTMS systems would be required. A simpler option exists in building the location data into the AFC System itself, and as a result the AFC System will have no need to integrate with the APTMS system to obtain location data and calculate fares. This option is recommended as it removes the risk of this integration not being ready for the go-live date.

4.3.5. Communication Infrastructure

AS part of the UTC contract, the UTC Contractor will implement a communiations network to link TRT stations and other fare collection points. This will build upon existing City of Tswhane fibre connections and extend it with other fibre and wireless links as appropriate. This communications network will serve as the backbone to the AFC Agent communication.

As a result the AFC Agent’s responsibility is to provide the detailed communication requirements at stations and depots to the communications contractor.

The role of the UTC Contractor is to incorporate in their communications design the optical fibre backbone between the TRT Control Centre and the stations and depots. This shall include all fibre links, wireless access points, cabling and network switches required by the AFC System, configured to ensure secure and reliable communication of all the fare-related data This design must also consider the use of other communication media to provide redundancy, security and robustness. The AFC Agent is responsible for any additional communication media to satisfy specific fare collection requirements around redundancy, security and robustness, including sufficient capability to deal with failure of the communications system.

4.3.6. Penalties and Fines

Penalties and fines must be built into the AFC System. Both penalties and fines in an AFC System share the same objective, which is to reduce fare evasion, though they differ slightly in their application. Penalties are automatic charges made to a card by the AFC System when:

The card holder enters the system by “tapping in”, but not “tapping out”; or

Enters the system without “tapping in” and exits the system by tapping out.

Fines will be charged where Commuters are caught evading fare payments or making other transgressions as outlined in the new CoT By-laws, applicable to the TRT. Penalty fares to be applied will be indicated in

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the Fare Policy, however, the amount of the fare in most AFC Systems is set as the maximum fare on the system. The Fare Policy will determine the penalty and fines values on the TRT and TBS services. The penalties will be determined annually as part of the CoT's fare determination process through an appropriate Tariff of Charges, whilst the fines will have to be determined by the Chief Magistrate.

4.3.7. Risk Management

The approach to Risk Management by the AFC Agent must be proactive and meticulous. The specific strategic approach to risk management should be co-developed with the CoT upon appointment. It is envisioned that an international used and approved approach will be utilised and deployed.

Risk Management should be planned, risks identified, qualitative (prioritising) and quantitative (effect) analysis performed and risk responses planned to develop options and actions to enhance opportunities and reduce threats to objectives. Ownership of risks is of critical consequence to the AFC Agent and must be clear.

4.3.8. Training

In order for the AFC System to operate effectively, the personnel who utilise the system need to be informed and trained on the system and its equipment. A significant number of non-AFC Agent personnel will have interactions with the AFC System and its various components. These staff will include but are not limited to bus drivers, station management and COT customer feedback personnel. Two options were identified and considered to ensure all applicable staff and appropriately trained on the AFC System:

1. AFC Agent are responsible to train all applicable non AFC Agent personnel; or 2. AFC Agent implements a “train the trainer” system, and the CoT subsequently becomes

responsible for training the non AFC Agent personnel.

In the context of the AFC Agent providing a turn-key solution, it is proposed that the AFC Agent be required to provide training to these personnel on the AFC system, as well as any related/supplementary systems/processes involved in fare collection. This is a significant undertaking given the personnel numbers involved. Indicative figures point to 500+ bus drivers eventually, customer feedback staff, cashiers etc, all of which will require training on the AFC equipment that they will need to operate and utilise.

4.3.9. Ticket Inspectorate

Ticket inspections will form an intricate part of minimising fare evasion, which is a key objective and requirement of the fare collections system. The options that were considered for ticket inspections on the TRT and TBS services, included:

Using AFC Agent personnel across both services.

Using the existing TBS staff on both systems.

Using AFC Agent personnel on the TRT system and existing TBS staff on the TBS system.

Using an external, independent third party to perform ticket inspections.

The advantage of the AFC Agent performing the inspectorate role on both services is that as the fare collection agent, they have full control on the function, and can be incentivised to minimise fare evasion. The use of TBS staff on both systems would require additional resourcing since the current capacity would need to be increased to accommodate the additional buses and trips. However, the major drawback of this option relates to the accountability and responsibility arrangements which would need to be set up and managed between the AFC Agent and TBS. An independent third party may be a viable option, however, since the AFC Agent is responsible for all fare collection, removing the control of this function from the AFC Agent may create responsibility issues. It is proposed that the fare inspectorate is performed by the AFC Agent.

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4.3.10. Customer Service

The provision of customer service centres along the routes, where Commuters may enquire about the service, obtain information relating to the AFC System, fares, routes, stops/stations, general customer service queries, as well as provide customer feedback must be implemented. This is especially important in the first months of operation as commuters learn the system and how it operates.

For the purposes of this AFC Agent strategy, the following options were considered from an infrastructure perspective:

Create new centres;

Utilise the TRT stations and TBS ticket offices;

Utilise the existing TBS and CoT customer service centres; or

A combination of the above.

It is proposed that the TRT stations and TBS ticket offices, as well as the existing CoT Customer centres are used, as this will minimise the requirement for new customer service centres being set up. The CoT has existing centres which provide customer service for other CoT services, and the addition of the TBS/TRT services can be made.

From a resourcing perspective, the options considered were:

AFC Agent provides personnel at these locations to deal with the AFC related customer service queries.

AFC Agent train the current (and / or new) TBS, TRT and CoT staff in these centres on the AFC System to enable them to dispense the advice and information Commuters will require.

It is proposed that the AFC Agent train the current (and / or new) TBS, TRT and CoT staff at these centres to deal with AFC related queries.

These recommendations would need to be linked to the detailed strategies being developed for the TRT to govern customer service operations and any proposals developed as part of the TBS transformational initiative.

4.3.11. Cash In Transit (CIT)

CIT services could be outsourced to a third party, or included in the AFC Agent service. The CoT’s strategic requirement that the AFC Agent provide a turn-key solution tends towards the inclusion of the CIT solution in the CA’s responsibilities, as this would ensure the AFC Agent has full control of the fare collection process, and would reduce the risk for the CoT. It is consequently proposed that the AFC Agent provide secure cash collection services to recover cash from stations TVMs and ticket offices. The CIT services will be centralised and be managed by the AFC Agent for both TBS and TRT.

4.3.12. Commercial Requirement

The City aims to use the AFC System to achieve enterprise development and Broad Based Black Economic Empowerment (BBBEE). The following are some of the commercial requirements of the City in this respect:

Suppliers of the AFC System must be between level’s 1 to 5 BBBEE contributor in order to qualify;

The AFC System must have significant local content;

Suppliers must propose funding options for the system; and

The sale and distribution of the fare media to benefit local SMME’s.

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5. THE RESPONSIBILITIES OF THE AFC AGENT

The diagram below illustrates the relationship the AFC Agent will have with TBS and TRT, and indicates the major functional areas of responsibility of the AFC Agent.

Figure 4: Over-arching responsibilities of the AFC Agent

The banking services (highlighted in white) could be included part of the AFC Agent contract or a separate contract. This contract approach is discussed in Section 8.2.

The AFC Agent will provide fare collection and related services to the new TRT services and TBS. The highest level, and based on the decision that the CoT requires a turnkey fare collection solution, the AFC Agent’s responsibility is to Design, Build, Install/Implement, Operate and Maintain a fare collection system which will service the TRT and TBS systems.

5.1. “Design” the AFC Agent System

AFC Agent Responsibility: Design Fare Collection System

AFC Equipment The AFC Agent is required to provide a “turn-key solution”. The CoT will provide detailed user requirements/technical specifications, with which the AFC System must comply. Consequently the AFC Agent will be fully responsible for the design elements of the fare collection system, including:

Based on the technical specifications and user requirements for the AFC System, which will be provided to the AFC Agent, the AFC Agent is responsible for the

Design Build Install Maintain Operate

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design of the AFC System.

Provision of hardware at stations to allow Commuters to purchase compliant cards, top-up cards and purchase multi-trip tickets.

Design of the penalty policy into the system.

TVM’s must issue fare media as well as enable top ups.

Include location services in the AFC System design.

Design of the AFC back-office in compliance with the technical specifications and user requirements.

Recommendation and design of an access control system(s) which meet TBS and TRT user requirements, specifically traffic volumes.

Design of an interim ticketing solution.

Design and provide detailed communication requirements at stations and depots to the communications contractor. Ensure that all designs can integrate- and are compatible with TRT and TBS physical and technical/software infrastructure.

Fare Media The AFC Agent (along with the issuing bank) is responsible for designing fare media which is EMV and DoT compliant, and to allow the introduction of new products at any time, and in compliance with the Gauteng Department of Roads and Transport’s IFM Framework. The functional design must enable:

Fare Media Integration.

Structure Integration.

Fare Integration.

Training The AFC Agent is responsible for the design training material on AFC system, to be used to train and educate non-AFC Agent staff on the system.

Customer Service The AFC Agent is responsible for the design of customer service processes and media, in conjunction with CoT marketing, specifically for AFC related customer service issues.

Cash in Transit The AFC Agent is responsible for the design or and alignment of CIT processes to the AFC cash management processes.

5.2. “Build” the AFC System

AFC Agent Responsibility: Build Fare Collection System

AFC Equipment The AFC Agent is fully responsible for the “build” components of the Fare collection system, including:

Based on the design on the AFC System, the AFC Agent is responsible for the sourcing, procurement and/or building of the necessary AFC System hardware and software including TVM’s, access control solutions, location services systems and back office equipment, which complies with the design specifications and user requirements.

Provision of fare media issuing equipment. The same fare media will be used across both systems so only one set of fare media issue equipment is required.

Provision of at least one TVM at each TBS Ticket Office and TRT Station.

Making provision for an interim ticketing solution, and sourcing, procuring and building any resources required to implement it.

Fare Media The AFC Agent (along with the issuing bank) is responsible for sourcing and procurement of EMV and DoT compliant fare media, which also allows the inclusion of new fare products.

Training The AFC Agent is responsible for the development and documentation of training material on AFC System, to be used to train and educate non-AFC Agent staff on the system.

Customer Service The AFC Agent is responsible for the development and documentation of Commuter service processes and media specifically for AFC related Commuter service issues to be dealt with in customer service centres.

Cash in Transit The AFC Agent is responsible for the development, documentation and alignment of CIT processes to the AFC cash management processes.

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5.3. “Install and Implement” the AFC System

AFC Agent Responsibility: Install and Implement Fare Collection System

AFC Equipment As a turn-key solution, the AFC Agent is responsible for the installation and implementation of all fare collection equipment, including:

Installation of all AFC equipment and TVM’s at all fare media sale and top up points, including at least one TVM at each TBS Ticket Office and TRT station.

Installation and set up of an AFC Back-office in compliance with the design specification and user requirements.

Installation of access control systems on new TRT buses, and retro-fitting of access control systems in TBS buses, as applicable.

If required, implementation of an interim ticketing solution.

Fare Media The development of new products is the responsibility of the City, however the implementation of new products, both in the Commuter domain and in the back office is the responsibility of the AFC Agent.

Risk Management The AFC Agent is responsible for all risk management within ambit of fare collection.

Distribution The AFC Agent, as the key distribution strategy role player, will be responsible to:

Provide necessary equipment to enable smart cards sales and activations at stations.

Provide for smart card sales and top up services at Station Kiosks.

Provide for TVM’s at the Stations.

5.4. “Operate” the AFC System

AFC Agent Responsibility: Operate Fare Collection System

AFC Equipment Operation of all AFC equipment and systems at all point of sale locations, including fare gates, TVM’s and AFC terminals in ticket offices.

Sale of fare media to Commuters.

Operation of the AFC back office.

AFC reporting.

Ensure sufficient adequately skilled personnel are available to resolve AFC related issues, with minimal inconvenience to the Commuters and minimal interruption to the service, for the lifetime of the contract.

Operate and manage TVM’s in order to facilitate fare media distribution and improve accessibility to both TBS and TRT services.

If required, operation of an interim ticketing solution.

Perform ticket inspection on services, and fine transgressors as applicable, and in line with the CoT’s By-laws.

Risk Management Monitoring and management of all fare collection risks.

Training The AFC Agent is responsible for the provision of training on AFC system, to all non-AFC Agent staff on the system, as applicable. It is the AFC Agent’s responsibility to ensure the training structures are adequately resourced.

Customer Service The AFC Agent is responsible for resourcing and operating the AFC customer service ‘desks’ at the customer service Centres.

Cash in Transit The AFC Agent is responsible for the all CIT operations from TRT stations and TBS ticket offices, the reconciliation of cash against deposit slips, management of shortages, and depositing of cash into the specified accounts.

Reconciliations The AFC Agent will be responsible for all fare collection reconciliations from the stations and ticket offices via the back office. Integration of the AFC system with the CoT SAP system will be required in order to enable data transfer for reporting purposes.

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Ticket Inspections Inspection of tickets on TBS and TRT buses as part of fare evasion management.

Media Sales Staffing

The TRT structures will be fully staffed by the AFC Agent, however, it is currently foreseen that TBS may retain some of its current ticket office staff (cashiers). Should this scenario occur the final AFC Agent contract will include the appropriate arrangements between CoT and the AFC Agent to properly govern the AFC Agent management of the TBS employees. This is would result in an awkward scenario, and should ideally be avoided, as it may result in responsibility and accountability issues.

Distribution The AFC Agent will be responsible for all fare media distribution and the associated risks. The Issuing Bank with whom the AFC Agent engages would be responsible for the manufacturing of the fare media and delivery thereof to agreed and defined delivery points for both TBS and TRT services. Delivery points for TBS will typically be TBS station ticket offices and TVM’s, whilst for TRT these delivery points would include stations. For both TBS and TRT, selected merchants would be used to provide additional points of sale for Commuters.

The AFC Agent is responsible to:

Orders the smart cards from the Bank and nominate a central delivery point.

Delivers the smart cards to the various authorised resellers;

Manages and run Ticket offices, Station Kiosks and Customer Care Centres where commuters can buy and activate their Cards;

Contracts vendors where necessary to sell smart cards to commuters.

The purchasing and top-up of the bank issued fare media must be easily accessible to Commuters, and specific locations identified along the routes where Commuters can purchase a card or top up, within a maximum of 500 meters from each stop. The envisaged fare media sales channels would include:

Ticket offices at the TRT stations

TVM’s at the TRT stations

TBS ticket offices

Top up agents in the retail space

Online top up facilities

Mobile fare media sale/top up facilities were considered, however the based on the experience of other operators in South Africa, this options is not advisable due to the very high cost of security required to safeguard the fare media and funds in the mobile vending facilities. The AFC Agent, with the Issuing Bank, will contract a network of participating retail outlets to provide additional top-up facilities at shops and suitable locations close to the trunk and feeder networks.

System Pilot The AFC Agent is required to implement and operate a “system pilot” in order to fully test the fare collection system. The use of the TBS system is proposed by the CoT, however, the AFC Agent should evaluate alternatives and propose a pilot strategy. The pilot should occur for the two month leading up to the “go live” date of April 2014.

5.5. “Maintain” the AFC System

AFC Agent Responsibility: Maintain the Fare Collection System

AFC Equipment Fare collection equipment will be owned by the AFC Agent, and subsequently maintained by the AFC Agent, including:

Perform all maintenance and repairs required to all AFC equipment and systems, including TVMs, access control systems, location services systems and the back office will be the responsibility of the AFC Agent, which will be governed by appropriate agreements between the AFC Agent and the COT.

Provision of AFC maintenance reporting as appropriate.

Training The AFC Agent is responsible for the provision of ongoing training. The AFC Agent is responsible for:

Training new employees.

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Refresher training (as applicable). Additional training required due to system updates and changes or implementation of service extensions.

5.6. AFC Agent Responsibility Exclusions

AFC Agent Responsibility Exclusions

Marketing & Service Promotion

All marketing, branding and service promotion will be the sole responsibility of the CoT. The strategy of the City is to launch a Fare Media that is branded in line with the City’s Corporate Identity guidelines. The design of the branding and naming of the card will be done in conjunction with the City’s marketing department and also in line with the TRT marketing strategy. The promotion of the new Fare Collection system will be the sole responsibility of the CoT. The launch of the Tshwane smart card will be done both at a local and national level. This will form part of the build up to the TRT Inception phase in April 2014. The target here is to position the CoT as a smart city with a modern and efficient public transport system. At the initial stage, the promotion will be focused on educating the commuters. This campaign will educate the commuters to move people from the current TBS paper ticket and cash system to electronic fare media. The advantages of this for the Commuter will be highlighted and the transition must be trouble-free as possible, especially for the current TBS Commuters. From time to time the City will launch new products and specials to incentivise existing Commuters to use electronic fare media while attracting new Commuters to use the bus services in the CoT. The most effective media platform in the Tshwane area is local and regional radio stations. Although this may be more expensive than print, this platform reaches a wider audience, is multi lingual, and caters for illiterate commuters. Other platforms that will reach the commuters of the TRT and TBS services include press, internet, and outdoor advertising. The AFC Agent will be encouraged to come forward with marketing ideas and feedback.

Branding Fare media will be CoT branded and a robust marketing strategy will be required to ensure brand awareness, an understanding of the new system and how the fare media works. The CoT is responsible for all marketing.

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6. HIGH-LEVEL SYSTEM OVERVIEW

6.1. Overview

The AFC System comprises an issuing aspect and an acquiring aspect. The AFC Agent is responsible for the successful implementation, maintenance and operation of both. The issuing aspect incorporates the contract with the issuing bank, the ordering and delivering of smart cards, the distribution of smart cards and the top-up and selling of products. The acquiring aspect incorporates the contract with the acquiring bank, fare rules to be implemented, fare payment including access control and fare collection, reconciliation, reporting and customer relationships.

6.2. Fare Media (CoT Card, Branding)

The fare media is a bank issued EMV low value payment smart card. The main stakeholders in the manufacturing of the card are the bank, MasterCard or Visa and the CoT.

The smart card is a banking payment instrument which can be used in transport and retail. The user therefore has an agreement with the issuing bank regarding the use of the card. This agreement is supplied by the bank with each smart card when the user receives the card.

The role of CoT is to act as an agent for the bank to distribute the smart cards to their customers. CoT can brand the bank cards with their own branding to promote the use of the smart cards in transport. The role of the AFC Agent is to liaise with the marketing department of CoT and the bank to ensure that the branding process is according to the applicable standards and requirements.

The AFC equipment is capable to load value onto the smart cards (top-up), redeem value from the smart card in return for the required fare and use the transport data structure on the smart card for transport-related functions such as reading and recording boarding and alighting information.

A hybrid model is proposed for fare collection. The Hybrid model is a combination of the card-centric and the back office-centric models. The general characteristics of these two models are outlined below:

Card-centric: The smart card holds data regarding the Commuter (optional), loaded monetary values, transit information such as boarding and alighting times and positions, and transport products such as weekly or monthly travel passes. Validators at stations and on-board buses reads the relevant information off the card, does fare calculations using this information and the fare rules and subtracts the appropriate value from the smart card and/or allows the Commuter on/off the vehicle according to the relevant transport product just validated.

Back office-centric: The smart card holds only a card ID which links the card holder to an account with the card issuer and/or transport agency responsible for collecting the fares. Transport products are bought from the transport agency and linked to the smart card ID. This information is stored in the back office database. For certain products it might be required from the Commuter to register on the database with their personal details. Validators at stations and on-board buses will confirm the validity of the smart card against a blacklist and forwards the smart card ID and transit information of the Commuter to the back office. At the end of each day the transit information of the Commuter is evaluated and checked against the transport product database. All the trips and journeys done by the Commuter are evaluated, the fare rules are applied to this and the relevant products and the appropriate fare collection action is taken.

The value of a back office-centric model lies in the ease of integrating transport products over several operators and even fare collection agencies.

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A hybrid model based on the combination of the aforementioned models is proposed for the TRT and TBS services. In principle the card-centric model will be utilised to calculate zone and distance based fares during tap-on and tap-off when there are no transport products available on the smart card. If the Commuter bought any transport product for use on the TRT (and other related transport services) then a flag will be set in the secure data structure to indicate that a product must be used instead of the monetary value. When the validators recognise this flag the smart card ID and relevant transit information is recorded and sent to the back office for reconciliation and/or apportionment. The data structure on the bank issued EMV smart card will be used in all circumstances to record the transit information during tap on and tap off.

The value of the hybrid model is the fact that more than three transport products per smart card are available for Commuters on COT transport services.

6.3. Equipment

The AFC Agent will handle the issuing and acquiring functions of both TRT and TBS. The equipment used for AFC will be the same on both the TRT and TBS. The responsibilities of the AFC functions are as explained in the table below.

Function Responsibility

Issu

ing

Designing, manufacturing of cards Bank, CoT, AFC Agent*

Distribution – physical infrastructure (buildings) TRT, TBS

Distribution – equipment infrastructure AFC Agent

Distribution – People AFC Agent*, TBS

CIT AFC Agent

Funding account CoT

Acq

uir

ing

Physical infrastructure at stations TRT, TBS

Equipment infrastructure AFC Agent

People – inspectors AFC Agent

Control centre AFC Agent*, TRT, TBS

Holding account AFC Agent *Denotes lead

6.3.1. Issuing Equipment

Cards will be delivered to TRT station kiosks, TVM’s and TBS ticket offices for distribution to their Commuters. The AFC Agent together with the issuing bank is responsible for this. The selling of the cards will be controlled by the AFC Agent. The AFC Agent staff will sell fare media at the TRT station kiosks and the TBS staff will sell the cards at their ticket offices. The equipment required for selling cards are computers linked to the banking network and card readers. After the cards are sold, this equipment will activate the smart cards so that they can be used in the transport and retail environments.

The next step is for Commuters to load value on the smart card or buy transport products. The same equipment that is used for activation is also used for top-up and product loading.

Other means of top-up includes ticket vending machines (TVMs), which will also issue fare media. These machines must be linked to the banking network.

All equipment needed for issuing and top-up must be connected to the banking infrastructure via the internet or dedicated LAN. It is preferable that this connection is via a network cable infrastructure, but a wireless connection may also be used if no other permanent fixture option is available. The connectivity must be guaranteed to have specific uptime percentage, which would need to be agreed with the AFC contractor. For TRT premises, these communications shall be provided as part of the UTC Contract.

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Backup and failsafe systems must be in place to ensure this, as if the system is not operational, Commuters will not be able to load value on the fare media.

6.3.2. Acquiring Equipment

6.3.2.1. Tshwane Bus Services (TBS)

The AFC system in respect of TBS will only be implemented on its buses. There are currently no plans for closed stations on the TBS routes. On-bus validators will be placed at all the doors on TBS buses. The validators will be linked to a control unit and a communication interface which will be used to temporarily store and transmit the transactions to the back office. This on-board equipment will include the generation of location information for the AFC’s own use.

The transmission of the information would take place at the TBS depot. The relay for this transmission includes Wi-Fi equipment to receive the data from the bus, linked to a fixed line network that communicates via the internet or LAN to the back office. The use of 3G data transmission was considered however, due to the large data volumes being transferred, the Wi-Fi options is less costly, and there is less risk of connectivity loss.

The on-board validators will include physical access control that restricts entrance into and out of the bus. This gate must be retrofitted to the existing TBS buses, must be compact in design and as indicated earlier must not inhibit Commuter embarking/disembarking rates.

6.3.2.2. Tshwane Rapid Transit (TRT)

TRT stations are controlled environments where Commuters enter an enclosed area on the station before entering the bus along the trunk routes. This area has access gates with validators controlling their function. The TRT buses will have access doors on the left and right hand sides. The left hand side doors will provide access to streets and the right hand side doors will provide access at stations. Only the doors on the left will need on-board validators to allow users to tap on and tap off when entering or exiting the bus on street level and not at closed stations.

The transmission of the information would take place at the TBS depot. The relay for this transmission includes Wi-Fi equipment to receive the data from the bus, linked to a fixed line network that communicates via the internet or LAN to the back office. The use of 3G data transmission was considered however due to the large data volumes being transferred, the Wi-Fi options is less costly, and these is less risk of connectivity loss. The validators at closed stations will communicate via the optical fibre network to the back office.

6.3.3. Certification

All the equipment that is used for fare collection must be EMV and Terminal Integration Process

(TIP) certified from the banking industry. The AFC System must also be Department of Transport certified before going live. Certification is a key dependency and has timescale risk implications. The AFC Agent is responsible to identify the certification requirements and ensure the risk is managed. However, the preferred approach is to appoint a supplier whose AFC system already has these certifications to minimise these risks.

6.4. Links to other TRT / TBS systems

The AFC control centre for TRT and TBS will be in the new Transport Control Centre building. The AFC back office equipment will be hosted in this building. The role of the control centre is for the AFC Agent to manage and report on all functions of the AFC System. Other TRT and TBS systems that require information from the AFC System will obtain it from the AFC Agent at the control centre.

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On-bus equipment: The AFC equipment must be able to function without operator intervention and individually without inputs required from on-board equipment operated by third parties, specifically GPS location inputs.

Logon: This is the exception to the abovementioned statement. Drivers must be able to logon only once when they start their shift. It is envisioned that the same logon equipment must enable the start-up/activation of the AFC equipment. An override for this must only be accomplished through supervision/depot intervention.

SAP Reporting: The CoT SAP system must be linked to the AFC System to enable the CoT to receive performance and financial data in order to generate reports.

On an infrastructure level the AFC System will communicate to the back office via the TRT and TBS optic fibre backbones. This is the optical fibre network running from the TRT stations to the Transport Control Centre building. In the case of TBS this will be the LAN or internet network coming from the bus depot and ticket offices.

6.5. Integration

Integration between the following ITS functions/suppliers are required at various levels:

AFC System

APTMS, including scheduling

Fleet Management

The places where integration is needed are:

On-board vehicles

On stations

At Control Centre / Back Office

On-board equipment integration

The AFC equipment must be able to function without operator intervention and individually without inputs required from on-board equipment or the APTMS system.

Integration is required for logon or start-up to allow drivers to logon only once when they start their shift. This single logon must also enable the start-up/activation of the AFC equipment.

The same power supply from the bus must be used by the different ITS subsystems. Each system must be isolated from the power supply so that the equipment does not affect the power supply in terms of noise, spikes, etc.

During installation each system will need its own physical space. Each subsystem must not affect the installation of any other subsystem.

On Station equipment integration

Only the communication infrastructure from the station to the Control Centre will be shared amongst the subsystems.

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Control Centre Integration

The communication infrastructure of the Control Centre will be shared amongst the different subsystems. This includes the backbone communication to the stations and possibly connection to the internet. The different subsections also need to communicate with each other for co-ordination purposes. As part of the co-ordination between the different systems is a reporting requirement. Reporting formats must be co-ordinated so that it can be integrated in other systems to satisfy their requirements. Examples are:

Financial reporting from the AFC System to SAP applications.

In the case where Fleet Management location based information is unavailable the required information could be taken from the APTMS or AFC Systems.

Commuter counting done by the APTMS system must be used to verify and/or rate the effectiveness of the AFC System.

The functionalities to be integrated are shown in the table below.

6.6. Redundancy / Security Considerations

On-board equipment on the vehicles is connected to the vehicle’s battery. If this power is not available the validators cannot read cards and allow access. All AFC equipment on the busses must have a power backup in order for the validators to be available. No other on-board ITS equipment will be operational in such a case and the vehicle will not be able to operate on routes where Commuters board and alight from the roadside. The vehicle must then be sent to the depot for repairs to the battery/electrical system.

Station based equipment must have standby power in order to power the equipment in the case of a power failure. UPS power at stations will be supplied by the electrical contractor. It is proposed the AFC Agent install additional power back up systems, to ensure uninterrupted power supply at all times.

AFC APTMS, incl. Scheduling Fleet Management

Integration

required

On

-bo

ard

Location services (GPS) Location services (GPS) Location services (GPS) No

Card Readers Commuter & outward displays Engine sensors No

Voice announcer, Cameras,

Commuter Counter No

Driver interface - LCD, mic,

speaker

Driver interface –

logon/logoff tag/screen Yes

Comms – 3G/Wi-

Fi/Port Comms – 3G/Wi-Fi/Port Comms – 3G/Wi-Fi/Port No

Control Unit Control Unit Control Unit No

Installation Installation Installation Yes

Power supply Power supply Power supply Yes

On

sta

tio

n Card Readers Commuter displays

No

Gates Announcers

No

Issuing Equipment

No

Communication Communication Communication Yes

Co

ntr

ol C

entr

e /

Bac

k O

ffic

e

Database Database Database No

Applications Applications Applications No

Comms Comms Comms Yes

Infrastructure –

Displays, workstations

Infrastructure – Displays,

workstations

Infrastructure – Displays,

workstations No

Reporting Reporting Reporting Yes

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The AFC back office systems must have an automated failover system to ensure maximum uptime, the percentage is to be agreed with the AFC Agent. In addition back up communications between the station equipment, depot equipment, back office and bank must be in place at all times.

In the case where the AFC System cannot be utilised in its entirety a backup system must be employed to give users access to transport. This must consist of handheld readers that can hold one day’s transactions and that can download the financial transactions to PC’s or the back office. Handheld readers will be used by inspectors during normal operations. In the case of other validators not being able to function because of power problems the same handheld units will be able to be used as validators. The AFC Agent must ensure the required resourcing is available to perform this should the situation arise, and operating procedures developed.

6.7. Flexibility to cater for changing TRT/ TBS requirements

The stored value being used for fare collection from the smart card is the basic product. Additional products are stored on the back office and the fare rules determine the validity of the cards in the system. For the products to be utilised, the tap-on and tap-off information of the users is sent to the back office and the fare rules are applied. When new products are implemented the fare rules will be changed in the back office to accommodate them. New products must not require the users to change their tap-on and tap-off behaviour.

6.8. Approach to future integration with other systems (Gautrain, Rea Vaya)

The fare media to be issued by CoT is interoperable between all modes of transport and all AFC Systems which conform to the NDoT AFC Regulations. All fare media issued by other AFC systems can also be accepted on the CoT AFC system.

In order to achieve integration between two AFC systems e.g. TRT and Gautrain, the agencies responsible for each AFC system must put an agreement in place stipulating what level of integration is required, including the transport products offered. Under this scenario a further level of reconciliation is required to do the apportionment of fares.

It is foreseen that the apportionment will be done either by a Level 4 back office under the control of the Gauteng Province or an entity specifically charged with the apportionment function of the relevant parties. Alternatively it is also possible for either one of the parties to do the level 4 functionality for both parties.

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7. FUNDING OPTIONS AND FINANCIAL IMPLICATIONS

7.1. Funding Options

Among the key objectives of the CoT with respect to the AFC Agent agreement is that it is structured in such a way as to minimise both the cost and the risk to the City as far as possible. Clearly there is an inevitable trade-off between cost and risk, but the contract and funding arrangements will take into account the City’s capacity for both cost and risk and must strive to find the optimal balance between the two.

Ideally, from the CoT’s point of view, the AFC System should be as self-funding as possible, thus minimising capital expenditure requirements. The AFC Agent will thus have a full end to end responsibility for the AFC design, supply, service and maintain agreement, i.e. be responsible for all the hardware, software and the physical collection of fare revenue. The question arises however as to how the funding of this arrangement should be optimally structured, particularly with respect to the AFC equipment that will be required.

In this regard, the following options have been identified:

1. The AFC equipment is wholly owned by the AFC Agent and the cost thereof is entirely funded through the revenue generated by the TRT and TBS services. This would represent the lowest risk for the City but at potentially the highest cost.

2. The AFC equipment is wholly owned and purchased by the CoT. Although this may prove to be the lowest cost option (particularly if funded through the PTIS Fund – see section 7.2. below), but equipment ownership, maintenance and all the responsibilities associated with upgrading and replacement would reside with the CoT thus increasing the City’s risk considerably.

3. The AFC equipment is owned by the AFC Agent, but the initial capital expenditure required to purchase of the equipment is “funded” by the CoT (through the relevant funding sources outlined in section 7.2 below), either be through an initial capital payment to the AFC Agent or through an on-going leasing arrangement. This would represent a relatively low risk option for the City as ownership and all the associated responsibilities would rest with the AFC Agent but funding would be possible through mechanisms other than revenue generation.

National Treasury has clearly stipulated that PTIS Grant funding may only be utilised if the infrastructure to be funded is owned by the CoT. This means that Option 3 cannot be further considered. In considering the appropriate funding option, it is recommended that either: a) The decision on the preferred funding option is taken now and only that option is included in the Terms of Reference for the AFC Agent procurement process. This would allow for a more straightforward evaluation of the bids but may exclude any potential innovative proposals by the bidders; or b) Bidders are requested to provide for both Options 1 and 2 above in their proposals, allowing the City to make a decision on the preferred option based on these proposals. Although this would provide more comprehensive information on which the CoT can base the decision, it does present a greater risk in that the procurement and evaluation process increases in complexity. The forecast financial implications of Options 1 and 2 outlined in section 7.4 below provide further insight into the proposed option.

7.2. Sources of Funding

Where funding for the system is to be provided, the Conceptual High Level Business Framework for the BRT/IRPTN Project as presented to Council on 26 April 2012 cites the following available sources:

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The Public Transport Infrastructure System (PTIS) Fund - Treasury will provide the majority of the system establishment funding from this Fund. The extent of this funding is an indicative budget of R2.5 billion to the end of the 2015 financial year, as published in the DoRA. However, the DoRA grant conditions that are applicable for the use of the PTIS Fund stipulate that IPTN/IRPTN systems must recover all direct operating costs from fare revenue and other funding sources. The Fund is therefore primarily for infrastructure establishment. However, the Fund can be fairly flexible form and structure of mechanisms used to fund infrastructure. It is understood that on the basis of appropriate motivations to National Government, it may be possible to utilise the Fund for ongoing equipment leasing payments. Further investigation is required in this regard.

Existing Treasury Commitments - These relate to commitments to existing bus services in the Tshwane area that may now be extended to include the TRT system. This (the Public Transport Operating Grant (PTOG)) amounts to more than R1 billion per annum but only a portion of that may be incorporated into the TRT system. The extent of this transfer is still under investigation.

Current CoT allocations to TBS - These are current allocations to the TBS system that may be extended into TRT services. The extent of this possible resource is still under investigation..

In addition, there is a separate fund allocation for the transformation of TBS. This fund is primarily to be used to fund new buses, but may also be used to procure the AFC equipment.

7.3. Revenue Generation

The main sources of revenue for TRT and TBS systems are as follows:

Fare Revenue – Total revenue for TBS currently is estimated at approximately R80 million per annum. Fare revenue for the TRT System may generate between R150 to R200 million per annum from about 2015 when the majority of the system will be implemented.

Sale of Fare Media – Some revenue may be generated from the sale of the physical fare media (EMV cards) to commuters. However, the CoT may decide to either partly or fully subsidise the fare media, most likely through the PTIS Fund. This revenue will decline over time as commuters only need to replace their smart cards after three years.

A self-funding system will require that this revenue be sufficient to cover both the capital and operational costs associated with the AFC Agent and the operational cost of providing the TRT service.

Detailed payment terms for the AFC Agent Contract have yet to be determined, but the payment terms under consideration are as follows:

Payment of all the costs of the AFC Agent as a percentage of the fare revenue. This will place all the costs of the fare collection system on operating expenditure and may exclude the use of the PTIS fund.

Payment of equipment leasing costs as a fixed fee and operating costs as a percentage of fare revenue. The PTIS Fund may be available for the equipment leasing costs.

An initial capital expenditure sum to be paid by the CoT to the AFC Agent for the purchase of the AFC hardware, which will be owned by the AFC Agent. Operating costs are to be paid as a percentage of revenue.

The CoT has committed to carrying the revenue risk for both the TRT and TBS systems. Any payments as a percentage of fare revenue therefore will need to be underwritten by a minimum ridership forecast to be guaranteed by the City.

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The relative merits and financial implications of the funding and revenue models are further unpacked in section 7.4 below and a final decision will be required from the CoT for the purposes of the technical specifications to be included in the AFC Agent terms of reference.

7.4. Financial Model

Based on other AFC system benchmarks, and in particular the experience of the City of Johannesburg on

the Rea Vaya system, an indicative forecast financial model for the fare collection function of TBS and TRT

through an AFC Agent has been prepared. The model has been based on the AFC turnkey solution

proposed in this strategy and has taken into account the estimate capital and operating expenditure that

is envisioned for the implementation and operation of the AFC System by an AFC Agent.

7.4.1. Roll out of Buses and Stations

The planned roll out of buses and statins for TBS and TRT is outlined in the following tables:

7.4.2. Key Revenue Assumptions

TBS fare revenue is estimated to be approximately R80 million per annum by the year ending April 2015 as

a result of improvement interventions currently underway. Thereafter the model assumes an average 5%

annual increase in fare revenue.

TRT fare revenue is based on the TRT Operations Plan and is in line with the stepped implementation of

Phases 1a to 1d of the TRT system.

Estimated revenue for both TRT and TBS from the year ending April 2015 to the year ending April 2020 is

summarised in the following table:

Vehicle Description Apr-2015 Apr-2016 Apr-2017 Apr-2018 Apr-2019 Apr-2020

Annual Revenue TBS 80,000,000 84,000,000 88,200,000 92,610,000 97,240,500 102,102,525

Annual revenue TRT 19,000,000 166,000,000 284,000,000 357,000,000 461,000,000 531,000,000

TOTAL ESTIMATED FARE REVENUE 99,000,000 250,000,000 372,200,000 449,610,000 558,240,500 633,102,525

TBS AND TRT ESTIMATED FARE REVENUE PROJECTIONS

Vehicle Description Apr-2014 Apr-2015 Apr-2016 Apr-2017 Apr-2018 Apr-2019

Number of Buses - TBS 232 0 0 0 0 0

Number of buses to be fitted (rigid) - TRT 20 10 12 15 18 12

Number of buses to be fitted (artic) - TRT 0 76 26 0 0 0

TOTAL NEW BUSES PER YEAR 252 86 38 15 18 12

TOTAL BUSES - TBS AND TRT 421

TBS AND TRT BUS ROLL OUT

Ticket Office Description Apr-2014 Apr-2015 Apr-2016

Number of Ticket Offices - TBS 4 0 0

Number of Stations - TRT 10 9 19

Number of Terminal Stations - TRT 1 1 1

Number of Walk-in Centres 2 0 0

TOTAL 17 10 20

TBS AND TRT STATION/TICKET OFFICE ROLL OUT

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7.4.3. Capital Expenditure Assumptions

Total estimated capital expenditure required fo the implemetation of an AFC System by an AFC Agent is

detailed in the following table:

Capital expenditure includes all equipment and software as well as licensing and supply related services

(project management, integration, training etc.).

Expense DescriptionEstimated

Cost (ZAR)

Back office software 12,900,000

Top up and payment software 17,140,000

Supply related services 33,800,000

Back Office hardware 180,000

POS machines - stations 10,560,000

POS machines - terminals 1,440,000

Vending Machines - stations 35,200,000

Vending machines - terminals 9,600,000

Access gates - stations 25,080,000

Access gates - terminals 3,960,000

Handicap gates - stations 2,014,000

Handicap gates - terminals 318,000

Onboard access system - buses 12,992,000

Onboard validators - buses 18,524,000

GPS - buses 505,200

Handheld transit validators - Inspectors 180,000

Contingency 26,398,980

TOTAL CAPITAL EXPENDITURE 210,792,180

CAPITAL EXPENDITURE

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7.4.4. Operating Cost Assumptions

The key staffing and operating cost assumptions are outlined in the following tables:

Staff Description AllocationNumber of

Staff

Estimated

Monthly

Salary (ZAR)

Ticket Office Staff - TBS2 per shift, 2

shifts16 8,000

Station Staff - TRT2 per shift, 2

shifts152 8,000

Teminal Station Staff - TBS2 per shift, 2

shifts12 8,000

Walk-in Centre Staff1 per shift, 2

shifts4 10,000

InspectorsAllocated to

buses20 8,000

ManagementGeneral

supervision5 30,000

STAFFING RQUIREMENTS

Expense

Maintenance fee

Cash in Transit (CIT)

Stationery and Disbursement Costs

Bank fees and charges

OPERATING EXPENSES

Description and Assumptions

Cash in Transit supply and services. Has been estimated to

be approximately R3 500 per station per month.

General operating materials including stationery, equipment

consumables etc. Estimates based on benchmarks.

Includes switching costs, bank charges and commissions.

Estimated as a percentage of revenue based on benchmarks.

Includes general costs, software maintenance, back office

operations, technical maintenance and repair fees.

Estimates based on benchmarks.

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7.4.5. Financial Forecasts and Funding Scenarios

The model has considered two scenarios with two contract periods for each scenario, namely:

1. Capital Expenditure funded by the CoT and the AFC Agent’s Operating Expenditure is paid for out

of fare revenue:

a. 6 year Contract

b. 12 year Contract.

2. Capital Expenditure is funded by the AFC Agent and both Operating ànd Capital Expenditure is

paid for out of fare revenue:

a. 6 year Contract

b. 12 year Contract.

The financial forecasts in the tables below outline the scenarios described above and provide an indicative

view on the potential capital repayments and operating costs that can be expected for the AFC Agent.

Based on the expected fare revenue from the TBS and TRT systems, the tables also indicate the

percentage of fare revenue that will be required to cover the costs and repayments in each of the

scenarios.

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TBS and TRT Combined 6 year Contract

Fare Revenue

Year

EndingApr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20

Annual Revenue TBS 80,000,000 84,000,000 88,200,000 92,610,000 97,240,500 102,102,525

Annual revenue TRT 19,000,000 166,000,000 284,000,000 357,000,000 461,000,000 531,000,000

Total Revenue 99,000,000 250,000,000 372,200,000 449,610,000 558,240,500 633,102,525

AFC Agent Costs

Year

EndingApr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20

Staff for TBS fare collection 1,536,000 1,536,000 1,536,000 1,536,000 1,536,000 1,536,000

Staff for TRT fare collection 6,888,000 10,728,000 18,408,000 18,408,000 18,408,000 18,408,000

Maintenance fee 14,460,000 17,460,000 19,860,000 21,051,600 22,314,696 23,653,578

Cash in Transit TBS 168,000 178,080 188,765 200,091 212,096 224,822

Cash in Transit TRT 546,000 1,023,960 2,029,222 2,150,975 2,280,033 2,416,835

Annual Stationery and Disb. Costs 3,000,000 4,200,000 5,400,000 6,600,000 6,996,000 7,415,760

Estimated bank charges 495,000 1,250,000 1,861,000 2,248,050 2,791,203 3,165,513

TOTAL FARE COLLECTION COSTS (EXCL.

CAPEX REPAYMENTS)27,093,000 36,376,040 49,282,986 52,194,716 54,538,028 56,820,508

% of Fare Revenue 27% 15% 13% 12% 10% 9% Average: 12%

CAPEX Repayments 44,446,756 44,446,756 44,446,756 44,446,756 44,446,756 44,446,756

TOTAL FARE COLLECTION COSTS (INCL.

CAPEX REPAYMNETS)71,539,756 80,822,796 93,729,743 96,641,472 98,984,784 101,267,264

% of Fare Revenue 72% 32% 25% 21% 18% 16% Average: 23%

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TBS and TRT Combined 12 Year Contract

Fare Revenue

Year

ending Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Apr-22 Apr-23 Apr-24 Apr-25 Apr-26

Annual Revenue TBS 80,000,000 84,000,000 88,200,000 92,610,000 97,240,500 102,102,525 107,207,651 112,568,034 118,196,436 124,106,257 130,311,570 136,827,149

Annual revenue TRT 19,000,000 166,000,000 284,000,000 357,000,000 461,000,000 531,000,000 557,550,000 585,427,500 614,698,875 645,433,819 677,705,510 711,590,785

Total Revenue 99,000,000 250,000,000 372,200,000 449,610,000 558,240,500 633,102,525 664,757,651 697,995,534 732,895,311 769,540,076 808,017,080 848,417,934

AFC Agent CostsYear

ending Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Apr-22 Apr-23 Apr-24 Apr-25 Apr-26

TBS Staff 1,536,000 1,536,000 1,536,000 1,536,000 1,536,000 1,536,000 1,536,000 1,536,000 1,536,000 1,536,000 1,536,000 1,536,000

TRT Staff 6,888,000 10,728,000 18,408,000 18,408,000 18,408,000 18,408,000 18,408,000 18,408,000 18,408,000 18,408,000 18,408,000 18,408,000

Maintenance fee 14,460,000 17,460,000 19,860,000 21,051,600 22,314,696 23,653,578 25,072,792 26,577,160 28,171,790 29,862,097 31,653,823 33,553,052

Cash in Transit TBS 168,000 178,080 188,765 200,091 212,096 224,822 238,311 252,610 267,766 283,832 300,862 318,914

Cash in Transit TRT 546,000 1,023,960 2,029,222 2,150,975 2,280,033 2,416,835 2,561,846 2,715,556 2,878,490 3,051,199 3,234,271 3,428,327

Annual Stationery and Disb. Costs 3,000,000 4,200,000 5,400,000 6,600,000 6,996,000 7,415,760 7,860,706 8,332,348 8,832,289 9,362,226 9,923,960 10,519,397

Estimated bank charges 495,000 1,250,000 1,861,000 2,248,050 2,791,203 3,165,513 3,323,788 3,489,978 3,664,477 3,847,700 4,040,085 4,242,090

TOTAL FARE COLLECTION COSTS

(EXCL. CAPEX REPAYMNETS)27,093,000 36,376,040 49,282,986 52,194,716 54,538,028 56,820,508 59,001,443 61,311,652 63,758,811 66,351,055 69,097,001 72,005,780

% of Fare Revenue 27% 15% 13% 12% 10% 9% 9% 9% 9% 9% 9% 8% Average: 10%

CAPEX Repayments 27,556,274 27,556,274 27,556,274 27,556,274 27,556,274 27,556,274 27,556,274 27,556,274 27,556,274 27,556,274 27,556,274 27,556,274

TOTAL FARE COLLECTION COSTS

(INCL. CAPEX REPAYMNETS)54,649,274 63,932,314 76,839,260 79,750,989 82,094,302 84,376,781 86,557,717 88,867,925 91,315,085 93,907,329 96,653,275 99,562,054

% of Fare Revenue 55% 26% 21% 18% 15% 13% 13% 13% 12% 12% 12% 12% Average: 15%

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From the tables, the following conclusions can be drawn:

1. Scenario 1: If the CoT funds all capital expenditure (and owns all the equipment), the average

percentage of fare revenue that will be required to cover the AFC Agent’s operating costs over a 6

year contract period will be 12% of revenue.

2. Scenario 2: If the AFC Agent funds all capital expenditure the average percentage of fare revenue

that will be required to cover the AFC Agent’s operating costs and capital repayments over a 6 year

contract period will be 23% of revenue.

3. Scenario 3: If the CoT funds all capital expenditure (and owns all the equipment), the average

percentage of fare revenue that will be required to cover the AFC Agent’s operating costs over a 12

year contract period will be 10% of revenue.

4. Scenario 4: If the AFC Agent funds all capital expenditure the average percentage of fare revenue

that will be required to cover the ADC Agents operating costs and capital repayments over a 12 year

contract period will be 15% of revenue.

On the face of it, and considering the relative burden on fare revenue, the recommended scenario would

be that the CoT purchases and owns all the equipment, hardware and software through the use of the

PTIS Fund and that the AFC Agent is granted a 6 year contract whereby only operating costs are paid for

out of fare revenue. This financial forecast model will be further developed and will provide the basis for

the evaluation of the AFC Agent bids.

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8. CONTRACTUAL ARRANGEMENTS

8.1. Length and Form of Contract

The contract to be entered into with the AFC Agent will be based on the following broad principles: Fare collection will be the responsibility of the contracted AFC Agent and will:

Provide staff and hardware at stations to allow Commuters to purchase compliant smart cards, top-up cards and purchase multi-trip tickets. Where applicable (as may be the case with TBS ticket offices) the AFC Agent will arrange to utilise existing CoT staff;

Work with a bank to provide a CoT card and with other banks who issue EMV cards to collect the revenue from Commuters who use the TBS and TRT systems. The issuing bank will also be responsible for contracting a network of participating retail outlets to provide additional top-up facilities at shops and suitable locations close to the TRT trunk and feeder networks and to the existing TBS networks;

Provide secure cash collection services to recover cash from stations, ticket offices and other revenue offices; and

Be responsible for the maintenance of all the Fare Collection Equipment through the life of their contract.

The structure of the contract will include, inter alia, the following sections:

The AFC Supply Agreement which will include: o Supply of Technical Platform o Term o Purchase Price and Payment o Specifications for Supply o Project Plan o Technical Platform Design o Development o Installation

o Delivery and Acceptance Testing o Training o Documentation o Risk in Ownership o Representations and Warranties o Indemnities and Liabilities o Delays and Penalties o Suspension and Supply

The AFC Service Agreement which may include: o Appointment o AFC Services o Payment Media Services o Maintenance o Communication o Management of top-up payment

sub-system o On call services

o Additional Maintenance o Terms o Rights and obligations o Fees and Payment o Management meetings o AFC Service Incentives and Penalties o Warranties

Due to the CoT’s intention for the AFC Agent to be self-funding as possible, the AFC Agent contract would undoubtedly need to be longer than 3 years and consequently, Council approval of the AFC contract, in terms of Section 33 of the MFMA, is required.

The Contract will provide for those terms and conditions required to ensure compliance with all supply chain management provisions of the MFMA as well as other sections relating to contractual requirements, in particular section 116, providing inter alia for the following:

Termination of the contract in case of under or non-performance;

Dispute resolution mechanisms; and

Periodic review every 3 years.

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8.2. Approach to Banking Services

As the fare collection must be made through bank issued fare media, the Issuing Bank will be an integral part of the fare collection process and will have to work closely with the AFC Agent

Three options available to the City with regards to contracting the services of an EMV/LVP ready Issuing Bank were considered:

1. Utilise the CoT’s existing Corporate Bank. CoT currently has a corporate banking agreement with Standard Bank which runs to the end of 2017. Standard Bank is LVP/EMV ready. CoT can therefore extend the existing corporate banking contract to include the AFC banking services. Although from the CoT’s perspective this may be comparatively easier to set up and negotiate, the key disadvantage of this approach is that the City will not necessarily be sure that the most appropriate banking partner has been appointed at the best possible price. Furthermore, integration issues between the AFC Agent and the bank that they are, in essence, compelled to work with may pose significant risk for the City. The existing contract and the MFMA is currently being analysed to determine if the City is precluded from procuring AFC banking services from other banks.

2. Separate Tender of AFC Banking Services The CoT can put out a separate tender for AFC Banking Services and negotiate a separate contract with the Issuing Bank. AFC Agent and banking services would thus be governed by two separate contracts. Some of the advantages and disadvantages of this approach include:

a. More than one contract to manage; b. More control over Banking Services and other aspects; c. Lower costs can be negotiated; d. If a problem arises only that particular contract is in breach; and e. Integration risks.

3. Issuing Bank to form part of AFC Agent team.

Suppliers for the AFC Agent contract can be required to include a banking partner as part of their bids. The AFC Agent contract would thus be all inclusive and include the banking services as part of the overall, “one stop shop” contract. The relative advantages and disadvantages of this approach include:

a. All AFC functionality in one contract; b. One diverse contract to manage; c. Less control over different aspects of AFC; d. Higher costs if the banking costs are hidden in the overall AFC Agent contract; e. Will require special permission in terms of the MFMF, where two different banks supply Banking

Services to the City – this must be investigated further by the City’s legal department; f. If a problem arises with a portion of the contract the whole contract is in breach; g. Comparatively simpler integration issues; and h. AFC Agent is accountable.

Currently it is proposed that option 3 above be the preferred option, with the proviso that:

1. The CoT will request that all banking charges and fees be separately shown in the AFC Agent bids; and

2. The COT reserves the right to negotiate these fees with the preferred bidder.

The CoT will further reserve the right to periodically review the services of the AFC Agent and to replace any or all of the AFC Agent consortium members should the need arise. It is envisioned that such a review would take place within 3 years of the ‘go-live’ date which would correspond to the expiry of the corporate banking contract and would thus afford the CoT the opportunity to include AFC banking services in the subsequent corporate banking terms of reference if the Issuing Bank does not perform adequately. Changing the Issuing

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Bank during the term of the AFC Agent contract, in any of the above 3 scenarios, will pose risk to the CoT, due to the potential integration challenges which may emerge as a result, as well as increase costs for the CoT.

8.3. Performance Measurement and Monitoring

The AFC Agent will be responsible for the co-ordination and management of all AFC operations. It will thus be a requirement that the operations will be supported by standard operating procedures (SOPs) which the appointed contractor will develop in consultation with the CoT. During the finalisation of the specific scope of operations the performance standards will be drawn up and negotiated and agreed. Both the SOPs and the performance standards will be used to monitor the performance of the AFC Agent.

If the appointed contractor fails or refuses to render any of the required AFC Services, CoT will be entitled to deduct pre-determined penalties from the contractor, against fees payable. These penalties will be stipulated in the contract. In certain instances the CoT shall be entitled to cancel the contract with the AFC Agent should the CoT so desire.

The appointed contractor will hold management meetings with the relevant CoT representatives as required to keep the CoT informed of AFC operations. The AFC Agent will also provide CoT with regular reports, to be supplied in a jointly agreed format and at predetermined intervals. CoT may also request ad hoc reports at any stage. The CoT may appoint a representative to monitor the services rendered by the AFC Agent.

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9. IMPLEMENTATION OF THE AFC AGENT

9.1. Work Programme & Roll Out

The appointment of the AFC Agent is a critical step towards operationalisation of the TBS and TRT systems. The following table outlines the planned timing for the implementation of the TRT and TBS services.

Deadlines & Important Dates

Activity Deadline Date

Bid Evaluation Committee finalises tender specifications 8 November 2012

Tender for a AFC Agent advertised 9 November 2012

Close of tender 11 January 2013

Appointment of AFC Agent 1 March 2013

Contract negotiations / Section 33 Process March / April 2013

Project Inception April 2013

AFC System design, development, procurement, implementation and testing

April 2013 to February 2014

Pilot Feb 2014-April 2014

System goes live April 2014

The short timelines between the Tender being issued and the “go live” date” are a result of the deadline of April 2014 for the system to be operational, and the requirement to provide the appointed AFC Agent a 12 month implementation period.

9.2. System Pilot

As part of the system implementation and testing, and prior to the system going “live”, the AFC Agent will be responsible to run a “system pilot”. Whilst the AFC Agent is required to propose an approach to the pilot, it is proposed that TBS system is used as a pilot for the roll out of the Fare Collection System since it is currently an operational service, with buses, staffing and infrastructure in place. Whilst TBS would not allow full piloting of all AFC hardware, due to structure of the TBS operation, access control and lack of station infrastructure, it will enable the AFC Agent to pilot critical components. The pilot should start by February 2014 and be complete by go live.

9.3. Risk Assessment

The following risks have been identified for the process of procuring the supply of an AFC System and the

services of an AFC Agent. This list of risks represents a preliminary view at this stage of the process and will

form the basis of the risk register which will be maintained and updated as the process progresses.

Issues Risks Mitigation

Procurement process Delays in the publication of the tender

Request for extension by the service providers

Delay in appointment of the Service Provider

Legal challenges to the procurement process by service providers

AFC Agent/System procurement to be given priority at the different decision making committees including, BOC Steering Group, Bid Specification Committee, Mayoral Committee

Tender must be published by latest middle of November

Service providers to be given at

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least 6 weeks to respond

Evaluation criteria must be clear and robust to avoid legal challenges

Criteria must be published with the tender

ITS Integration Duplication of systems

Development cost escalating

Gaps in the ITS system

Lack of communication between systems

Data format not compatible with City IT systems

ITS integration workshop held on the 27 September to identify risks and mitigation strategies

AFC workstream is part of the ITS work stream which meets twice a month

Integration requirements to form part of the tender document

TBS transition from paper ticket to electronic fare media

Customer resistance to new system

System failure

Current fare collection staff – possible redundancies

Training of staff on the new system

Cot Marketing to be involved in change management and publicity

Staff to be re-trained and absorbed in other departments e.g. City Finance

AFC Agent requirements to include training of all staff (+- 500) in the bid

Implementation of the AFC System

Delays in the implementation due supplier performance

Delays in the delivery of buses

Technical problems

TBS to be used as a pilot for the new AFC System

Penalties to be included in the AFC Supply and Services contract

Interim solution to be put in place by Service Provider

If reasons for delay are beyond the Service Provider’s control, TRT to use current TBS paper ticket in case of delays beyond Feb 2014.

Contract duration 3 years too short amortise the capital and operational costs of the AFC Agent

Proposed contract period of 6 years with a critical review at year 3

The provisions of section 33 of the Municipal Finance Management Act, Act 56 of 2003 will need to be adhered to and the required procedure followed.

The public participation process required by section 33 aforesaid, will take at least 2 months to

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Banking contract (since resolved – no longer a risk)

There is an existing Banking Contract with Standard Bank

No clear indication on whether the CoT must use existing contract

Legal opinion is being obtained whether or not the CoT’s current Banking Agreement with its Commercial Bank (Standard Bank), allows for the City to contract the services of a different bank where these services can in fact be provided by Standard Bank in terms of the current contract.

Preference will be for Banking tender to be included in the FCA tender

Banking cost must be made transparent in the proposal

City reserves the right to negotiate directly with the bank

The contract will be reviewed at mid-life

New City Banking contract (in 2016) may include LVP services

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10. SUMMARY OF DECISIONS REQUIRING APPROVALS

The following decisions and approvals are urgently required at this stage of the process if the timelines outlined in the section above are to be met:

A decision on the approach to selecting the appropriate funding option/s is urgently required for the

finalisation of the Technical Specifications and draft AFC Supply and Services Contract.

The AFC Strategy and the Contracting Principles that will govern the appointment of the Automated

Fare Collection (AFC) Agent need to be approved by the Mayoral Committee and the City Manager

needs to be authorised to take such and other further actions as may be necessary and desirable in

order to give effect to the strategy and the procurement process.

The Technical Specifications and draft Supply and Services Contract need to be presented to the

relevant Bid Committee for approval as soon as possible.

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MarieB1

Typewritten Text

ANNEXURE D

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359

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AUTOMATED FARE COLLECTION SERVICE LEVEL AGREEMENT

entered into by and between

CITY OF TSHWANE METROPOLITAN MUNICIPALITY

(A category A municipality, duly demarcated as such in terms of section 12 of the Municipal Structures Act, 1998 (Act 117 of 1998))

(Herein represented by Jason Ngobeni in his capacity as the Municipal Manager, duly authorised thereto)

(Hereinafter referred to as “the Employer”)

and

XTREMETEC CONSORTIUM TSHWANE PROPRIETARY LIMITED

Registration number 2007/012755/07

(Hereinafter referred to as “the Contractor”)

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MarieB1

Typewritten Text

ANNEXURE E

Page 2

___________________________________________________________________

Contents

PREAMBLE ................................................................................................................ 3

1. DEFINITIONS ....................................................................................................... 3

2 INTRODUCTION ................................................................................................ 15

3. CONDITIONS ..................................................................................................... 17

4 COMMENCEMENT DATE AND DURATION ..................................................... 18

5. CONTRACTOR DOCUMENTS .......................................................................... 18

6 ACCESS TO CONTRACTOR TECHNICAL PLATFORM ................................... 18

7 FEES AND PAYMENT ....................................................................................... 19

8 MANAGEMENT MEETINGS .............................................................................. 19

9 PRICES AND TAXATION .................................................................................. 20

10 DOMICILIUM CITANDI ET EXECUTANDI ......................................................... 21

11 CONFIDENTIALITY ........................................................................................... 23

12 SURVIVAL ......................................................................................................... 24

13. PROPOSED TENDER AMENDMENTS ............................................................. 25

14. PURCHASING OF EMV CARDS ....................................................................... 25

15. PROVISION OF OFFICE ACCOMMODATION .................................................. 26

16 INCORPORATION OF DOCUMENTS ............................................................... 27

17 CESSION ........................................................................................................... 27

18 INTERPRETATION ............................................................................................ 27

19 SEQUENCE AND TIMING OF COMPLETION OF THE WORKS ...................... 28

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PREAMBLE:

WHEREAS the Employer has appointed the Contractor as the successful bidder for the

provisioning of Works in terms of Tender CB 59/2013: Tender for the Design, Build,

Installation, Operation and Maintenance of an Automated Fare Collection System for A

Re Yeng TRT System and Tshwane Bus Services (TBS);

AND WHEREAS Xtremetec Consortium Tshwane (Pty) Ltd, consisting of Xtremetec

Management Consulting CC and Vix-Questek (Pty) Ltd was the successful bidder in

respect of Tender Number CB59/2013;

AND WHEREAS XTREMETEC CC and VIX- Questek Pty Ltd herein cede all their

rights and delegate all their obligations in respect of the SLA to Xtremetec Consortium

Tshwane Proprietary Limited;

AND WHEREAS the Employer and the Contractor has agreed to enter into a Service

Level Agreement to regulate the Works to be provided in terms of the Tender as

contemplated in clause 1.6 of the General Conditions of Contract as amended under

clause 13 of this Agreement;

AND WHEREAS the Employer has requested in the Tender and the Contractor has

agreed to in the Tender to provide the Works in respect of both A Re Yeng TRT System

and TBS to the Employer;

AND WHEREAS the Employer and the Contractor have agreed to enter into this

Service Level Agreement to regulate the implementation of the Works.

THEREFORE the Parties hereby agree as follows:

1. DEFINITIONS

In this Agreement and in the schedules hereto, the words and expressions shall

have the same meaning as that meaning allocated to it in the General Conditions

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of Contract, unless the context indicates otherwise or any term as defined in any

part of this Service level Agreement, being:

1.1 “ABSA” ABSA Bank Limited, the banking partner and

appointed subcontractor of the Contractor;

1.2

“Access Gates”

in respect of User’s entrances and exits, being

either:

(i) Station Access Gates;

(ii) On-board Access Gates; or

(iii) Validators;

1.3

“AFC Back Office”

a single centre that has centralised responsibility

for the integrity, security, registration, settlement

data collection and forwarding within an AFC

Central Information System;

1.4

“AFC Central

Information

Subsystems”

the technology system (consisting of hardware and

software) that will be utilized by the Contractor. It

includes:-

(i) AFC Central System Software, which manages the

business side of the operations including:-

- Passengers/users of the AFC System;

- Cards and card holders;

- Control gates and vending machines;

(ii) EMV Payment Gateway system, which receives

and records all fare payments and top up

payments according to prescribed requirements;

(iii) Data Storage;

(iv) Servers; and

(v) Agreed Disaster Recovery System;

1.5

“AFC Hardware”

the equipment which constitutes the physical

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portion of the Technical Platform, including without

being limited to the following:

(i) the central computer with its peripherals in relation

to the AFC Central Information Subsystem;

(ii) the On-station and Off-station attended Points of

Sale and unattended Points of Sale, in relation to

the Top-Up Subsystems;

(iii) the Access Gates at the Stations and on board fare

validators on the Feeder Vehicles and

Complimentary Vehicles, in relation to the Fare

Payment Subsystem; and

(iv) portable transit card validators, in relation to the

Payment Inspections Subsystem;

1.6 “AFC Services” the services to be rendered by the Contractor, in

terms of this Agreement;

1.7 “AFC Service Fees” the fees payable by the Employer to the

Contractor, as set out in Schedule B;

1.10 “AFC Software” collectively, the Third Party Software and Bespoke

Software, that together with the AFC Hardware

enable the functionalities required for the Technical

Platform;

1.12 “AFC System” the set of processes, supported by the Technical

Platform that enable the automated collection of

fares, the accounting of revenues and the

collection of passenger information in the TBS and

A Re Yeng Systems;

1.13 “Agreement” this Service Level Agreement and the Schedules

thereto, including the terms and conditions

contemplated in 16 below, and any Appendices

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attached hereto regarding the Works in respect of

both A Re Yeng TRT System and TBS;

1.13 “APTMS” Advanced Public Transport Management System;

1.14 “A Re Yeng System” the bus rapid system established by the Employer;

1.15 “Back Office Centric

System”

the AFC model where the smart card holds only a

card identification number, which links the card

holder to an account with the card issuer or

transport agency responsible for collecting the

fares;

1.16 “Bespoke Software” the software programs, manuals and other

documentation specified in this agreement to be

developed and written by the Contractor for the

Employer, which comply with the specifications

and are wholly compatible with the Technical

Platform;

1.17 “Bespoke Software

Intellectual Property

Rights”

all patents, trademarks, copyright, designs, trade

names, domain names and the like constituting or

related to the Bespoke Software;

1.20 “Commencement

Date”

For the purposes of this Agreement shall be the

date of the last signature.

1.21 “Commissioning” or

“Accepted”

The issue of a Commissioning Certificate in terms

of the FIDIC clause 11.7

1.22 “Complementary

Vehicles”

those Vehicles with a Passenger carrying Capacity

specified by the Employer by notice in writing to

the BOC from time to time;

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1.23 “Contract Data” the data notified as part of the Tender and

provided by the Employer applicable to FIDIC and

appearing as section C1.2.3 of the Tender

document, subject to any amendments agreed at

Schedule C hereto and any amending Appendix

hereto;

1.24 "Contractor

Technical Platform”

that part of the Technical Platform, excluding the

AFC Central Information Subsystem, the BOC

Technical Platform and the Station Contractor

Technical Platform, which complies with the

technical specifications listed in main agreement

namely:

(i) the Issuance Subsystem;

(ii) the Off station Top-up subsystems; and

(iii) the Web Subsystem;

1.25 “Customer Service

Centres”

the dedicated premises where passengers can

enquire about TBS and A Re Yeng TRT Systems

services and have their queries resolved, submit

feedback, buy and top up fare media and have

their fare media identification registered;

1.26 “EFC

Requirements”

the guideline setting out the minimum requirements

for payment media for public transportation in the

RSA published by the National Department of

Transportation;

1.27 “EMV Bank Card

Issuers”

any bank or other authorised financial services

provider which is authorised to issue EMV Bank

Issued Cards for the AFC System;

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1.28 “EMV Bank Issued

Cards”

Payment Media compliant with EMV contactless

standards as specified in the EFC Requirements;

1.28 ESCROW Google it.

1.29 “Fare” Consideration paid by a Passenger in terms of the

COT Fare Policy, and Fare Rules;

1.30 “Fare Payment

Subsystem”

the station and on-board equipment that:

(i) validates the Payment Media;

(ii) validates a Travel Pass or deducts the Pay-as-you-

go Fare;

(iii) records the Fare Payment Transactions;

(iv) transmits the Fare Payment Transaction to the

AFC Central Information Subsystem; and

(v) controls access to the Paid Areas, Feeder Vehicles

and Complementary Vehicle;

1.31 “Fare Rules" the detailed fare usage rules (issued by the

Employer as and when amended) which enable

the implementation and operation of the Fare

Policy;

1.32 “Feeder Vehicles” those vehicles used on feeder routes for services

that link with the trunk system;

1.33 "FIDIC" Fédération International des Ingénieurs-Conceils

(International Federation of Consulting Engineers)

-Conditions of Contract for Design, Build and

Operate Projects, First Edition, 2008 (as amended

as set out in Schedule C to this Agreement);

1.34 “General Conditions

of Contract”

the General Conditions of Contract as

contemplated in the FIDIC Conditions of Contract

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for Design, Built and Operate of Projects, including

the Particular Conditions of Contract, being the

amendments and additions to such General

Conditions of Contract, issued as part of the

Contract Documents;

1.35 “Interim AFC SLA” the Automated Fare Collection Interim Service

Level Agreement entered into between the parties

on 10 June 2014 plus the addenda thereto;

1.36 “Installation” installation of the Technical Platform;

1.37 “Issuance

Subsystem”

that part of the Technical Platform which issues

and formats Payment Media in accordance with

the technical specifications contained in the Tender

Documents;

1.38 “Multi Application

Payment Media”

Payment Media compliant with the AFC regulations

published by the National Department of Transport;

1.39 “Off-station” the areas outside the designated A Re Yeng TRT

stations where Top-up Subsystems are installed

for either the A Re Yeng TRT System or TBS;

1.40 “Off-station

Maintenance

Services”

the maintenance services of the Off-station Top-up

subsystem provided by the Contractor for the

ultimate benefit of the Employer;

1.41 “Off-station Top-up” that part of the Top-up Subsystem which is located

Off-station;

1.42 “On-board Fare

Payment

that part of the Fare Payment Subsystem which is

located on the Vehicles;

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Subsystem”

1.43 “On-call Services” the non-scheduled repair and/or maintenance

services to be rendered by the Contractor;

1.44 “On-station” the areas inside the designated A Re Yeng TRT

stations where some components of the AFC

Systems are installed;

1.45 “On-station Fare

Payment

Subsystem”

that part of the Fare Payment Subsystem which is

located on the stations in the A Re Yeng TRT

System;

1.46 “On-station Top-up

Subsystem”

that part of the Top-up Subsystem which is located

on or in the stations in the A Re Yeng TRT System;

1.47 “Paid Areas” the on-board area beyond the station gate or

Vehicle validators;

1.48 “Party” the “Party" as defined in the clause 1.1.59 of the

General Conditions of Contract and “Parties” shall

refer to the plural of Party as the contents require;

1.49 “Pay-as-you-go-

Fares”

the fares that are deducted at entry and/or exit

points of the A RE Yeng TRT System, in

accordance with the specifications set out in the

Tender Documents;

1.50 “Payment

Inspections

Subsystem”

the equipment and procedures used to conduct

random inspections of Payment Media;

1.51 “Payment Media” (i) bank issued payment media compliant with EMV

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contactless standards;

(ii) A single-application payment media, which may be

reusable plastic smartcards or disposable

cardboard smartcards;

(iii) interoperable payment media issued by other

transit authorities as approved by the Employer; or

(iv) other payment media approved by the Employer

from time to time;

1.52 “Section of Works –

Inception Phase”

those Sections of Works referred to in C.1.2.3 of

clause 1.1.70 of the Data Provided by the

Employer in the Tender Documents;

1.53 “Section of Works

Design Built Period

Completion”

the successful completion of each Section of

Works Design Built period in accordance with the

AFC Project Plan, confirmed by the issuing of a

Commissioning Certificate as foreseen in the

General Conditions of Tender by the Employer’s

Representative;

1.54 “Points of Sale” or

“POS”

the attended and unattended points of sale On-

stations and Off-stations where fares and other

entitlements to travel are sold;

1.55 “Prime Rate” the basic quoted rate of interest at which ABSA,

lends to its customers on unsecured overdraft, as

certified by any general manager of that bank,

whose authority or appointment it shall not be

necessary to prove;

1.56 “RSA” the Republic of South Africa, being the area

comprising the nine provinces identifies in section

103 of the Constitution of the Republic of South

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Africa, 1996;

1.57 “Signature Date” the date upon which both Parties have signed this

Agreement or in the event of their having signed

the Agreement on different dates, the date of the

last signature;

1.58 “Specifications” the technical specification to the Technical

Platform, which comprise of the:

(i) Employer’s Specifications;

(ii) Contractor’s tender response in so far as it

complies with the Employer’s Specifications; and

(iii) such amendments or deviations requested by the

Contractor in its tender response and subsequently

agreed upon in writing between the parties;

1.59 “Station Contractor” the entity that will be contracted by the Employer to

render certain station management, - security, -

cleaning and such AFC related services or

functions as may be agreed with the AFC

Contractor or the Employer;

1.62 “Stations” the bus stations at which passengers board and

alight from Trunk Vehicles, Complementary

Vehicles and Feeder Vehicles in the A Re Yeng

TRT System;

1.63 "System Pilot" as contemplated in C.1.2.3 of clause 1.1.70 of the

Data Provided by the Employer in the Tender

Documents, being the phase during which the AFC

solution will be tested in the operating environment

through the simulation of normal operating

conditions, in order to test and monitor the AFC

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System's performance prior to “go live”;

1.64 “Tax” all value-added tax, sales tax and customs and

excise, import and export duties and all other

indirect taxes, levies or duties of a like or similar

nature payable in any relevant jurisdiction in

relation to this Agreement;

1.65 "TBS" Tshwane Bus Service, a public bus service as

established by the Employer;

1.66 “Technical Platform” or the AFC Technical Platform, the technical

platform as defined in the Scope of Works set out

in C3.1 of the Tender Documents, including

integrated set of the subsystems that together with

the ongoing processes enable the AFC System.

The subsystems that constitute the technical

platform are: issuance subsystem, top-up

subsystem, fare payment subsystem, payment

inspection subsystem, banking subsystem, Central

Information Subsystem and Web subsystem;

1.67 “Technical

Proposal”

that part of the Contractor’s response to the

Tender which contained the following information

in respect of each subsystem:

(i) the hardware required, including for each

item the manufacturer, reference and product

catalogue;

(ii) the software required, including for each

item the developer, reference and catalogue; and

(iii) the communication infrastructure required

including the technology, bandwidth, availability

and provider of the service;

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1.68 “Tender Document” all documentation forming part of the Tender;

1.69 “Third Party

Software”

the third party components forming part of the AFC

Software, available in the market and/or developed

by parties other than the Contractor;

1.70 “Top-up Subsystem” the On Station and Off Station Top-up

Subsystems;

1.71 “Top-up

Transactions”

the process whereby the Top-up Subsystem

incrementally increases the entitlement of Fare

Products and/or Pay-as-you-go value stored on the

Payment Media;

1.72 “Training” the training to be provided by the Contractor in

terms of this Agreement;

1.73 “Trunk Vehicles” vehicles with a User carrying Capacity specified by

the Employer by notice in writing to the BOC from

time to time;

1.7xx TRT Tshwane Rapid Transit - refers to A Re Yeng.

1.74 “Turnkey” fully integrated service provision by the Contractor

in providing services in all aspects of this

Agreement;

1.75 "Validators" the electronic device that records the Passenger'

trip and payment transaction;

1.76 “Vehicles” the Feeder Vehicles, Complementary Vehicles and

Trunk vehicles, including TBS buses;

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1.77 “Web Subsystem” the website and related functionalities to provide

information and be accessed by the general public,

which will incorporate fare regimes, transport

options, payment media availability and maps of

the TBS and A Re Yeng Systems, in accordance

with the specifications set out in the Tender

Documents ;

1.78

“Works”

Means:-

1.78.1 those Works contemplated in the General

Conditions of Contract; and

1.78.2 including, without limitation the Sections of Works

1 to 8 of clause 1.1.70 in C.1.2.3 of the Data

Provided by the Employer in the Tender

Documents starting at the Commencement Date

for a period of 12 years calculated from the

Commencement Date; and

1.78.3 all such Instructions, Variations and Adjustments

issued in terms of the Contract, during the validity

of the Interim AFC SLA in respect of the Section of

Works- Inception Phase;

1.79 “ZAR” or “Rand” the legal currency of the RSA;

2 INTRODUCTION

This Agreement is being entered into on the following basis:

2.1 The Contractor commits to provide an AFC System for TBS and the A Re Yeng

Services in respect of the Works.

2.2. The Contractor herewith gives notice to the Employer that the following sub-

contractors are to be utilised in the Works being:

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NAME COMPANY

REGISTRATION

NUMBER

% OF TOTAL

CONTRACT VALUE

SUBCONTRACTED

Vix Technologies Limited

Australian Company Number 085 823 846

5.8

ABSA Bank Limited 1986/004794/06 4.7

Shaddai Systems cc 2008/223108/23 0.1

Xuma Technologies (Pty) Ltd

2001/006551/07 1.3

EOH Mthombo (Pty) Ltd

1998/000103/07 0.6

Global Payment Technologies (Pty)Ltd

1998/006737/07 1.2

and the Employer agrees to the utilisation of these Sub-Contractors.

2.3 The Employer’s Representative for the Works shall be the person that is

nominated by the Employer from time to time.

2.4 The Contractor shall meet the main objectives of the AFC System in respect of

the Works as set out in Part C3.3.2 of the Scope of Work contained in the

Tender Document.

2.5 The Contractor shall ensure that the Section of Works- Inception Phase shall

integrate seamlessly into the Works.

2.6 The Section of Works- Inception Phase contemplated in the Interim AFC SLA

and all solutions established during the duration of the Interim AFC SLA shall be

incorporated into this Agreement at no additional cost to the Employer.

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2.7 The Contractor shall design, build, operate and maintain a AFC System with a

Technical Platform in accordance with the Contract Specifications, subject to

the terms and conditions set out in this Agreement.

3. CONDITIONS

3.1 The Contractor shall:

3.1.1 obtain the Performance Security as contemplated in clause 4.2 of the General

Conditions of Contract and Contract Data within 7 days of the commencement

of each section of the Works in respect of the Operating Service Period , of

which the total shall be equivalent to:

3.1.1.1 2 months operating cost in respect of the negotiated value of the

Operating Service Period part of the Works

3.1.2 obtain the Performance Security as contemplated in clause 4.2 of the General

Conditions of Contract and Contract Data within 7 days of the commencement of the

Design Build Period equivalent to R 3.09 million, fixed for the Design Build Period.

For the due, proper and timeous discharge by the Contractor of its obligations in

respect of the Works – ; and

3.1.2 Submit a detailed proposal within 7 days from date of signature of this

Agreement on the following:

3.1.2.1 Number of jobs to be created in its execution of this Agreement;

3.1.2.2 Benefits that will accrue to the local economy;

3.1.2.3 Strategy for the appointment of local labour.

3.2 If the conditions in 3.1 remains unfulfilled or has not been waived (if it is capable

of waiver in law) in writing by the Party or Parties for the benefit of which such

condition has been stipulated by the date in 3.1 or such later date as the parties

may agree in writing pursuant to 3.1, then the aggrieved party may terminate

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this Agreement as contemplated in clause 15 of the General Conditions of

Contract.

4 COMMENCEMENT DATE AND DURATION

This Agreement will come into effect on the Commencement Date and will terminate 12

years from the Commencement Date.

5. CONTRACTOR DOCUMENTS

5.1 The Contractor shall furnish the Employer with the Contractor Documents

required for the Works, in accordance with the time periods referred to in the

Schedule A.

5.2 To the extent which the Contractor is for whatever reason legally debarred from

supplying the Employer with any of the source codes and/or documentation set

out in 5.1, such source codes and/or documentation as the case may be, shall

at the cost of the Contractor and subject to such terms and conditions as may

be agreed between the parties, be deposited in ESCROW by a third party,

identified by written agreement between the Parties or failing agreement,

independent third party nominated by the chairperson of the Pretoria Bar

Council, for the duration of this Agreement, coupled with the right on the part of

such third parties to forthwith release such source code/documentation to the

Employer if the Contractor commits a breach of this Agreement which would but

for this clause, have entitled the Employer to take possession of and use for its

benefit, the relevant source code and/or documentation.

6 ACCESS TO CONTRACTOR TECHNICAL PLATFORM

The Contractor agrees to permit the Employer or its representatives, or

employees, agents and nominees from time to time, to have access to the

Contractor Technical Platform and Site as provided for in section 7.3 of the

General Conditions of Contract.

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7 FEES AND PAYMENT

Fees and payment to the Contractor shall be in accordance with Schedule B.

The Auditing Body and/or the Dispute Adjudication Board shall be appointed as

contemplated in Clauses 10.3 and 20.3 respectively of the General Conditions of

Contract.

The cost for the appointment of the Auditing Body referred to above shall be

shared on a equal basis between the parties.

8 MANAGEMENT MEETINGS

8.1 The Employer and the Contractor agree to hold monthly management meetings

on or before the 10th calendar day of each calendar month during the Contract

Period, at which meeting each of the Employer and the Contractor will be

represented by at least two of its nominated employees or representatives.

8.2 The meeting shall be chaired by a representative of the Employer;

8.3 At the first management meeting to be held, a standard agenda will be tabled

and agreed to by the parties for use at all subsequent meetings in addition to any

special matters arising for their consideration;

8.4 The chairperson will be responsible for the preparation of minutes of the

management meeting concerned, which will be circulated timeously and be

approved at the immediately succeeding management meeting.

8.5 The Contractor shall submit the reports contemplated in clause 4.21 of the

General Conditions of Contract two working days prior to the date of the

Management Meeting, and present the report at the meeting.

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9 PRICES AND TAXATION

9.1 All prices are exclusive of VAT. In addition:-

9.1.1 All prices are inclusive of any other applicable Tax, as well as including

but not limited to the cost of exchange and commission, packing,

transportation and delivery to the Specified Sites, installation and all

costs, expenses and charges related thereto, training, warranty, project

management and consultancy, provided that if any change in

legislation, including tax legislation but specifically excluding any

increase in the rate of any existing Tax other than any increase in the

rate of custom tariffs, custom duties and value-added tax, subsequent

to the date of the Contractor’s Letter of Appointment on 2 December

2013 but before the payment by the Employer impacts the Contractor’s

costs under his tender, the relevant payment shall be adjusted upwards

or downwards as soon as reasonably possible after the introduction of

the relevant Tax to take account of the impact of such change; and

9.1.2 The contract price for goods and services rendered shall be adjusted

according to the formulae included in the Employer's Contract Data

Addenda 11.58 and 11.61 with regard to the Base Date (as defined by

FIDIC) and the Commencement Date for each phase with respect to the

lease of assets. The price of services provided in the Operations

Period shall be adjusted monthly according to the Contract Data

Addendum's with respect to the Base Date (as defined by FIDIC) and

the index applicable for the month in which the services were rendered.

9.4 In so far as any prices include components which have to be sourced from

outside the Common Monetary Area, thereby introducing a currency risk which

does not apply in relation to locally sourced components, the Employer will

compensate the Contractor for the increased Forex fluctuation from date of

tender, until the date of instruction to proceed with the ordering of equipment.

The Contractor will assume full currency risk from the date of ordering of the

equipment to date of delivery of the equipment and accordingly the Contractor

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shall be entitled but not obliged to enter into the necessary hedging

arrangement and/or obtain the necessary forward cover in its sole discretion

and at its sole cost and expense.

9.5 In order to comply with 9.4 the Contractor must disclose the value of equipment

subject to Forex fluctuations at the time of the tender, as well as the exchange

rate that applied at the time of tender.

9.6 Should the currency rate at which the Forex is calculated on date of ordering of

equipment be lower than the currency rate stated in the tender documents, then

the Contractor shall reduce its tender price accordingly.

10 DOMICILIUM CITANDI ET EXECUTANDI

10.1 Each Party chooses the address set out opposite its name below as its

domiclium citandi et executandi at which all notices, legal processes and

contractual processes must be delivered for the purposes of this Agreement:

10.1.1 the Contractor:

Att: Frans Kruger/ Caswell Mkansi

Questek Building

Fairways Office Park

52 Grosvenor Road

Bryanston

2077

10.1.2 the Employer:

Att: Kgomotso Mokoena

Second Floor

Infotech Building

1090 Arcadia Street

Hatfield

Pretoria

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0083

10.2 Any notice or communication required or permitted to be given in terms of

this Agreement shall be valid and effective only if in writing.

10.3 Any notice to a Party contained in a correctly addressed envelope and:

10.3.1 sent by prepaid registered post to it at its chosen address; or

10.3.2 delivered by hand to a responsible person during ordinary

business hours at its chosen address,

shall be deemed to have been received, in the case of 10.3.1, on the 5th

Day after posting (unless contrary is proved) and, in the case of 10.3.2, on

the date of delivery.

10.3 Any notice to a Party contained in an email, addressed to the designated

representatives of the Employer and the Contractor, shall be deemed to be

delivered as follow:

10.3.1 If the email is sent prior to close of business (17h00) on a working day, it

will be deemed delivered on that working day;

10.3.1 If the email is sent after the close of business (17h00) it will be deemed to

be delivered on the next working day;

10.4 Each of the Parties chooses the physical address set out opposite its

name on 10.1.1 and 10.1.2 as the address at which legal process must be

delivered for this purpose of this Agreement.

10.5 Each of the Parties shall be entitled at any time to change its addresses

for the purposes of this clause 10.1 to any other address in by giving

written notice to that effect to the other Party.

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11 CONFIDENTIALITY

11.1 Each of the parties (the disclosing party) has imparted and may from time to

time impart to the other party, certain Confidential Information relating to the

Technical Platform, parts or sub-assemblies including hardware and software

thereof, other equipment or marketing or maintenance thereof (including

technical specifications therefor) and the other party (the receiving party) hereby

agrees that it shall use such Confidential Information solely for the purposes of

this Agreement and undertakes not to disclose, whether directly or indirectly, to

any third party such information other than as required to carry out the purposes

of this Agreement and in such cases, the receiving party will prior to any such

disclosure, obtain from such third party a duly binding agreement to maintain in

confidence, the information to be disclosed, to the same extent at least as the

receiving party is so bound to the disclosing party hereunder. Such information

shall remain subject to the terms of this clause 11 (notwithstanding expiry or

termination of the Agreement) until the same shall fall within the public domain

otherwise than by reason of a breach this clause 11.

11.2 The parties shall procure that each of its employees, agents and sub-

contractors to whom any Confidential Information requires to be disclosed shall,

for the duration of this Agreement and thereafter:

11.2.1 keep all the Confidential Information which is disclosed to it (whether

orally, in written form or in any other form) by the disclosing party, strictly

secret and confidential and shall not disclose any of the Confidential

Information to any other person whomsoever, except as provided in 11.1;

11.2.2 not use any part of the Confidential Information for any purpose other than

the execution of this Agreement without the prior written consent of the

disclosing party, which consent shall not be unreasonably withheld or

delayed.

11.2.3 ensure that no part of the Confidential Information shall be reproduced,

stored in a retrieval system or transmitted, in any form or by any means

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electronic, mechanical, photocopying, recording or otherwise without the

prior written permission of the disclosing party, such approval shall not be

unreasonably withheld or delayed.

11.3 Any technical data and information comprising the Confidential Information shall

be excluded from the undertakings set out in this clause 11, if and to the extent

that the parties establishes to the satisfaction of the other party that such

technical data and information was public knowledge prior to the disclosure of

such information and data by the disclosing party to the receiving party, or it

subsequently became part of the public knowledge by publication or otherwise

than by a wrongful act by the receiving party or any person to whom it disclosed

such information, including without being limited to any breach of any of the

undertakings contained herein.

11.4 Notwithstanding anything to the contrary in this Agreement, the parties

acknowledge that any breach by any one of them of the provisions of this

clause 11 may cause serious loss or damage to the other party. Consequently,

each party hereby indemnifies and holds the other party harmless against all

loss or damage incurred by the disclosing party as a result of the receiving party

breaching this clause 11.

12 SURVIVAL

The parties agree that the following clauses shall remain in force

notwithstanding expiry, termination or cancellation of this Agreement until the

same shall fall within the public domain:

12.1 Confidentiality; and

12.2 Intellectual Property Rights.

12.3 Limitation of liability clauses contained in FIDIC; and

12.4 Indemnity clauses contained in FIDIC.

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13. PROPOSED TENDER AMENDMENTS

The Contractor has proposed certain amendments as set out in Part T2 of Form

RDE2 of its tender response. The record of agreement reached between the

parties on the proposed amendments is set out in Schedule C hereto.

14. PURCHASING OF EMV CARDS

The parties confirm that the purchase costs of the EMV cards are not included

in the Contractor's tender price, as the purchase price of such cards will be

recovered by the Contractor from the Passengers. Should the Employer decide

that it is in the interest of the Passengers that the Employer purchases the EMV

cards and make it available directly to the Passengers:

14.1 the Contractor shall, if so requested in writing by the Employer, arrange for the

purchasing of the EMV cards on behalf of and at the cost of the Employer;

14.2 the Contractor shall before ordering any EMV cards, agree with the Employer

the number of cards to be ordered and confirm the price payable for such cards;

and

14.3 the costs associated with such cards shall be in accordance with the following

card ordering fees structure, subject to any CPI adjustments agreed to between

the parties in terms of this Agreement:

Card Ordering Fees Structure (Base date: August 2014)

2 000 cards per order R69.53 (excl VAT) per card




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Provided that the fees structure referred to above shall include the preparation, preservation, packaging, storage, handling, transportation, marking and issuing of the EMV Cards.

14.4 no extra fees or charges other than those indicated in 14.3 shall be payable to the Contractor in respect of EMV cards purchased in terms of this clause 14: Provided that should the Contractor be required to pay interest to its bankers on any purchases of EMV cards, the Employer shall, against receipt of documentary support of the interest so paid, reimburse the Contractor in respect of such interest, calculated from the date of actual payment of the cards by the Contractor until date of reimbursement by the Employer.

14.5 the Contractor shall invoice the Employer for all and any EMV cards purchased on behalf of the Employer and will attach documentary proof to the reasonable satisfaction of the Employer evidencing the costs incurred in respect of any such purchases.

15. PROVISION OF OFFICE ACCOMMODATION

15.1 The parties confirm that the Employer is obliged to provide, at its cost, the office space reasonably required by the Contractor for the AFC Back Office, to enable the Contractor to fulfil its obligations in terms of this Agreement. The Contractor shall, if so requested in writing by the Employer, arrange for the leasing of such office space including the provision of municipal services required in connection thereto, at the cost of the Employer.

15.2 The Contractor shall before leasing any office space contemplated in 15.1, agree with the Employer in writing the office space requirements of the Contractor, rental payable, duration and all other relevant terms and conditions applicable to such lease.

15.3 The Contractor shall invoice the Employer monthly for any expenses incurred in terms of 15.1 and will attach documentary proof to the reasonable satisfaction of the Employer evidencing the costs incurred in respect of any such expenses.

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16 INCORPORATION OF DOCUMENTS

16.1 In accordance with the Tender Documents, the following documents are incorporated in this Agreement and shall collectively constitute the terms and conditions of the Agreement contained in the following documents:

16.1.1 Part T1 Tendering Procedures

16.1.2 Part T2 Returnable Documents

16.1.3 Part C1 Agreements and Contract Data,

16.1.4 Part C2 Pricing Data

16.1.5 Part C3 Scope of Work

16.1.6 Part C4 Site Information

16.1.7 Drawings and documents or parts thereof, which may be incorporated by reference into Parts C1 to C4 of the Tender; and

16.1.8. This Service Level Agreement between the Employer and the Contractor to record the rights and obligations of the parties in relation to the goods to be provided and services to be rendered by the Contractor.

17 CESSION

Xtremetec Management and Consulting CC and VIX- Questek Pty Ltd hereby cede all their rights and delegate all their obligations in respect of this Agreement to Xtremetec Consortium Tshwane (Pty) Ltd. The Employer hereby consents to such cession and delegation.

18 INTERPRETATION

18.1 In this Agreement, unless the context requires otherwise –

18.1.1 words importing any one gender shall include the other two genders;

18.1.2 the singular shall include the plural and vice versa;

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18.1.3 A reference to natural persons shall include created entities (corporate or unincorporated) and vice versa.

18.1.4 Should there be any conflict between the definitions used in this Agreement and those contained in the Tender Document, then the provisions of the Agreement shall prevail.

18.2 In this Agreement, the headings shall be taken into account in its interpretation.

18.3 If anything in a definition is a substantive provision conferring rights or imposing obligations on anyone, effect shall be given to it as if it were a substantive provision in the body of this Agreement.

19 SEQUENCE AND TIMING OF COMPLETION OF THE WORKS

19.1 The time for completion of the Works set out in Part C1.2.3 of the Tender Document as well as the Scope of Work may change based on the operational requirements of the Employer.

19.2 The Contractor will be advised in writing of the changes to the Employer’s

completion times and Scope of Work referred to in 19.1 with reasonable notice.

19.2 The CAPEX part of the Contract Price shall be recalculated based on any such changes referred to in 19.1 in accordance with the Rates and Prices contained in the Pricing Data provided by the Contractor in its response to C2.2 of the Tender Document.

20. OWNERSHIP OF EQUIPMENT

Notwithstanding anything to the contrary contained in this Agreement or the

Tender Document, ownership of all equipment supplied or to be supplied by the

Contractor in terms of Tender CB 59/2013: Tender for the Design, Build,

Installation, Operation and Maintenance of an Automated Fare Collection

System for A Re Yeng TRT System and Tshwane Bus Services (TBS), shall

vest and remain vested in the Employer on delivery.

SIGNED AT ________________ ON ________________________ 2014

AS WITNESSES:

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1 ___________________

2 __________________ ___________________

For: EMPLOYER

Signatory:

Capacity

Authority

SIGNED AT ________________ ON ________________________ 2014

AS WITNESSES:

1 ___________________

2 __________________ ___________________

For: CONTRACTOR

Signatory:

Capacity

Authority

390