October 15, 2007 Smart Card. Smart Travel. TransLink ® Card Procurement Study Update Presentation to the TransLink Operating Group

2 In 2004, the TransLink ® Consortium set aside about $7 million for smart card procurement –Staff estimated this would enable procurement of 1.3 million cards –At that time, staff estimated that demand would exceed 1.3 million cards within the 10-year budget horizon MTC has already executed two smart card orders –The first order covered 400,000 cards –The second order covered 95,000 cards As of October 12, about 19,750 Phase II TransLink cards were in circulation Background

3 The existing TransLink ® card uses an ST-19 microchip that is no longer in production To ensure sufficient inventory, MTC and BART initiated a study to identify the direction for replacement TransLink cards The study scope includes: –Review of industry trends, including use of other form factors, limited use smart cards, and moving to a contactless-only environment –Development and evaluation of alternatives for replacement cards: Replacement chip for ST-19 Open standards-based dual-interface card Contactless-only card To address the immediate need of ensuring sufficient card inventory, priority was put on the next card procurement

4 TransLink ® card inventory appears adequate in the short term Original Inventory Inventory after 2nd Procurement Inventory after Free Card Giveaways* Adult Cards251,000306,000136,000*** Senior Cards 61,000 71,000 RTC Cards 90,000120,000**120,000 Total402,000497,000327,000 As of October 12, 2007, 19,750 cards were in circulation. 6,150 of the cards were RTC TransLink Cards. Only a small fraction were Senior Cards. * Free cards will be distributed over time ** RTC cards will be distributed at a rate of 36,000 per year *** Reflects 170,000 free cards to be distributed by Phase 2.2 and 2.3 agencies

5 The forecast shows adult card inventory running short by mid-2009

6 Maintaining Card Inventory in the Short and Mid Term Card demand forecast shows demand will average about 11,500/month over the next two years –If procurement timetable is 12 months, inventory should never fall below 138,000 cards (11,500 x 12 months) in the next 2 years Beginning in mid-2009, the program anticipates rapid growth in the number of cardholders –Policy decisions at SFMTA regarding continued availability of Fast Pass ® will affect speed of adoption Recommendation: order 450,000 cards to meet forecasted demand through late-2010 –This quantity should allow maintenance of minimum inventory

7 MOT/ERG submitted a proposal outlining options for replacement cards Utilize existing card architecture –Option 1: Replace with an ST-19 compatible chip, no enhancements –Option 2: Replace with an ST-19 compatible chip with enhancements (increased memory, etc.) Open source architecture –Option 3: Port the TransLink application to a Java card Parallel development –Option 4: Option 1 or 2 in parallel with Option 3 The proposal did not address a contactless-only and non-proprietary open source standards

8 After review of the proposal, the task force recommends Proceed with Option 4 Replacement with the ST-19 compatible chip, no enhancements –Minimizes system risk –Minimizes schedule risk (approximately 1 year) –Solution with no additional development costs Continue discussions with Contractor for a future open source solution –Allows for competitive sourcing of cards –Allows most flexibility for future of TransLink (other form factors, additional applications, etc.)

9 Next Steps Obtain Consortium approval for change order for card order #3 (450,000 cards, per Contract, ~$4.50/card) –Price break occurs at orders greater than 100,000 cards Issue change order for card order #3 Continue discussions for open source solution –Issue change notice for Contractor to provide cost for an open source solution Continue to look at contactless-only cards as a possible long-term approach Complete review of industry trends Request participation from other operators

10 Timeline for card orders Activities Month Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Obtain Approval and Issue Change Order for Card Order #3 Procurement of Card Order #3 Issue Change Notice for additional option Continue discussions for future solution Selection of option for future card orders – TBD Receive cards