Sam Selim is glad to have the PayIt saga in the rearview mirror, but the chief executive officer for Toronto tech firm SQL Power Group is casting doubt on the rate of City of Toronto’s adoption of the new online payment systems. That doubt comes from the newly introduced user fees that will now be passed down to Toronto citizens.
What’s worse is if that adoption doesn’t pick up, he said it might end up hurting the city in the long run.
Toronto city council confirmed on May 5 that U.S. tech firm PayIt had been selected to replace 11 separate portals for property taxes, parking tickets and permits, water bills, and more, with a platform that mobile devices or a computer can access. Fees to PayIt will be a combination of transaction fees and payment processing fees.
Residents, businesses and even visitors will be able to pay property taxes, utility bills and parking fines through e-transfers, credit or debit cards starting this fall.
Much of the reaction since the announcement yesterday has been one of frustration, specifically regarding how the bidding process for the contract unfolded. But Selim said his biggest concern now lies with the rate of adoption and an “unconventional business model” driving the project forward.
Selim said he understands why zero upfront costs sound compelling for a city in the midst of a pandemic and economic uncertainty, but he still described the move as “shortsighted.”
“In my opinion, this unconventional business model of not purchasing a software license and not paying for anything upfront, where the vendor recovers all their costs from transaction fees based on an anticipated adoption rate, might end up hurting the city in the long run,” he said. “If the vendor chooses to abandon the project due to poor adoption, it could lead to an unlicensed city scrambling and with no solution.”
According to an overview of the partnership with PayIt presented to city council, the City of Toronto is not responsible for upfront capital, technology build, maintenance, or licensing costs. The city will pay only for the value created through customer adoption, which is less than what it costs the city today through revenue generation.
Selim said SQL has spent years developing business process workflows that automate data collection, electronic signatures, and payments, notifications, and much more.
“We were confident that we could automate all 143 City of Toronto Permit/License applications in the first year. I’m not sure if PayIt has these capabilities,” he said. “Otherwise, why are you staging all this automation over four phases? These are things you simply configure in your solution over weeks and months. Technically, you could automate all of Toronto’s applications over the first year. Why is it being spread over four phases when it can be done in one year unless you don’t have those capabilities currently?”
The RFP stressed the importance of data being stored in Canada. The contract terms state that PayIt will retain data in Canada and that it can’t be modified or sold. It can only be used to enable payments within the city.
Salem said if SQL had won the contract, they would have worked with cloud hosting provider ThinkOn and cloud service provider Quick Intelligence. SQL would have provided the software platform itself. All data would have resided in Canada and on Canadian-owned infrastructure.
Raising the bar
Toronto city council voted against a sole-source contract with PayIt last year, which is why staff mounted a “Swiss challenge” bid process afterwards to see if anyone else could make a better pitch. SQL Power Group was the only other firm that submitted a bid.
“We were competing and winning internationally for many years, but this was our chance to give back to our great city and showcase our world-class digital government platform locally in our backyard,” Selim said.
City staff stopped reviewing SQL’s bid after they claimed it failed to get enough points to progress past a section of the Swiss challenge that included a request for references to show the firm’s ability to drive “digital adoption” and other modernization goals. SQL was confident in its proposal despite a shortened timeline created by the Swiss challenge.
SQL’s bid even expanded the proposal’s scope, adding more city permit and license applications to the modernization process and a COVID-19 emergency response solution. Even if the city didn’t pick them, Selim said SQL’s seemingly beefier proposal would have “upped the ante” on PayIt, forcing them to expand the scope of their project. But on December 8, 2020, Selim was informed that their proposal didn’t score enough points to progress past a section of the application process that included a request for references to show the SQL’s ability to drive adoption.
“It leaves the PayIt proposal completely uncontested,” he said.
Brad Ross, the City of Toronto’s chief communications officer, confirmed that the city was unable to determine if SQL’s proposal was better than PayIt’s because it didn’t score high enough during the earlier stages of the bidding process.
“SQL has exercised their right to a debriefing to understand what happened with their proposal, which occurred in December. SQL also exercised their right to a Pre-Award Bid Dispute in which they provide arguments about why they should be allowed to be considered in the evaluation process,” Ross said in an emailed statement. “Staff reviewed their dispute in consultation with the Fairness Monitor and Legal Services. As the issue in question was how they scored and that they did not score well, staff were unable to provide a satisfactory remedy to SQL.”
The city says it will save $11 million over five years on costs. This includes the credit card fees it currently pays. PayIt will earn between $20 million and $25 million from the contract.
PayIt did not respond to requests for comment.
There has been some support shown for PayIt’s latest victory in the local tech community. Alaina Percival, CEO and board chair and Women Who Code co-founder, said PayIt has been a strong partner in past projects with the global organization.
“PayIt has been extremely supportive of Women Who Code Canada’s Toronto Network. We are excited that PayIt is joining the Toronto tech landscape,” she wrote in a letter submitted to council last month.
When asked if SQL would be willing to submit another bid if his predictions about PayIt’s future with the project came to fruition, Selim said they would.
“I would bid on this again tomorrow if it were an open process, but I would never bid on another Swiss challenge again.”
