Combination of direct awarding and tendering of public transport services
Topic of the practice
Regional Transport Authorities
Good Practice Information
The combination of direct awarding and tendering is a good example of a strategy to gradually implement regulated competition between local public operators. It is based on a direct awarded, long-term contract with a municipal-owned company and a gradual increase of services tendered to private companies. The municipal operator is managed directly by the local authority and delivers usually a higher reliability than private operators. But the private operators can decrease the cost level in the bus services and a competition can result in an increase of the service level - these are as well the main objectives of the practice.
Main stakeholders are the Warsaw Public Transport Authority, the municipal bus company (direct award of services) and private bus operators (services awarded by tendering). Passengers benefit from the quality increase and the municipal budget from the cost decrease.
The financial resources from the authority are needed regularly in order to pay for the awarded services. The operators use these incomes to repay the investments done at the beginning of the contract. The contract between the authority and the operator regulates the exact amount of payments during the contract period, which creates a stable financial background for the operators and a clear financial plan for the authority.
Key success factors are a well organised transport authority - independent from the public transport operators - that will award services directly or by tendering, a precise definition of the level of service and a rigorous control. In fact an efficient controlling and penalty (or even bonus-malus) system is the key for a reliable contract management. If these conditions are fulfilled, transfer is possible without restrictions.
Evidence of success
The practice enables a better management of the public transport (bus) services. It sets transparent criteria, and the long-term contracts both directly awarded and tendered provide a good base for investments. The tendering can help to decrease the cost needs and contracts with well defined quality indicators can increase the quality level. Both ways of contracting are in line with the current EU legislation, in particular regulation 1370/2007 (EC).
Success can be measured through the development of service costs (measured in vehicle-kilometers) and the development of service quality (measured by the development of quality indicators).
Contact details to obtain further information on the practice
Tamas Dombi, CAPRICE coordinator
City of Warsaw – Public Transport Authority
Annex completed on: 07-20-2011