1
Introduction

Each year the federal government distributes grants for capital investment and planning, as well as some operating assistance, to about 500 public transit systems across the country. State and local governments match and supplement these grants with funds for transit operations, equipment, and facilities. This large public investment continues a decades-long government commitment to the provision of transit in the United States.

As the workhorses of urban transit, buses operating on fixed routes are an especially important component of the nation’s public transportation system. They are the most ubiquitous and heavily used form of public transport, carrying more than 16 million passengers a day. Together with demand-responsive paratransit vehicles, which carry more than 300,000 people each day, the nation’s fleet of more than 75,000 transit buses accounts for about two-thirds of all daily passenger trips by transit (see Figure 1–1). Though often associated with large cities, both fixed-route and demand-responsive transit services can be found throughout the country, in large and smaller communities alike.

Transit officials and policy makers at all levels of government have a keen interest in finding the most efficient and effective means of delivering bus and demand-responsive transit services to ensure good service and minimize the need for higher fares and public subsidies. Most public transit systems provide the majority of these services directly, using their own facilities, equipment,



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience 1 Introduction Each year the federal government distributes grants for capital investment and planning, as well as some operating assistance, to about 500 public transit systems across the country. State and local governments match and supplement these grants with funds for transit operations, equipment, and facilities. This large public investment continues a decades-long government commitment to the provision of transit in the United States. As the workhorses of urban transit, buses operating on fixed routes are an especially important component of the nation’s public transportation system. They are the most ubiquitous and heavily used form of public transport, carrying more than 16 million passengers a day. Together with demand-responsive paratransit vehicles, which carry more than 300,000 people each day, the nation’s fleet of more than 75,000 transit buses accounts for about two-thirds of all daily passenger trips by transit (see Figure 1–1). Though often associated with large cities, both fixed-route and demand-responsive transit services can be found throughout the country, in large and smaller communities alike. Transit officials and policy makers at all levels of government have a keen interest in finding the most efficient and effective means of delivering bus and demand-responsive transit services to ensure good service and minimize the need for higher fares and public subsidies. Most public transit systems provide the majority of these services directly, using their own facilities, equipment,

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience FIGURE 1–1 Annual trends in average daily passenger trips (unliked) by transit mode in the United States, 1984 to 2000. (SOURCE: American Public Transportaion Association, Public Transportaion Fact Book, 1997 to 2000.)

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience and vehicles, which are operated by their own personnel. Many, however, procure some services from outside contractors. They may contract for a limited amount of service on specific routes or for particular needs (such as express bus or dial-a-ride paratransit services), or they may contract for all services in a given area or over their entire network. According to Federal Transit Administration (FTA) data, most transit systems that receive federal aid purchase at least some services from outside contractors (see Figure 1–2). Of the nearly 500 systems offering fixed-route bus and demand-responsive services that received federal aid in 1998 (the most recent year of available data), about 40 percent supplied all services directly, 39 percent purchased some services from outside contractors, and the remaining 21 percent purchased all their services. Again according to FTA’s National Transit Database, demand-responsive services are the most likely to be contracted out completely; nearly half of transit systems receiving federal aid contracted all their demand-responsive services in 1998. A further one in six systems, or 16 percent, purchased some of these services. In almost a mirror image, 70 percent of systems directly operated all their fixed-route bus services, compared with only 18 percent that purchased FIGURE 1–2 Percent of transit systems that contract for all, some, and no bus and demand-responsive transit services: (a) total transit systems reporting (N=483). (b) transit systems with demand-responsive services; (c) transit systems with fixed-route bus services. (SOURCE: National Transit Database, 1998.)

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience all of these services from contractors. Altogether, about 6 percent of bus vehicle-hours (in revenue service) and about 67 percent of demand-responsive vehicle-hours was purchased from contractors (see Figure 1–3). In total, contractors provided about one in seven vehicle-hours in 1998. This ratio has changed very little during the past few years. The aggregate data on purchased transportation collected by FTA provide an incomplete picture of transit service contracting in the United States, however. They provide little insight into the many different ways in which contract services are obtained, used, and structured. The hundreds of transit systems that contract for services do so in a multitude of ways and for many different reasons. For instance, most find and select contractors through procedures intended to attract competing bidders—awarding contracts according to proposal quality or making their decisions strictly on the basis of lowest price (as FIGURE 1–3 Recent trends in vehicle-hours directly operated and purchased for (a) fixed-route bus services, (b) demand-responsive services, and (c) total, 1994 to 1998. (NOTE: Percentages refer to share of total vehicle-hours purchased. SOURCE: National Transit Database, 1998.)

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience is often required by state or local law). These contracted services are usually rebid every 2 to 5 years. Yet other transit agencies have developed long-standing agreements with individual transit providers—both public and private—whose contracts are renegotiated periodically, but who, as a practical matter, are subject to little if any regular competition. Transit service contracting received much attention during the 1980s and early 1990s, when federal policies favoring outsourcing led to numerous experiments and studies of transit service contracting while stirring much debate about its effects. The debate has subsided somewhat during the past decade as more transit systems have gained experience with contracting and as federal aid requirements have been more neutral with respect to the particular methods of service delivery used by transit systems. Nevertheless, much of the discussion and research on transit service contracting during the past decade has centered on the experiences, sometimes controversial, of a few large transit systems that have contracted for fixed-route bus services—even as the majority of contracting has taken place in smaller systems and for demand-responsive services. Thus after more than two decades of debate and study, there is still much to be learned about the wide array of transit service contracting practices and experiences across the country. Study Purpose As noted in the preface, this study was funded by FTA in response to a legislative request to examine the effects of contracting out by public transit agencies for service operations and administrative functions (see Box 1–1). However, the statement of task agreed to by the National Research Council (NRC) includes an explicit recognition that the broad scope of the congressional request was not commensurate with the time and resources provided for the study (see Box 1–2). Accordingly, the Transportation Research Board (TRB) charged the committee with gathering and analyzing information about the scale and nature of transit service contracting across the United States, and offering insight on those effects of the practice for which information could be obtained and examined. In particular, the committee sought answers to the following questions: How much contracting is practiced, by whom, and for what kinds of transit services; How contracting has been changing over time, in both quantity and quality; Why some agencies contract for transit services while others do not;

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience BOX 1–1 Text of Congressional Request for Study Transportation Equity Act for the 21st Century (TEA-21), Federal Transit Act of 1998 Section 3032, Contracting Out Study: Study. Not later than 6 months after the date of enactment of this Act, the Secretary shall enter into an agreement with the Transportation Research Board of the National Academy of Sciences to conduct a study of the effect of contracting out mass transportation operation and administrative functions on cost, availability and level of service, efficiency, safety, quality of services provided to transit-dependent populations, and employer-employee relations. Terms of Agreement. The agreement entered into in Subsection (a) shall provide that The Transportation Research Board, in conducting the study, consider the number of grant recipients that have contracted out services, the size of the population served by such grant recipients, the basis for decisions regarding contracting out, and the extent to which contracting out was affected by the integration and coordination of resources of transit agencies and other Federal agencies and programs; and The panel conducting the study shall include representatives of transit agencies, employees of transit agencies, private contractors, academic and policy analysts, and other interested persons. Report. Not later than 24 months after the date of entry into the agreement under Subsection (a), the Secretary shall transmit to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a report containing the results of the study. Funding. There shall be available under Section 5338(f)(2) of Title 49, U.S.C. to carry out this section $250,000 for fiscal year 1998. Contractual Obligation. Entry into an agreement to carry out this section that is financed with amounts made available under Subsection (c) is a contractual obligation of the United States to pay the government’s share of the cost of the study.

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience BOX 1–2 Study Statement of Task To reach conclusions about effects on transit cost, service, safety, labor, and efficiency, this project will review available literature reporting on the experience of U.S. transit agencies with contracting out some or all of their operational and administrative functions. Current information about the amount and type of contracting that is under way will be gathered. As required by Congress, the study will consider the number of grant recipients that have contracted out services, the size of the population served by such grant recipients, the basis for decisions regarding contracting out, and the extent to which contracting out was affected by the integration and coordination of resources of transit agencies and other federal agencies and programs. The committee will select a consultant to review and synthesize the literature and to survey a sample of transit agencies. The committee then will use this information to address the questions posed by Congress to the extent possible. Although the committee may not be able to answer the questions fully, it will identify those uncertainties that can be resolved with available information and those that cannot. How contract provisions and contracting processes vary among agencies; and How contracting has affected the level and quality of transit service, transit expenditures, safety performance, and relations between labor and management. The aim in addressing these questions was to shed more light on the many purposes, methods, and outcomes of transit service contracting—information that should prove valuable to transit policy makers and managers in deciding whether to contract and how to make contracting programs work better. Approach and Scope Given the lack of detail on contracted services in FTA’s National Transit Database, as well as the agency-specific nature of most recent research on contracting, the committee decided to obtain additional data on the practice by conducting its own nationwide survey of public transit systems. A two-part survey questionnaire was mailed to the general manager in each of more than 500 public transit agencies that receive grants from FTA (since the congressional request identified federal grant recipients as the primary focus of this

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience study).1 Further detail on the survey design, method, and pool of recipients is provided in Chapter 4 and Appendix B. The general managers were asked to forward the first part of the survey to the members of their staff most familiar with agency contracting programs. This part asked for information on the types of services contracted; the history of contracting agreements; and contracting methods, terms, and procedures. The general managers were asked to complete the second part of the survey, which contained more perceptional questions about their agencies’ reasons for contracting and the outcomes, both positive and negative. This part of the survey also sought the general managers’ advice on how to avoid and mitigate problems in contracting and how to make contracting programs work better. General managers from agencies that do not now contract were asked to cite the reasons for this decision. The survey focused specifically on contracting for fixed-route bus and demand-responsive transportation services, which account for the vast majority of contracting practice in the United States. Nevertheless, transit systems were asked whether they offer other kinds of transit service and if so, whether any of these are contracted. None of the 10 respondents with heavy rail systems and one of the 10 respondents with light rail systems reported contracting for these services. Several transit systems reported contracting for vanpool and ferryboat operations (21 of 35 that offer these services), while most of the handful of respondents providing commuter rail service (7 of 11) reported using contractors. In the interest of obtaining as much detailed information as possible, the respondents were asked to distinguish between fixed-route bus and demand-responsive services when reporting on their contracts and contracting methods. In the second part of the survey, however, the general managers were not always asked to make this distinction when assessing their contracting experiences and programs. In retrospect, such a distinction would have been helpful in examining contracting experiences by type of service—especially since many transit systems have been contracting for demand-responsive services for many years. Yet it was important to keep the survey from becoming too long and burdensome for respondents to complete, and some loss of specificity was accepted in anticipation of higher response rates. Also to keep the survey manageable, as well as to retain the study focus on contracting for transportation services, recipients were not asked to provide information on their contracts for administrative and support functions, such as marketing, accounting, and vehicle maintenance (although such tasks may be subsumed within broader contracts for transportation service). Nor was infor-

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience mation sought on contracts for management services. Although potentially informative, a wide-ranging examination of all kinds of outsourcing by transit systems would have presented time and resource demands that would have compromised the committee’s ability to fulfill the main purpose of the study. The practice of and experience with contracting for other transit functions, such as maintenance and management, may merit closer study in the future. More than half of the transit systems receiving the survey responded, providing a wealth of information on service contracting practices and effects. The information gleaned from the first part of the survey, completed by contract program staff, provides a snapshot of the extent and methods of contracting today, including contracting amounts, terms, and procedures by mode, community size, and region. Responses to the second part of the survey, completed by general managers, depict how well contracting is working, where improvements are needed, and what steps can make the practice more effective. To supplement and illuminate the survey results, the committee also selected five transit systems for more detailed telephone interviews with the transit agency managers, private contractors, and local labor union and elected officials most knowledgeable about contracting decisions and programs to obtain their perspectives on contracting experiences. Along with reports from the literature, these interviews provided ideas on how to analyze and interpret the survey results. The findings presented in the following chapters are highly informative about the practice and outcomes of transit service contracting today. This report does not, however, offer recommendations on contracting. Contracting practices and experiences are varied, as are the individual circumstances of transit systems. Political environments and other exogenous factors (such as the available workforce) can influence both interest in contracting and its effects; the study did not address these broader influences. The aim of this report is to provide better information for those who must make policy decisions regarding transit service delivery, and to enable transit systems to learn from the experiences of others and adapt this information to their own situations as they see fit. Further analysis of the survey information will undoubtedly yield many more insights, and the survey data have been made available to interested analysts for this purpose. Report Organization Chapter 2 provides a historical overview of the role of the public and private sectors in the provision of transit services in the United States. The discussion ranges from the early for-profit origins of urban transit to the factors leading to

OCR for page 15
Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience widespread public ownership and subsidy of transit during the past four decades. The chapter concludes with a review of more recent policies and legislation affecting the amount of transit contracting that takes place. Chapter 3 offers a conceptual framework for the decision to contract for transit services, drawing on the precepts of organizational behavior and contract economics. This is followed by a brief review of the effects of transit contracting on service cost, quality, and safety as identified and examined in past studies. Although time constraints precluded a comprehensive review of the literature, the chapter identifies several gaps in the previous research that the committee has attempted to fill in the present study. Chapters 4 and 5 present the survey findings. Chapter 4 describes the scope of transit service contracting today, the terms and methods employed, and the extent of competition—information obtained from Part 1 of the survey. Chapter 5 summarizes the reports of transit general managers in Part 2 of the survey on the factors influencing decisions about contracting, the positive and negative aspects of the practice, and ways to improve contracting programs. The final chapter summarizes the main findings of the study. Taken together, these findings reveal much about the nature and extent of transit service contracting today, the motivations for and deterrents to the practice, and its advantages and disadvantages. The committee offers its own insights and ideas for further study at the conclusion of the chapter. Note 1.   The committee recognizes that some public transit providers receive aid from other federal programs, such as Medicaid, and that others do not receive any federal aid at all; however, tailoring and administering surveys to such a varied population would have exceeded the time and resources available for this project.