Contracting Fixed-Route Bus Transit Service (2018)

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134 Contracting Fixed-Route Bus Transit Service 1. Contact info 2. What are some of the key factors in the decision to submit a bid on an RFP for fixed-route contracting? Not Important At All Not very Important Neutral Important Extremely Important Agency reputation 0% 0% 14% 43% 43% Familiarity with agency 0% 0% 14% 43% 43% Incumbent contractor 0% 14% 43% 14% 29% Need to find maintenance facility 0% 14% 0% 43% 43% System size 0% 0% 43% 43% 14% Clarity of RFP 0% 0% 0% 43% 57% Evaluation criteria 0% 0% 29% 0% 71% Other (please describe) Comments include: (1) contract term length, geographic location, capital expenses, ability to negotiate contract terms, and timeline to bid. (2) We value agencies that are purchasing on value based contracts. High ratings for price evaluation give us pause. We also prefer to work with clients that ensure drivers are paid a living wage. (3) For our company, the scope of work must reasonably fit our resume, and the draft contract should illustrate that the agency is looking for a partnership with their contractor. We also evaluate if there are issues with the current operation that we as a contractor can help to resolve for the agency. If it is simply a low bid situation, we tend not to submit a proposal for those RFPs. (4) Clarity of information would include specific roles and responsibilities for agency and contractor, including but not limited to: specifics on level of service (hours, miles, peak/total vehicles); CBA and related union information; wage and benefit information; current employee census/seniority; hiring and training requirements; fleet specifications; insurance/risk management requirements; contract terms (service level change, COLA, living wage, termination clause; mutual agreement on optional extensions; liquidated damages and incentives); on-site staff required, road supervision/dispatch requirements and staff coverage; call taking/scheduling requirements including call volumes; ridership produc- tivity; average trip length and ride time; dedicated vs. non-dedicated fleet; short-term plans for service changes (growth/reductions); fleet maintenance requirements (PMs, major components allowance, fleet refurbishment/rebuild schedule, fleet replacement schedule). (5) Size of team A p p e n d i x F Contractor Survey Results

Contractor Survey Results 135 required for engagement. (6) The relationship between the agency and the current contrac- tor is important. The time frame to respond is extremely important. Capital requirements are important. Flexibility of agency is important. Willingness to answer questions is important. Performance level of current contractor is important. Geographic area is important. Funding sources are extremely important. 3. Are there elements of an RFP that encourage your firm to bid? Please give examples. Responses summarized in Table 3, Chapter 5 of report. Verbatim responses are provided here. If there is ample time to put together a competitive bid we are more likely to bid. If the agency provides capital we are more likely to bid. Professional quality of RFP, appropriate amount of lead time, willingness to provide informa- tion (particularly information from incumbent contractor). Previously mentioned clarity and definitions of scope of work in RFP; projects with existing facilities provided are desirable. Many communities have limited real estate options that are properly zoned, adequately sized, and in a logistically viable location. Yes, when the RFP provides extensive information so we can make informed pricing deci- sions; and when there are situations with current service we can help solve. We prefer RFPs that allow for fixed and variable payment methodologies. We feel that it matches the reality of operating transit programs and reduces the need to build contingencies into our pricing. We prefer contracts which provide for implementation costs up front dur- ing the implementation phase. We also like Fairness in incentives/dis-incentives. Agency has capital replacement plan and has followed thru on that plan. Reputation of agency. Agency past contracting history. Agency’s willingness to partner and is open to innovation. Agency is focused on quality. Whether size, scope, and location is favorable to our offer; client has stable funding; fleet composition (make year model, etc.) is favorable. 4. Are there elements of an RFP that discourage your firm from bidding? Please give examples. Responses summarized in Table 3, Chapter 5 of report. Verbatim responses are provided here. Short terms with high capital; scope/severity of incumbent performance issues, requirement to sign a contract with the bid, non-negotiable terms, high LDs, short timeline to respond to the bid. Award based almost entirely upon price low bid historical agency. If an RFP is overly capital intensive, and/or does not provide enough current information and data to provide a responsible bid it may discourage us from bidding. As stated previously, if Price is over weighted as an evaluation criteria we may pass on the opportunity. Yes, if pricing is the highest weighted factor, we typically do not propose on those type of low bid situations. Also, if there is a situation where the agency cannot provide enough informa- tion about the current service data, it makes it hard to make educated pricing decisions, and we may not end up submitting if we cannot get enough information on labor, maintenance, miles, hours, etc. Short turnaround (limited time to provide proposal response and/or compressed start-up schedule). One-year base term contract with options also not encouraging, especially with capi- tal requirements.

136 Contracting Fixed-Route Bus Transit Service Poor quality RFP, short lead time (suggests it is wired for incumbent), lack of system information, length of tenure of incumbent contractor. If the work is awarded on low bid, If the agency is unwilling to negotiate if an issue arises that is out of contractor control (surge in fuel costs, mandated minimum wage, the incumbent negotiates a union agreement that gives employees a significant increase upon contract handover when the info was not available during the procurement period) 5. If you could change ONE aspect of the contracting process with transit agencies, what would you change? Responses summarized in Chapter 5 of report. Verbatim responses are provided here. The requirement to name an entire team during the procurement process if the work is not going to start for at least 6 months. Be as open to incentives as they are to liquidated damages. RFP allowance to renegotiate price based on significant changes in scope of work and eco- nomic conditions: service level change < or > 10%; healthcare; prevailing wages; fleet conditions. We have seen very successful processes where agencies offer a Request for Information (RFI) where bidders can be introduced, and the agency can have an open dialogue with potential bidders WHILE they are working on the final draft of the RFP. If all agencies would allow this kind of dialogue, then I think the procurement process in general would be better. Fixed route driver wages are usually reasonable, we find that in paratransit operations driver wages should be higher and if agencies could set a minimum wage or refer to living wage indices it would ensure that contracts are not won based on lowering driver wages. Length of contract terms. Decision to award. Zero variance between the weight of price in evaluation criteria, versus how much it actually price drives a decision to award. 6. Are there any lessons learned that would be helpful for transit agencies in preparing an RFP and in the contracting process and procedures? Responses summarized in Chapter 5 of report. Verbatim responses are provided here. Our company has talented manager candidates that are proven in other industries and ver- ticals; however, unless these candidates have experience in the exact scope of the contract, we are unable to bid them based on how agencies evaluate our credentials. Our industry has a huge challenge in talent; loosening experience requirements would help open up opportunities to unconventional yet talented candidates. On a similar note, if a proposal is due months before decision date, consider not requesting to name managers. Holding a potential candidate for a period is nearly impossible and perpetuates the image that “bait and switch” drives candidate selection (versus the actual inability to hold on to viable candidates for that time period). Time- lines for proposal responses are also an important factor in the quality of bid. If you provide your bidders adequate time to respond - and adequate time after questions are answered, the responses will be more thorough. The more information that can be provided about current state, future vision, and statistical information will help bidders to assess an opportunity and agencies are more likely to get more responses.

Contractor Survey Results 137 Staff of contractor should play a large roll in an RFP requirement-requiring GM that has 10 years of experience is not always a good thing. Commitment of corporate support by contractor. Best practices that I have seen include site visits for contractor existing locations to understand how that vendor manages and operates its locations, fixed and variable based pricing method- ologies, and value based contracting. If an agency is materially changing their operation, we suggest first going to an RFI and then to an RFP. RFIs help ensure that new ideas are incorpo- rated and that vendor comments to major changes are received to ensure those changes can be properly implemented and managed. Yes, it is very important that current wages and benefits for the current employees are dis- closed, especially when there is a labor agreement in place today. If not, then bidders are making guesses that could end up hurting the incumbent employees after contract award. It is important to both the agency and the incoming contractor to protect the incumbent employees and their experience going forward, so we actively work with the agency to try to ensure as much informa- tion as possible is out there for bidders. Craft the provisions in the RFP to limit an adversarial relationship in the subsequent contract. Strive for clarity in terms and conditions in the RFP and resulting contract. Monitor contrac- tor performance with a priority focus on safety and customer service. Consider the agency- contractor relationship as a partnership, with equal weighting for both penalties and incentives. Develop communications framework for constant updating and feedback, blending input from passengers, agency staff, contractor, and contractor employees. Work to leverage capital and operating funds for facilities and fleet that optimizes contractor competition. Cooperatively develop technologies in a holistic and complementary manner, using agency’s vendors, and con- tractor’s expertise. Innovate using the RFP process to encourage alternative approaches. Work towards longer term base contracts to allow service continuity and employee retention as well as employee development and succession planning, maintaining mutual contract termination language as needed. Be prepared to accept innovative alternatives - for example, be open to alternate fleet require- ments that assure quality but reduce cost. To level the playing field and promote competition reduce inherent advantage for incumbent, for example, require incumbent to provide detailed labor information, require incumbent to give agency right to lease maintenance facility if they are not successful proposer, if there is a large team required give proposers access to lower level staff positions for recruitment. Include incentives as well as liquidated damages in the contract. Don’t overwhelm contractor with agency staff whose only mission is to find penalties to reduce agency cost. Agencies should make it mandatory that any labor agreement associated with their work should terminate at the same time as the contract. Anything else usually results in labor unrest not in the best interest of the agencies or the system passengers. 7. Below are verbatim responses from the “lessons learned” question for transit agencies regard- ing the proposed local team versus the overall company: The last RFP we published did not ask the proposers to identify a specific management team. As most agencies, we have experienced the “bait and switch” with a proposed management team so, in our RFP, we asked each firm to tell us what their company would bring to our contract from a corporate support perspective. It made it easier for the firms to focus on our service with- out competing for the talent that is available—many of whom do NOT want to be identified in a proposal for fear of jeopardizing their current position. We included specific steps we expected from the successful proposer as to how the management team would be selected and approved.

138 Contracting Fixed-Route Bus Transit Service The result was a group of very good proposals that were focused on the things we were most interested in: technology, KPIs, safety, and employee development/training. When the RFP was issued and firms were selected for further interviews, there was a focus on the personnel that were being proposed for the GM and Maintenance Manager positions. In hindsight, the people that were proposed were only here for a short time and then there was a change. The people that are being proposed are very important, but I would also focus on interim management if they leave and the process for replacing them. Focus on the local management team, not the regional and corporate staff. You have to live with the local team every day. 8. From your perspective, where should the agency’s focus be? The RFP that did not ask for a specific management team was brilliant. We participated in one of those and the focus was on the proposed operational strategies. In addition, choosing the team was said to be a joint process between the agency and the contractor. Really demonstrates their willingness to be a true partner. Focus on the local management team. For contractors, it is a challenge to assemble a qualified management team for a new specu- lative opportunity. Agency focus should be on the contractor offering the best value and their commitment to mutually approved management staff meeting the qualifications. I think it is innovative for the agency to focus on the company process, procedures, training, culture, support, etc.—allowing for a wider range of talent to be considered once the agency selects the company it wants to work with. The agency could outline in the RFP that all final management team selections have to be approved by the agency. This is a legitimate issue. I think the current process makes it difficult to recruit good can- didates from similar industries that could easily be trained to meet the agency’s requirements. This results in recycling, bait and switch and interim management issues. I do agree that agen- cies should focus on the competencies of the company and allow for interim management for a minimum period of time and then agree with their vendor on a formal selection and interview process as well as onboarding and training of the new management staff. We have a rigorous selection process that allows us to pick the best candidates for the long term health of the con- tract. When we are forced into short selection timeframes we may not be able to access the best candidate. One of my favorite phrases is hire slow and fire fast. We would like to hire slower. We would like to have a partnership and be allowed to develop talent through coaching and mentor- ing. I could go on, but will stop here. Local team. The company, its experience, its creativity in solving your needs, and its standards for and access to talent. 9. Respondents to the agency survey mentioned ways to assist the contractor in developing their bids. Two verbatim examples are: Talk to potential bidders about what they need to allow them to make a bid on the contract. Make sure you understand what your agency’s goals and objectives are first—safety, OTP, MDBF, other (Employee pay, number of FTEs, etc.) and then use these goals to develop your RFP and SOW. It’s important the contractor understands agency goals, objectives and expecta- tions so they can bid the contract accordingly.

Contractor Survey Results 139 10. Are there other ways to make the process easier for bidders? Very helpful. Other ideas: Understanding what is working, what isn’t and why. What changes in the scope are a result of missed opportunities in the current contract? Be honest about how much price is a consideration. A workshop held by the agency to explain their goals is important. So many prebid meetings, questions are not answered. An open workshop that would allow for dialogue exchange prior to RFP being written is key to success. Yes, I think the RFI process is so valuable and could be one way to capture the above. Yes these are very helpful. I think the initial step of having an RFI and industry meetings BEFORE the RFP is finalized helps both the contractor and agency to have a more successful process. This was recently done by both Valley Metro in Phoenix, AZ, and the Washoe County RTC in Reno, NV. A pre-RFP industry review has been useful to agencies and contractors. Contractors are not seeking “easy,” they are seeking clarity, specificity, equitable price/performance measures. These are helpful. See comments above about breaking down inherent advantage for incum- bent to make the process easier. Yes, these are helpful. Make sure information provided is accurate. 11. Is there any other information you would like to share that could benefit transit systems that contract fixed-route service? Put out a notice 6 months in advance that you intend on releasing an RFP. When considering outsourcing, identify all costs the agency incurs on the service to determine if contracting would benefit them. Risk management and employee costs may be underestimated. Yes- in our experience revenue HOURS are much less risky for contractors bidding on fixed route services, than revenue MILES. Using revenue hours as the billable unit allows a fair compensation of the contractor when their driver is still in service and on the clock, versus using revenue miles as the billable unit, which does not take into consideration realistic factors such as traffic, weather and construction. I just want to thank you for soliciting information from your vendors. We want to do the best job for our clients and improved RFP processes will allow us to provide better service. Stressing Partnership between contractor and agency is important. Encourage creativity from your bidders. They are transit experts and should be able to share their experience when improving your transit system. Thank you for participating. The survey is now complete.