Contracting Fixed-Route Bus Transit Service (2018)

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1 Many transit systems choose to contract a portion or the entirety of their bus operations to one or more contractors, as opposed to directly operating the service. Much of the current literature focuses on cost–benefit analyses. This synthesis addresses the process of contract- ing bus service, from preparation of the request for proposals (RFP) through evaluation and selection of a contractor to oversight of the contractor’s performance. The purpose is to provide summary information that documents current practices in the contracting process. Findings from the literature review, survey responses from transit agencies and contractors, and particularly the case examples identify and assess elements contributing to a well-thought-out process of procurement and oversight to ensure quality fixed-route bus transit services. Results of a survey of transit agencies in North America that contract some or all of their fixed-route bus service document the current state of the practice with regard to the contracting process. Thirty-seven completed responses were received from the 45 agencies in the survey sample, a response rate of 82%. Four partially completed surveys were also included in the survey analysis. Survey results address the procurement process, contract structure, transition issues, oversight, labor issues, challenges, agency assessments of the contracting process, and lessons learned. This study also included a brief survey of firms that provide contracted transit services, to obtain their views of the contracting process. With the assistance of panel members for this study, surveys were received from six of the seven contractors contacted. Inclusion of the contractor perspective is important in providing a full picture of all elements of the contracting process. Case examples provide additional details on procedures, challenges, lessons learned, and keys to success. The six case example cities and agencies are: • Denver, Colorado: Denver Regional Transportation District; • Lawrenceville, Georgia: Gwinnett County Transit; • Moorhead, Minnesota/Fargo, North Dakota: Metropolitan Area Transit; • Oceanside, California: North County Transit District; • Petaluma, California: Petaluma Transit; and • Woodbridge, Virginia: Potomac and Rappahannock Transportation Commission. Synthesis findings are summarized here in the areas of satisfaction with contracting, an effective contracting process, transition issues, oversight, and partnerships. S u m m a r y Contracting Fixed-Route Bus Transit Service

2 Contracting Fixed-route Bus Transit Service Satisfaction with Contracting Transit agencies are generally pleased with their contracting efforts. Lower costs, access to contractor expertise, greater flexibility, simplicity, and limited liability are among the reported benefits of contracting. Drawbacks of contracting include lack of control, different cultures, poor contractor performance, and the need for oversight with limited staff. The Contracting Process Allowing sufficient time for the RFP process is a prudent course of action. Consultation with peer agencies and potential bidders to learn from their experiences is helpful. Both peer agencies and contractors can point out flaws in thinking or mistakes, and identify elements that could increase the price without necessarily adding benefit. There are numerous ways to level the playing field and encourage multiple bids. Among these are early notice of the intent to release an RFP; opportunities for contractors to visit before or early in the RFP process; provision of vehicles, facilities, and equipment to mini- mize capital expense; and networking with contractors at conferences. A clear and specific RFP is the most critical element in the contracting process. A thor- ough scope of work and highly detailed cost sheets provide clarity throughout the process to bidders and the evaluation team. Defining the evaluation process, including clear criteria and the weight assigned to each, strengthens the RFP and clarifies agency goals. Respondents vary in the weight their agency gives to the local team versus corporate experience. Transitioning Between Contractors Condition of the vehicles is a major issue in the transition from one contractor to another. Some agencies rely on third-party inspections to resolve disputes. Oversight A robust oversight program is critical to contract success. A key to a successful oversight program is to ensure that all parties know and agree on what is measured and how it is measured. Nearly every agency includes penalties in the contract and may also provide incentives as part of the agency’s oversight program. It is useful to remember that although contract compliance is important, the agency wants the contractor to succeed. Partnership The degree to which contractors and agencies agree on major elements of the contracting process for fixed-route bus transit service is striking. Both sides value a clear scope of work and RFP, a selection process that allows sufficient time and is based on evaluation criteria other than cost, ongoing communication, and recognition of the value of both the agency’s local knowledge and the contractor’s expertise. Agencies and contractors both view a real partnership as the goal. Open and frequent communication at all levels, from the beginning of the RFP process through the day-to-day workings under the contract, is a necessary element in partnership.