Contracting Fixed-Route Bus Transit Service (2018)

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3 Project Background and Objectives 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. Most of the literature today focuses on cost–benefit analyses; this synthesis focuses on the process of procurement and oversight to ensure quality fixed-route bus transit services. The idea is to provide summary information and case examples that can be used by transit systems in their decision-making process. The purpose of this synthesis is to explore issues and document successful practices in the contracting process for fixed-route bus transit service. This report addresses: • The procurement framework, particularly development of the scope of work and the request for proposals (RFP); • Contract or operating agreement structure; • Transition between contractors; • Oversight; and • Labor issues. As directed by the panel overseeing the study, this synthesis gives particular attention to service procurement from the perspective of small transit agencies. These agencies often lack the time, experience, and internal resources to create and carry out a highly detailed procurement and may have difficulty attracting bids because many transit contractors may not be interested in small service contracts. This synthesis identifies successful strategies for achieving agency goals and best-practice solu- tions through a review of relevant literature, a web-based survey of a cross-section of North American bus transit agencies that contract all or part of their service, and case examples of six specific transit agencies (including two agencies with fewer than ten buses). The study also includes a brief survey of firms that provide transit services (i.e., contractors) 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. Both the chief execu- tive officer and the vice president of business development at one firm submitted surveys that focused on different elements of the contracting process, which resulted in the receipt of seven completed surveys for this study. Detailed responses provided by nearly every national contract- ing firm in the United States provide a highly useful supplement to information gathered from the transit agencies. An important element of this synthesis is the chapter documenting case examples, which go into greater detail on specific aspects of individual agencies’ policies and procedures related to C h a p t e r 1 Introduction

4 Contracting Fixed-route Bus transit Service contracting. The case examples profile innovative and successful practices. Findings from all of these efforts are combined to report on the state of practice, including lessons learned, chal- lenges, and gaps in information. A summary of research needs is also included. It is hoped this synthesis will aid transit agencies by identifying solutions that work and pitfalls to be avoided. Technical Approach The approach to this synthesis included: A literature review. A Transportation Research Information Database (TRID) search using several different keywords was conducted to aid the literature review. A survey of transit agencies, described in the following paragraphs. Telephone interviews with six agencies selected as case examples, to examine details in the contracting process. The survey on contracting fixed-route bus service was designed to solicit information on the procurement process, contract structure, transition issues, oversight, labor issues, challenges, agency assessments of the contracting process, and lessons learned. Once finalized by the panel, the survey was posted on the SurveyMonkey website and pretested. The pretest revealed no issues with survey logic and flow. National Transit Database (NTD) data identify which agencies contract some or all fixed-route bus service. The final sample was made up of 45 transit agencies. An e-mail with an attachment from the TCRP program manager explaining the importance of the survey and a link to the online survey site was sent to a known contact at each agency. Follow-up e-mails were sent as needed on a regular schedule after the original contact to encourage response. Thirty-seven completed surveys were received from the 45 transit agencies in the sample, a response rate of 82%. Four partially completed surveys were also received, and responses from the partially completed surveys are included in this analysis. There is an even distribution of the 37 fully responding agencies by size. The effort to attract participation by small agencies was successful, with responses from 12 agencies that operate fewer than 25 vehicles in maximum service (Figure 1). Small (less than 25 peak buses) 33% Medium (25- 99 peak buses) 32% Large (100+ peak buses) 35% Figure 1. Responding transit agencies by size.

Introduction 5 Distribution of respondents by FTA region was also examined. FTA Region IX accounted for 41% of responding agencies, but an analysis of NTD data indicates that 35% of contracting fixed-route agencies are located in Region IX. There is reasonably balanced geographical repre- sentation among survey respondents. Figure 2 shows the location of the 37 transit agencies that fully completed the survey. Case example locations are shown by a large dot. The case example agencies also completed the survey. Organization of This Report Following this introductory chapter, Chapter 2 summarizes the findings of the literature review. Chapters 3 and 4 present the results of the survey. Chapter 3 examines the procurement framework, contract/operating agreement structure, transition issues, labor issues, and over- sight. Chapter 4 discusses the agencies’ assessments of their contracting efforts and summarizes agency assessment of barriers to success, agency assessment of its contracting process, and les- sons learned that would be of interest to other transit agencies. Figure 2. Survey respondents and case examples.

6 Contracting Fixed-route Bus transit Service Chapter 5 presents the results of a brief online survey of major contracting firms in North America. Panel members and survey respondents helped to identify these firms and encour- age them to participate. Six of the seven contractors identified responded to the survey. Two executives from one of the contractors completed surveys, resulting in seven total surveys. These survey results add the contractors’ perspectives to this report. Chapter 6 reports detailed findings from each of the six case examples. The selection process for case examples had several criteria: to include transit agencies of various sizes in different parts of North America and agencies that reported detailed observations in the survey that would add value to the synthesis. Chapter 7 summarizes the findings, presents conclusions from this synthesis project, and offers items for further study. Findings from the surveys and particularly the case examples provide an appraisal of the current state of the art. Appendix A lists all agencies that contract fixed-route bus service and the percentage of their services that are contracted. Appendix B identifies transit agencies and contractors that partici- pated in the online surveys. Appendix C includes the online survey of transit agencies. Appen- dix D provides verbatim responses to the agency survey. Appendix E is the online contractor survey. Appendix F reports verbatim responses to the contractor survey. Appendix G includes sample RFPs and timelines for RFP preparation. (Appendix G may be obtained at www.trb.org by searching for “TCRP Synthesis 136.”)