New Report Calls for Improving Transit Service with Contracted Operations

October 10, 2017
A new report by Eno Center for Transportation and TransitCenter “A Bid for Better Transit: Improving Service with Contracted Operations” examines how and under what circumstances public transit agencies can contract bus or rail operations to private providers in order to boost service for riders while simultaneously preserving essential labor protections.
The report comes at a time when public transportation systems across the United States are struggling with declining ridership, strained budgets, and a need for new thinking. Many public-sector transit providers are searching for more sustainable and reliable ways to serve their riders and find operational efficiencies while maintaining workers’ rights.
One strategy with the potential to improve transit service quality for riders is to harness the forces of competition by inviting bids from private transportation companies—rather than strictly hiring public agency employees—to operate buses and trains. While such arrangements are common in other developed countries, most large American transit agencies directly operate fixed-route transit services with their own employees, using equipment procured and owned by the agency.
While interest in transit contracting is growing in the United States, it is complex and controversial and requires careful consideration. Most importantly, it should be considered as a way to improve service, not as a way to lower costs. In fact, contracting can provide an opportunity for labor leaders to update working conditions and challenge outdated assumptions about how the public and private sectors work together.
The report presents six case studies – three in Europe (Oslo, Stockholm, and London) and three in North America (Vancouver, New Orleans, and Los Angeles). It shows how devising poor contracts, chasing the lowest bidder, and undercutting workers can leave an agency and its riders with substandard service. From the report’s case studies, Eno and TransitCenter gleaned three main lessons.
  1. Governments cannot contract out the public interest. A transit agency can outsource operations, maintenance, planning, management functions, but it cannot outsource its responsibility to protect the public interest. Transit agencies’ approach to private contracting must be shaped by this core obligation.
  2. Clearly articulated contracts can align contractors’ profit motives with agency goals. Public agencies must clearly articulate their goals and set specific performance standards for private contractors. Doing so will help align private sector’s goal of profitability to the public sector’s mission to uphold the interest of riders and transit employees.
  3. Cooperative agency-contractor relationships can improve operations and foster innovation. While strong public oversight is essential, contractors should also be cultivated as allies in providing high-quality service. A mutually respectful relationship can facilitate innovation and help ease changing environments.
“Transit agency leaders are hungry for new ways to respond to changing demographics, emerging technologies, and unpredictable political dynamics. When used strategically, contracting can help strengthen the industry’s footing while also protecting the interests of riders and transit workers,” said Eno President and CEO, Robert Puentes.
“Competitive bidding has improved transit service in progressive cities all across Europe. If administered fairly, competition can also bring better transit to cities in the U.S.,” said David Bragdon, Executive Director of TransitCenter.
Former transit agency general manager Beverly Scott added, “Change is inevitable. Transit agencies and labor especially need to look ahead to be part of the change instead of change being done to them.”
Reacting to the report, the Transportation Learning Center’s Jack Clark noted, “There’s no way contracting out is going away. Putting some parameters around how it should—and should not—be used provides a useful counter to what could otherwise be a stale shouting match.”
“A Bid for Better Transit: Improving Service with Contracted Operations” can be found on Eno’s website and TransitCenter’s website.

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