Recent Transit Strikes Show the Pitfalls of Contracting Services for the Wrong Reasons

Unlike many of their counterparts in Europe and Asia, most public transit agencies in the United States directly operate fixed-route transit services with their own employees, using equipment procured and owned by the agency. However, as U.S. transit agencies look to provide more service with tight budgets, contracting transit operations to private sector providers seems to be increasingly proposed as a way to contain costs and boost quality.

Yet recent high-profile work stoppages point to the pitfalls of approaching contracting solely to save money. Eno research shows that contracting can deliver positive outcomes but only if done for objectives other than cutting costs. Recent action by maintenance workers and bus operators in suburban Washington, DC highlights this very concern.

The Washington Metropolitan Area Transportation Authority’s (WMATA) first foray into contracted operations was with its Cinder Bed Road Bus Garage in Fairfax County, Virginia. In August 2018, WMATA signed a three-year contract with TransDev, a multinational bus operator, to deliver the service. In a WMATA press release, the agency stated that the goal of using contractors was to “control cost growth while delivering quality service and preserving current employees’ jobs.”

Concerned about wage parity, benefits, and WMATA’s efforts to expand contracted operations, the Cinder Bed Road TransDev employees represented by the Amalgamated Transit Union (ATU) walked off the job in October 2019. This is the first work stoppage in WMATA’s history, and coincided with another strike at a nearby regional bus operator, the Fairfax Connector, which also contracts operations out to TransDev. The Fairfax Connector workers agreed to return after a five day strike in early December. The Cinder Bed Road workers tentatively agreed to return to their jobs during the week of December 16, but as of this writing the work stoppage continues.

While the strike might be about specific wages and benefits, it is also about the ATU’s desire to halt the further expansion of contracted operations. WMATA is considering contracting operations at other facilities, including the Silver Line Metrorail extension and maintenance facility. As transit agencies continue to explore contracting, it is important to keep several key principles in mind.

Contracted operations does not mean privatization

The word “privatization” suggests that the public sector is absolving itself of oversight. In fact, contracted operations are not the same as privatization. The public sector has a very important role in overseeing the contractor and ensuring that operations are high quality and the private company is meeting or exceeding the terms of the agreement. Contracting demands strong agency supervision, but is different than managing operations internally. Transit agencies and the press need to be clear not to excuse the public sector of its important oversight responsibilities.

Using contractors solely to as a way to cut costs is never a good idea

Low cost almost always comes at the expense of quality service. Eno research shows that other countries that extensively use contracting to provide bus services—like London, Oslo, and Stockholm—are primarily focused on boosting service quality and ridership. While contractors do compete on price, that is a minor consideration in relation to their overall bidding effort. The result is a system that is reliable, clean, and easy to use. Contracting, if done properly, can build in incentives for management and ownership to boost efficiency and meet reliability targets. Cost cutting should not be a goal of contracted services.

Contracting does not necessitate an attack on labor

Contracted services can also work with a unionized workforce and strong labor protections. Agencies can set rules or regions can legislate minimum labor protections, wage parity rules, and other provisions to protect against strikes or other issues that can disrupt service. If contracted operations cost less, it should be from streamlined management and operational efficiencies, not cuts to wages and benefits. If a transit agency has budget or pension problems, it needs to solve those directly rather than through contracting small bits of the service.

Contracting for operations is going to continue to be part of the conversation in public transit. But officials and agencies need to recognize what contracting can accomplish and what it cannot. Remembering the vital role of public oversight and the pitfalls of solely chasing lower costs can ensure that any contracted service remains high quality for both workers and the riding public.

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