Last week, Eno held a webinar — regarding private contracting of transit services — with representatives of two transit agencies and the North American Transit Alliance. The webinar participants expanded upon Eno’s recently released report, “Success Factors in Private Contracting for Public Transportation.”

Eno has found that when the public sector contracts with private contractors for transit services, they have the potential to improve services and/or lower costs. Contracting also enables transit agencies to tap into the expertise and experience of firms, who are typically providing similar services for other transportation organizations.

Both the webinar and the report highlighted how a positive and healthy relationship between a public agency and a private contractor can help achieve the best outcomes for the agency, contractors, their workers, and the riding public.

In the U.S., nearly two-thirds of transit agencies now contract all or part of their operations. Many of them turned to private contracting after the Americans with Disabilities Act required transit agencies to provide complementary paratransit service.

Laura Hendricks shared her insight during the webinar. She is the CEO of Transdev U.S., and also serves as the chair of the North American Transit Alliance, an association of private-sector companies who operate transit services in 46 states. Hendricks explained how private companies can bring innovative ideas from around the globe to public agencies. She cited several examples including those relating to fare payment technologies, real-time bus information, and zero emission vehicles.

Partnerships with contractors can bring resources including staff, technology, and expertise to design efficient routes and optimize services. They can also be nimbler than public agencies when procuring and implementing new technologies.

Sabrina Glenn is the senior director of transit at the Regional Transportation Commission of Southern Nevada (RTC), the 14^th busiest transit system in the U.S. Her agency serves the Las Vegas area and contracts out all its operations, which consists of fixed-route bus service, microtransit, and paratransit services.

RTC bus in Las Vegas. Source: RTC.

Glenn proudly noted that the RTC is one of the most efficient transit agencies in the nation — with the highest farebox recovery ratio, the third lowest operating cost per passenger, and the lowest subsidy needed per passenger.

Glenn recommended that agencies undertake an industry review process before issuing an RFP. By soliciting feedback from potential bidders and other transit agencies, they can refine contract details and provide greater clarity to contractors. She noted that RTC ensures that their contract accounts for “proper wages” for employees.

Glenn said RTC contracts out its operations and maintenance so that it can be more flexible and innovative. Transit agencies, she said, should wield both a carrot and a stick. The stick holds private contractors accountable for their services, and carrots are rewarded when a firm comes up with ideas that lead to improved service or cost savings.

Mary Ellen DeFrias is the administrator of the Greater Attleboro Taunton Regional Transit Authority (GATRA), a transit agency serving 30 communities in southern Massachusetts. GATRA service includes fixed-route, dial-a-ride, and microtransit services.

GATRA bus in southern Massachusetts. Source: GATRA.

The 1974 state law which created GATRA, along with 14 other regional transit authorities, stated that the authorities cannot operate service directly, but rather must contract with private operators for the provision of service. Legislators at the time did not want to harm the private bus operators who were providing services.

“Private contracting has been very successful for us,” DeFrias said. When her agency selects contractors, they consider numerous factors including the people who will be managing the services, their Human Resources capabilities, and the “kind of innovations they can bring to the table.”

The panelists talked about how private contractors represent their agencies. For example, buses are branded with the logo of an agency. Likewise, the agencies set performance standards for operations, maintenance, and other service aspects. Glenn said that RTC expects the same level of customer service in Las Vegas at 2:00 AM as it does during the middle of the afternoon.

RTC conducts a very extensive review process before selecting its contractors. Price is just one of many determinants used for selection. They also evaluate how firms have met the needs of their partners in other regions. Referring to contractors who lowball their bids, Glenn said, “Sometimes you get what you pay for.”

Both DeFrias and Glenn said although there are some advantages to having multiple contractors, their agencies have both decided to consolidate their contracted work under just a single firm at this time. Glenn said this allows RTC staff to work with just one dispatching unit, and be more flexible when the agency needs to shift services, supervisors, or drivers. DeFrias said that GATRA recently went from three contractors to one, because it was far easier to oversee the work performed by one contractor, and it made the contractor more accountable.

Glenn said RTC contracts out its services, in part, to improve the agency’s effectiveness and efficiency. When RTC had two contractors, their staff had two operations meetings and two service meetings. Everything they were doing was being duplicated for each one of those contractors. Consolidation, she said, has made their oversight much more effective.

Eno’s report indicated that contracting alone is not a panacea that will inherently lead to improved services or reduced costs. The best outcomes are achieved when the public and private sector work in a collaborative manner, positioning them both to respond to challenges and surprises.

Eno found that that contracts need to be customized to meet each agency’s needs. For example, there is no perfect length of a contract. They should be short enough to allow for natural competition between contractors. This provides an incentive for the firms to provide better service and lower prices. At the same time, contracts need to be long enough so that a contractor invests appropriate resources with the agency and within the community.