Service contracting is a tool that governments can use to deliver transit services for riders. It is also widely employed in the United States; nearly two-thirds of transit agencies already contract all or part of their operations. When contracting is implemented effectively and strategically, it can yield service improvements that benefit the riding public and, in some cases, lower costs. It can enable governance overhauls whose impacts may go far beyond increased service reliability by creating more adaptable, sustainable public institutions.

However, the COVID-19 pandemic has presented unprecedented challenges for public transportation, including workforce management issues, fluctuating ridership, and revenue declines. In response, transit agencies are exploring innovative ways to engage with private partners to address these challenges.

It is within this context that transit agencies are considering ways to engage with private partners. Previous work on contracting consistently points to the need for positive, healthy relationships between the public agency and the private contractor to achieve the best outcomes for both parties, their workers, and the riding public. This is intuitive because when there is public and private alignment, the public interest is protected.

This report finds that the current state of public transit in many regions makes the need for positive relationships even more acute. Public agencies should be tightly aligned and collaborate with the contractor on workforce issues to ensure good transit service and outcomes. At the same time, the dynamic period for transit means that contracts should allow the private contractor the flexibility to innovate to solve new problems.