Public Transport: Competition & Contracting

1. Public Transport:Competition & Contracting Programme Introductions Brainstorm on identifying stakeholders Brainstorm on the ideal public transport system Presentation on competition, contracting and quality partnerships Break Small group exercise: preparing a contract specification Role play exercise: negotiating and agreeing a contract

2. Competition, contracting andquality partnerships • Transparency, efficiency and quality are the keys for a friendly and efficient Public Transport System. • The co-existence of authorities and operators, the necessary allocation of responsibilities sharing of risks as well as co-ordinated ”pull” and ”push” measures are other crucial issues

3. SOURCES The following EU projects served as key sources: • ISOTOPE (improved structure and organisation for transport operations of passengers in Europe) • MARETOPE (managing and assessing regulatory evolution in local public transport operations in Europe) • QUATTRO (quality approach in tendering urban public transport operations) • CIVITAS - CIty-VITAlity-Sustainability • NPF-Urban Transport - The National Policy Frameworks for Urban Transport Project • SPUTNIC - Strategies for Public Transport in Cities

4. EU Policy regarding Regulation of Passenger Transport Service Obligations with regard to public road and rail passenger transport • Proposed Changes to Legislation COM(2005)319 • Principles: • Contractual arrangements between the competent authority and the operator(s) responsible for providing services where financial compensation or exclusive rights are granted. • Need for periodic review of contract terms, so limits on its duration. • Competitive tendering for public service contracts, except in certain cases where direct award is possible, e.g. rail/underground systems or below a certain financial threshold.

5. Agreed regulation of passenger transport services – “controlled competition” • Local authorities may directly award a public service contract in 4 cases: • When the local authority provides the transport itself or through a distinct entity over which it exercises control (so called internal operator). • When the average value of a contract is small (less than €1m or less than 300,000km) and in the case of a SME (no more than 23 vehicles) thresholds may reach €2m or 600,000km. • In the event of immediate risk of disruption of services. • Where contracts concern transport by rail including suburban trains, regional trains, long distance trains with the exception of metro and trams.

6. Note! Tendering is possible in all models! Organisational forms Authority initiative Market initiative Public system Conces-sion Authorisa-tion Open entry Delegated management Dominated by private companies) Public management Dominated by public companies) RIGHT OF INITIATIVE • competition on the road (UK) market initiative • competition off the road (very common throughout the EU) authority initiative Source: MARETOPE

7. Organisational forms Organisational forms Note! Note! Tendering Tendering of of the the realization is realization is possible possible in in all all Authority Authority initiative initiative Market initiative Market initiative models models ! ! Public Public Conces Conces - - Authorisa Authorisa - - Open Open entry entry system system sion sion tion tion Delegated Delegated Dominated by Dominated by private private management management companies companies ) ) Dominated by public Dominated by public Public Public companies companies ) ) management management RIGHT OF INITIATIVE • The market initiative regimes have as a common characteristic that commercially viable services are meant to appear from autonomous market processes. Authority initiative regimes have as common characteristic that services can only result from a conscious action by the authority. As such no services can appear as a result of simple market forces as no legal provision makes such autonomous entry possible.

8. Organisational forms Authority initiative Market initiative Temporary non Temporary non ... ... ... ... ... ... ... ... ... ... ... ... Central planning & out Central planning & out sourcing sourcing Open entry Open entry Concession Concession authorisation authorisation authorisation authorisation authorisation Public management Public management authorisation Delegated management Temporary exclusive Temporary exclusive Perpetual exclusive Delegated management Perpetual exclusive - - exlusive exlusive - - Source: MARETOPE It is important to state that few real-world examples will fully correspond to any of these theoretical organisational forms. Normally it is a blurry blend of several forms . Source: MARETOPE

9. Organisational forms Authority initiative Market initiative Temporary non Temporary non ... ... ... ... ... ... ... ... ... ... ... ... Central planning & out Central planning & out sourcing sourcing Open entry Open entry Concession Concession authorisation authorisation authorisation authorisation authorisation authorisation Public management Public management Delegated management Delegated management Temporary exclusive Temporary exclusive Perpetual exclusive Perpetual exclusive - - exlusive exlusive - - Source: MARETOPE FORMS

10. Level Decision Software Hardware General description Strategic General goals: transport policymarket shareprofitability General description of the services: areatarget groupsintermodality What do we want to achieve? Long term (5 year) Detailed service characteristics Tactical Which services can help to achieve these aims? faresimageadditional services vehiclesroutestimetable Medium term (1-2 year) Operational Sales selling activitiesinformation to the public… Production infrastructure management vehicle rostering and maint. personnel rostering and mngt. How to produce these services? Short term (1-6 months) LEVELS OF PLANNING AND CONTROL IN PT Source: MARETOPE

11. EXAMPLE: TENDERING OF THE DESIGN AND REALISATION(COMMISSIONING) • The freedom of operators is limited by the minimum standards defined by the commissioning agency which organises the tendering of all services, area-wise, according to the instructions of the transport authority. In many cases decisions pertaining to one topic, such as fares or routes, will not be attributed totally to solely one actor. Source: MARETOPE

12. Actor “The People” Transport Authority Tendering organisation Transport Providers Politicalcouncil TransportDepartment Independent Organisation Private companies Relation Democratic control Hierarchical control Instructions Contract with tendering organisation Strategic Transp. Pol. Social pol. Mobil. Std. ( (discussion) Accessib. Std. ( (discussion) Fares Tactical (Min.std.) Routes (Min.std.) Timetable (Min.std.) Translation ((Min.std.) Vehicle type Competitive tendering Operational (Min. std .) Sale (Mid. std .) Information Person. Mngt. Vehicle Mngt. Source: MARETOPE

13. Production risk borne by Authority Operator M with Revenue incentives M with productivity and revenue incentives GC with Shared production risk Gross Cost Contract (GC) Authority Management Contract (M) M with Productivity incentives GC with rev. incentives and shared prod. risk GC with Revenue incentives Revenue risk borne by NC withshared revenue and production risk NC with Shared revenue risk NC withSharedproduction risk Net Cost Contract (NC) Operator CONTRACTUAL RELATIONSHIP BETWEEN ACTORS Contracts in the public transport world usually divide between production cost risks and revenue risks. Risks can be shared in various ways implying many intermediate forms of contracts are possible as can be seen in the shaded boxes. Source: MARETOPE

14. Production risk borne by Authority Operator Authority Management Contract (M) Gross Cost Contract (GC) M with Productivity incentives GC with Shared production risk GC with rev. incentives and shared prod. risk M with Revenue incentives M with productivity and revenue incentives GC with Revenue incentives Revenue risk borne by NC withshared revenue and production risk NC with Shared revenue risk Net Cost Contract (NC) NC withSharedproduction risk Operator Source: MARETOPE

15. CONFLICT TYPES Responsibilities Finance Objectives to Reach Fare Policy Performance Other CONFLICT TYPES • There are internal (industrial relations) and external (between an authority and an operator) and will vary in their magnitude of importance. • Contracts should include provision for remedy covering all the risks that may be foreseen at the outset. Flexibility is one important part to guarantee a sustainable service which can cope with future challenges. Source: ISOTOPE

16. Ownership Public Private Private Delegated management Private concession (wb: Management contract) (wb: Regulatory contract) Management Public management (wb: Performance contract) Public OWNERSHIP VERSUS USAGE The figure presents possible combinations of public or private ownership with public or private management indicating different types of contracts between government and state-owned enterprises, private managers of state assets and private monopoly, respectively. Source: MARETOPE

17. Ownership Public Private Private Delegated management Private concession (wb: Management contract) (wb: Regulatory contract) Management Public management (wb: Performance contract) Public Source: MARETOPE

18. FIXED VERSUS FLEXIBLE PLANNING In the context of tendering, decision making at the tactical level can be organised. • prior to the contracting out and operators have no tactical powers (London, Copenhagen) • (prior to the contracting out and operators have some tactical powers (Helsingborg, Sundsvall) • during the contracting out (Netherlands, France) simultaneously with the contracting out of the operational level • during the contracting out not simultaneously with the contracting out of the operational level

19. T Determined During contracting/tendering T Determined prior to contracting/tendering T Changes During contract • Contracting/tendering of: • the implementation • with redevelopment incentives. • Contracting/tendering of: • The Development and • the implementation • with redevelopment incentives. T Fixed Duringcontract • Contracting/tendering of: • The Development and • the implementation • Contracting/tendering of: • the implementation FIXED VERSUS FLEXIBLE PLANNING These various forms are ordered into four main options for the place of the tactical (T) decisions. Source: MARETOPE

20. CONTRACT DESIGN The contract should specify: • objectives of continuous improvement • tools and responsibilities, including measurement and/or monitoring programmes • consequences of the measures, including financial incentivesand/or penalties • control of these results • recourse procedure in the case of non application of the contract

21. CONTRACT DESIGN This specification of services should stimulate operators and authorities to cover all operational/tactical fields of interest by the continuous improvement system: • Transport (including access/exit by users) • Connections (inside UPT/with other modes) • Information to customers (static/real time) • Fares and sales system • Environmental impact (in a broad sense)

22. INTEGRATION • The contract should specify: • Logical integration • Physical integration • Traffic integration • Continuous improvement • By ”continuous improvement” of urban public transport, we consider the need for continuous adjustment of the service design and of the organisation in charge of providing the service, in order to maintain or increase its value. Innovation in service and management is generated by continuous improvement systems.

23. QUALITY SERVICE FRAMEWORK 8 main indicators: • Availability • Accessibility • Information • Time • Customer care • Comfort • Security • Environment

24. AVAILABILITY

25. ACCESSIBILITY

26. INFORMATION On street underground real time display in Stuttgart

27. TIME

28. CUSTOMER CARE

29. COMFORT

30. Quality partnerships • Three sorts of voluntary partnerships: • Route or corridor based partnerships • Area-wide partnerships • Social partnerships • Statutory partnerships: • Aim: to give partners confidence to invest • Local authority provides particular facilities • Bus Operators who wish to use them adhere to agreed standards • Traffic Commissioners act as regulator • Standards can only encompass quality measures • Fares, Frequency, Timings are not covered, except in Scotland where minimum frequencies can be defined

31. Partnership Framework • Fair and open access – no exclusion • Quality standards • Exclusion from facilities only for non partners • Consultation • Ensure that it is not anti-competitive • Quality contracts – stick or carrot?

32. Components • Service dimensions: • Journey time reliability • Labour/equipment availability • Congestion levels, infrastructure priorities • Information • Stability/knowledge/printed/interactive • Comfort • Vehicle quality, driver quality, traffic environment • Access to the system • Low floor buses, stops, interchanges

33. Measures & responsibilities • Local authority: • Bus priority measures, e.g. bus lanes, traffic light priority • Bus shelters; well maintained with good lighting and timetable information (RT) • Bus stops; well maintained, with good lighting and timetable information • Dropped kerbs and Kassel kerbs with raised platforms • Parking restrictions enforced to enable buses to access stops • Improved interchanges between routes and modes • Quality walking routes to bus stops • Operators: • Provision of modern, comfortable, low floor, low pollution vehicles • Provision of timetable information at all stops • Provision of drivers trained in customer care able to provide appropriate information • Provision of easy to understand timetable information and fare structures • Joint travelcard amongst operators and modes • Employers: • Preparation of travel plans to promote use of PT for commuter and work trips • Provision of data on staff travel patterns to help with service design

34. QUALITY CONTRACTS AND TENDERS • Influence of the legal framework • Influence of the share of risks • Use the tender to promote quality • Quality in the contract itself

35. QUALITY CONTRACTS AND TENDERS • Influence of the legal framework

36. QUALITY CONTRACTS AND TENDERS • Influence of the share of risks Source: Quattro

37. Role play groups • Local Authority/Municipality • Task: To secure an operator for new route(s)/service(s) • PT Operator • Task: To win and agree the contract for new service(s)/route(s) • Developer • Task: To ensure viability of your development (selling/renting dwellings and commercial units) • Local people – prospective residents and businesses • Task: To be able to live, work and play using PT in their area