Contracting Pros and Cons: Global Trend Becoming More National

June 9, 2016
With a global-wide trend leaning toward contracting services out in the transit world — there are clear pros and cons to agencies selecting contracted services.

With a global-wide trend leaning towards contracting services out in the transit world — there are clear pros and cons to agencies selecting contracted services. Private providers vary in their service offerings, some agencies are looking to contract out all services, partial services — or none at all.

Contracting does have mixed feelings within the industry. Some transit agencies feel that there is a loss of control with the quality of service. Because full private providers are charged with both hiring and training of transit operators and even managers. But there is the fact that if a contractor isn’t operating successfully, the public’s perception is negative toward the actual agency.

Unions can also have a negative view toward contracting — contractor employees don’t fall under the same rules as union workers. The Amalgamated Transit Union (ATU) stated that their organization is committed to keeping public services — such as transit — in public hands. ATU cites private bidding as a factor that affects employees’ wages or benefits, which in turn may attract less-qualified employees.

However that is not always the case — these three private providers provide the benefits of contracting on some or all services to agencies.

Bombardier Transportation offers a variety of services for rail. Bombardier provides agencies train operations, dispatching, customer service, and maintenance of vehicles, right-of-way, signals and communications, stations and facilities; both national and internationally. Transdev operates within multiple modes of transportation in countries including North America, South America, Europe and Asia. Transdev provides agencies bus, rail, bus rapid transit (BRT), paratransit, taxi and shuttle services. National Express Group also operates within multi-modal transportation options — serving the United Kingdom, Europe, North America, Africa and Asia. National Express provides contracting services for buses, trains, light rail services and coaches.

Cutting Costs

Echoed by private providers and some of agencies who use contracted services are benefits of lower costs.

“Contracting services can be much more than cost control although that is one important factor,” said Dick Alexander, executive vice president of business development, Transdev North America. Alexander highlights that cost benefits can be seen in areas including a contractor’s purchasing power applied to the benefit of the public transit agency (PTA), also noting that the operating risk is shifted away from the public transit agency to their private partner.

Private providers are able to make changes or add services and vehicles with greater ease than public agencies. Where many public contracts require an agency to turn to the city to get approval, private providers are able to make changes without all the red tape.

Mark Foster, vice president, National Express Transit explained, “By having National Express Transit run the agency’s operations, we are able to serve the market as economically efficient as possible. We are able to streamline processes and ensure that the appropriate administrative staff is in place.”

“Contracted solutions is another way for PTAs to not only have a solid operating partner but also a partner that can quickly bring to the PTA the best practices, service solutions and innovations demanded by our users,” said Alexander.

 “We are also able to meet the customer needs because we communicate daily, share our data with them and become a true partner to the agency. Another key savings is through procurement. We have established relationships with large vendors and are able to purchase equipment and parts at a cost savings,” said Foster.

Drawing from Worldwide Experience

Private providers have the benefit of a bigger reach — with operations in multiple countries and larger agencies — they can bring their own company experience to the agencies.

“Bombardier’s World Class Operations and Maintenance Program (WCOM) is a systematic approach to operations and maintenance created through the integration of best practices in processes, procedures, technologies and people engagement drawn from our rail and aerospace services and manufacturing sites around the world,” said Jim Lindsay director, business development & sales — Central U.S., services Bombardier Transportation — Americas Division. “The WCOM program as a whole has brought measurable benefits to our services customers in the Americas and worldwide, helping them to minimize operational costs and maximize revenue generation while ensuring the highest levels of passenger safety and comfort, customer satisfaction, on-time performance, and fleet availability and reliability.”

Alexander said Transdev has experience from their operations, with work across 19 countries and 83,000 employees under management.

“As a partner, we bring our customers access to wide range of programs tested and validated across hundreds of transit organizations. These best practices range from pedestrian safety to improving the customer experience including specialized customer relations management programs, customer apps, added services such as mobile fare payment, real time bus information and driver customer care training to name a few,” said Alexander.

Transit Technology

Using technology on a wider scale opens up a variety of operations. Foster cites that National Express uses GPS and AVL to make scheduling more efficient. That also ensures that buses are able to be located at any point in time.

“Our buses are equipped with technology that constantly monitors the vehicle's operating condition, sending real-time data back to our dispatchers who ensure that no critical issues arise while in route to ensure the safety of our passengers and operators,” said Foster. “Our operators also have the freedom to escalate any maintenance issue to a critical level — providing a check-and-balance to ensure that no bus takes to the road with an issue that could lead to a breakdown or that could inconvenience passengers.”

Bombardier uses technology to benefit their transit agencies. “Bombardier has developed an automated vehicle inspection System and Orbiflo advanced condition monitoring system to automatically inspect rolling stock and provide predictive maintenance capabilities,” Lindsay explained. “Among the innovations Bombardier can implement to streamline our customers’ operations are our Sentio products which employ wireless communication coupled with a set of information tools that provide personnel instant access to documents, instructions, drawings and work orders via web-enabled handheld devices.”

National Express is working on implementing a best practice that has been on the rise, especially in targeting millennials. As technology develops, the transit industry needs to change with it — having a contractor with a larger reach can accomplish that.

“The right contractor can help its clients leap into new forms of shared ride mobility. These include app-based last mile solutions, dynamically routed bus services and crowd-sourced bus routes. These innovations such as the Kutsuplus service that operated in Helsinki brings a whole new dimension to mobility in the U.S. and a proven alternative to the standard 40-foot bus fixed-route service,” Alexander said.

Combining Processes

Public transit agencies have plenty of options when it comes to operations. Highlighted throughout what private providers feel make a successful partnership — is open communication with public agencies.

Lindsay ended by explaining the benefits of contracting. "Transit agencies considering the use of contracting would do well to develop a procurement with an evaluation process that balances the proposers’ capabilities and demonstrated experience, with future deliverables required by the agency and the proposers’ ability to achieve them, as well as with price. This approach will ensure that you select the partner that will provide the best value to your agency and your customers."

"As a contractor that understands to role of public policy, conformance to regulations such as ADA and Title VI, we can offer these solutions in the context of a public authority’s mandate and responsibility. We hear a lot today about business disruption as if it is a bad thing. At Transdev, we look upon it as an opportunity to bring our clients innovations that enhances the PTA offering to its customers. Contracted solutions is another way for PTAs to not only have a solid operating partner but also a partner that can quickly bring to the PTA the best practices, service solutions and innovations demanded by our users." said Alexander.