Outsourcing transit operations

[WMAveteran]

On July 13, 2009 THE WALL STREET JOURNAL ran a story on "cash-strapped American cities" that are contracting out the management and operation of transit services.  THE WALL STREET JOURNAL reported the following: "Under terms of a deal struck earlier this month, the New Orleans Regional Transit Authority (NORTA) will pay a subsidiary of Veolia Environment  about $56.3 million each year, and potentially $600 million over the next decade, to finance, manage and operate the city's bus and streetcar lines.  The deal could eventually save Norta - which spends about $72 million a year to run its system - as much as 30%, said Chairman Cesar Burgos."  "In New Orleans, the city's unionized bus drivers will become Veolia employees, and their labor agreements will be honored."  "Officials in Savannah, Ga., are negotiating a similar contract with Veolia."  The article also reported that Phoenix and Houston had also outsourced their transit management and operations. 

[Antozilla]

You are seeing the same thing in Arlington where we are dumping WMATA routes for ART routes because they are cheaper to run and easier fro a community to change.

[79MetroExtraMD]

You are seeing the same thing in Arlington where we are dumping WMATA routes for ART routes because they are cheaper to run and easier fro a community to change.

GEORGE technically should have been its own thing from the start, but now since Forsythe has the County's contract, GEORGE went along with it. In the fall, Connector is going to tender to MV for operations (finally).

[Tristan]

For the ultimate cost savings, we have a unique structure among TAs (but maybe not so unique for Virginia).  We (Alexandria Transit Company) are owned by the City of Alexandria; the General Manager and Assistant General Manager are employees of First Transit; everyone else works for Alexandria Transit.  Basically the city founded its own contractor.

What this does is gives us the City control of its transit system without City Council having to approve every order of Post-it Notes, and it keeps 140+ employees off the city payroll without lining the pockets of a for-profit contractor.

[Tritransit Area]

That's pretty interesting.  I think Pottstown Area Rapid Transit (http://www.pottstownarearapidtransit.com/ ) is the same way out here.  Pottstown borough funds and owns the service and vehicles, as well as plans the routes.  They set up a contractor (which calls itself Pottstown Area Rapid Transit, formerly Pottstown Urban Transit) to manage and operate the system.

It's kinda funny, outside of the drivers, there's essentially one administrative employee for PART.  I discovered that when I was job hunting several years ago.

[Tritransit Area]

Also, one thing that's nice about outsourcing operations is that you get charged an hourly rate, rather than having to worry about mileage, vehicle maintenance, etc.  Our rushbus system (www.rushbus.org) is contracted out to Bucks County Transport.  It makes route and schedule planning a bit easier, particularly with expansions and such.  Having a good relationship with the contractor is key, though.  Not to mention that you have to keep a very close eye on them at times, but I'm sure NORTA and other systems know that.

[Perry]

The way that our contract is set up is that not only is there an hourly rate, but we pay a per mileage rate on the type of vehicle.  60 footers are the most expensive to run, which is why I limit those particularly on weekends.  40 footers, including double deckers, are pretty cheap on a per mileage basis even though the fuel economy on a double decker sucks.  It makes looking for service cuts fun because you can do things such as put out a smaller vehicle than just cut the service completely.  I analyze the Passegers per service hour and make sure the 40 footer is capable of handling the load.  I don't care if people have to stand as long as we don't leave people behind at a bus stop.  It's not worth paying more for a larger bus if there are plenty of seats....

[mrpete]

    Many years ago when I worked for the Massachusetts Executive Office of Transportation and Construction (EOTC) TA's in the state, except MBTA, were forbidden from directly operating their services, which had to be contracted out. The TA's set policy, performed planning and marketing and owned the buses and facilities. Contractors provided a general manager, ran operations, maintenance and employed drivers and mechanics.
The heyday of transit contracting was during the 1970's & 1980's when many big TA's including Maryland MTA, San Antonio, Cincinnati and others were contractor managed with ATE being the largest contractor. Today MV is the kingpin along with the Euro-invaders, First, Veolia, Stagecoach and Arriva plus smaller domestic outfits like McDonald Transit Associates.
Correct me if I'm wrong Perry but I believe that in addition to Las Vegas, Denver, New Orleans and Foothill are the biggest contracted operations.
Across the pond in the UK, all transit services are outsourced by the TA's known as public transport executives (PTE's). In London for example, Transport for London (TfL) rebids large blocks (tranches) of routes every few years that not only results in the big boys (First, Stagecoach, Arriva, etc.) operating scores of routes, but also sees much smaller operators winning a handful of routes. What also happens is that the big boys set up subsidiaries to operate each block of routes .
Their contractors carry a greater financial risk by owning all the vehicles and facilities while employing all operating personnel. Some contracts also require the operator to actively market and promote the routes and services they operate in order to build ridership and revenue for TfL which then shares a portion of the extra revenue with the contractor if a percentage increase goal is met or exceeded. In addition contractors are allowed to modestly display their names, logos and colors on their vehicles which must otherwise be all red.
Similarly, all railroad passenger and freight services are contracted out to train operating companies (TOC's) while a government owned company, Network Rail, owns and maintains the tracks, right of way, signal, power and communications systems. 

[79MetroExtraMD]

    Many years ago when I worked for the Massachusetts Executive Office of Transportation and Construction (EOTC) TA's in the state, except MBTA, were forbidden from directly operating their services, which had to be contracted out. The TA's set policy, performed planning and marketing and owned the buses and facilities. Contractors provided a general manager, ran operations, maintenance and employed drivers and mechanics.
The heyday of transit contracting was during the 1970's & 1980's when many big TA's including Maryland MTA, San Antonio, Cincinnati and others were contractor managed with ATE being the largest contractor. Today MV is the kingpin along with the Euro-invaders, First, Veolia, Stagecoach and Arriva plus smaller domestic outfits like McDonald Transit Associates.
Correct me if I'm wrong Perry but I believe that in addition to Las Vegas, Denver, New Orleans and Foothill are the biggest contracted operations.
Across the pond in the UK, all transit services are outsourced by the TA's known as public transport executives (PTE's). In London for example, Transport for London (TfL) rebids large blocks (tranches) of routes every few years that not only results in the big boys (First, Stagecoach, Arriva, etc.) operating scores of routes, but also sees much smaller operators winning a handful of routes. What also happens is that the big boys set up subsidiaries to operate each block of routes .
Their contractors carry a greater financial risk by owning all the vehicles and facilities while employing all operating personnel. Some contracts also require the operator to actively market and promote the routes and services they operate in order to build ridership and revenue for TfL which then shares a portion of the extra revenue with the contractor if a percentage increase goal is met or exceeded. In addition contractors are allowed to modestly display their names, logos and colors on their vehicles which must otherwise be all red.
Similarly, all railroad passenger and freight services are contracted out to train operating companies (TOC's) while a government owned company, Network Rail, owns and maintains the tracks, right of way, signal, power and communications systems. 

Speaking of London, they have around 18 operators IIRC (except Veolia i wonder). It seems every month, there are route changes, contract changes (tenders), and fleet changes reflecting service. That's gotta be difficult to have to change quite alot of mylar blinds and schedules. There's a bit of irony though in the London case. Even though its services are contracted out to many vendors, there's still a set of standards that all operators have to conform to as well as their fleets (the red color scheme, mylar blinds, iBus, etc.)

[Perry]

Mr. Pete, you are correct with Foothill and New Orleans.  I'm not sure about Denver though as I'm not familiar with their operations.   I remember all of the Mass. operators having their operations contracted out when I worked for the National Transit Database.  I had to deal with all of these small towns who had the hardest time getting their data from their contractors, but they had what seemed to be decently run operations.

If we were directly operating our services, we would definitely had to either raise fares even more, make really severe cuts, or layoff a ton of folks.  With the way we're set up, not one person has to be laid off, the only thing they did was take away our COLA, but in this environment I'm happy to have a job, and the service cuts we made were so minor in scope because we basically made a frequency adjustment to just about every route in the system so that we weren't singling one segment over the other (you get into Title VI issues with that). 

We're still going to have to cut a little bit more in January, but I'm confident we can find some other opearational efficiencies such as changing deadheads, changing fleet types and perhaps widening frequencies a little more without any kind of draconian service cuts. I cringe when I see an agency propose such insanely huge cuts without first looking at what they can do on a route by route basis by tinkering with headways.  It seems as though the easiest way to save money is to chop up your network. 

[mrpete]

Did some research regarding current TfL practices and found this December 2008 policy:

http://www.tfl.gov.uk/tfl/businessandpartners/buses/tenderresults/lbsl-tendering-and-contracting-feb-09.pdf

With 700 routes operated, TfL issues invitations to tender (ITT), RFP's to us, every 2 to 4 weeks. Of particular note is the extent and degree of service standards in place, performance monitoring conducted in "real time" system wide and the clear responsibilities of TfL and the contractors. Also of note is the fact that "incentive contracts" are SOP these days.

The following link will take you TfL's bus network performance reports.

http://www.tfl.gov.uk/corporate/modesoftransport/londonbuses/performance/1552.aspx

[RailBus63]

    Many years ago when I worked for the Massachusetts Executive Office of Transportation and Construction (EOTC) TA's in the state, except MBTA, were forbidden from directly operating their services, which had to be contracted out. The TA's set policy, performed planning and marketing and owned the buses and facilities. Contractors provided a general manager, ran operations, maintenance and employed drivers and mechanics.

This is still the case - the only transit authority in Massachusetts that operates its own vehicles is Boston's MBTA (bus and rail transit only - commuter rail is contracted out).  There was a push in the 1990's to contract out the MBTA's suburban bus operations but the unions were successful in getting friendly state legislators to pass a law to limit privatization.

Jim D.