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April 27, 2014, 05:54:49 AM by #Metro in Infrastructure

How does competitive bus contracting work in London?

With competitive bus contracting confirmed for introduction into Brisbane, we look at how the process is managed overseas.

Bus contracting is not a new thing to Brisbane. Brisbane City Council (BCC) pioneered contracted public transport operation with
its CityCat operations which is run by private multinational company TransDev, the same operator that runs 30% of Melbourne’s
bus routes. In addition to this, BCC also has long standing contracts with private bus companies Veolia (TransDev), Thompsons
Bus Services, Bus Queensland, Kangaroo Bus Lines, and Caboolture Bus Lines. In addition, there appears to have been a
long-standing contract arrangement where some 140 BUZ services were contracted out to private bus company Park Ridge Transit.
Transport Network Planning agency TransLink proposes to take this further and introduce SEQ-wide bus contracting, providing a
mechanism to remove poorly performing operators, an incentive to keep standards high, and an incentive to depoliticise public
transport. Ending monopoly contracting will bring Brisbane into line with Melbourne, Sydney, Adelaide, Perth, Auckland (NZ),
London (UK) and Stockholm (Sweden), and indeed the business practices of BCC itself.

Two Australian companies operate significant parts of the London bus network. Macquarie Group is an ASX-listed Australian
company that is one of the top five bus operators in London. It employs 4300 staff and has approximately 1300 buses. The
Queensland company Transit Systems, operator of the Redland Bay Ferry service also has 1500 staff in London operating 403
London buses under competitive contract. Transit Systems also has a large bus operation serving TransPerth, Perth, WA. To put
this in perspective, Brisbane Transport (a division of BCC) has a bus fleet of around 1200 buses. Opening up the Brisbane bus
network to competitive contracting based on merit rather than historical privilege will allow Australian local and interstate
bus companies to offer their services, as well as international operators.

Transport for London (TFL) publishes a comprehensive guide describing the bus contracting and tendering process used.
The basic process is:

1.   Advertisement for candidates (Expressions of Interest)
2.   Pre-qualification and dummy bid
3.   Invitation To Tender (ITT)
4.   Response by candidate (bid)
5.   Evaluation of Bid
6.   Awarding and Debrief
7.   Compliance and Monitoring

In the first step, TFL advertises for candidate operators. When operators submit an expression of interest, TFL issues a
pre-qualification questionnaire. The information is important to screen out unsuitable candidate operators and may include site
visits, evaluation of previous experience within the industry, financial health and history of the company, meetings and other
due diligence. Once pre-qualified, candidate operators are added to a register. There is no obligation for a prequalified
candidate operator to operate bus services at this stage. Should pre-qualification be passed, the candidate operator is invited
to submit a dummy bid that is then returned with feedback so that genuine future bids are well prepared.

Tendering occurs on a rolling basis so at any one time about 10-15% of London’s services being opened to tender. Bids submitted
by candidate bus operators need to be compliant with minimum standards, however candidate bus operators may also submit
proposals outlining alternatives along with their compliant bid proposing alternative routing or frequency. In this way,
innovation and initiative is not stifled while keeping the responsibility for the network planning with the public agency. Bids
are awarded and unsuccessful bidders are given a debriefing so that they understand where they need to improve and future
competitive pressure on all participants is kept up. The bidding process is based on overall quality, so price is only one
factor considered out of many. For example, sustaining competition is one of the criteria, so it is unlikely that any one
operator will achieve full or near monopoly of service across the city. Indeed no London bus operator has more than 25% market
share, an indicator that the market for service is competitive and that no one company can dictate what the price of supplying
services for the entire city are. This is one particular point that should be noted when designing policy for Brisbane. In the
final monitoring and compliance phase, bus operators that meet their obligations or exceed them are able to extend their
contracts for another two years.

Bus contracting in Brisbane could adopt much of what has already been learned from the London and interstate experience.

References Macquarie Bank to acquire the London bus business of Stagecoach Group plc, Macquarie Bank, 23 June 2006.

Redland company takes wheel of London’s big red buses, Brisbane Times

Transport for London https://www.tfl.gov.uk/cdn/static/cms/documents/uploads/forms/lbsl-tendering-and-contracting.pdf

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#Metro - April 27, 2014, 05:56:08 AM

Appendix A:
Supplementary References




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