Transit service contracting for laymen – Part 3: Challenges to overcome

We introduced the concept service contracting last week, in lieu of the traditional franchising and antiquated fare-collection business model we had for decades.  Service contracting is a straight procurement for services, based on a set of easily measurable minimum performance standards and specifications. The “contractor” is paid for service delivery not based on passenger numbers so there are no “competing” buses on the road, just buses that arrive at stations or stops at regular frequencies!

Fare collection is done by government and should already be using automated fare collection systems (AFCS).  The question is – how would government ensure that fare collection is enough to cover the service contract costs? That’s the beauty of it, they don’t need to be of the same total amount, the fare-setting becomes a planning tool, which can be adjusted when needed or necessary. Fare levels can be made higher to accumulate an excess at the end of the year, which may be used to expand or extend transport systems or infrastructure.  If there are intermittent fuel price fluctuations, fares will not be affected and there would be no transport strikes.  On the other hand, it can be made lower if need be, and if there is need for subsidies, such as these times during and after the Covid-19 pandemic, these can be easily introduced to the system, without affecting the service contracts.  No more transport strikes!

The availability payment method, another term for service contracting, simply pays for the availability of a service.  If you need a bus every 1 minute in the peak hours of the morning, then you pay for that, same as you’ll pay for the availability of 1 bus every 5 minutes maybe in another time of the day or another route.  It doesn’t matter if the bus is full or not, or even empty, you pay for availability. Buses won’t race with one another, and passengers won’t fight for seats.  This is the kind of service you see in many cities of the world. And because contractors are paid a set fee, they can impute fixed wages for their drivers and their workers.  And they can arrange for regular maintenance works as maybe demanded by their contracts.

The question is, can the government do this?  Most naysayers point out to the calcified structure of our government, that they cannot react to this new set of paradigms, both in terms of the institutions themselves, the structures through which these works, and the systems of procurement and monitoring required.  Not to mention the grim certain possibility of corruption in the bidding process itself, and in the constant regular checks on meeting MPSS requirements.  These are very valid, certain, and maybe inevitable. But while I agree with these certainties, we will never be rid of them, not now, nor in the future. There will really come a time that we have to bite the bullet, change for the good, and fight off all the obstacles along the way, and go for it.  Right now, the government is in a denial mode. But for how long?