Who will run Cebu BRT? (Part 2 – Service Contracting)

Last week, we started looking at the institutional aspect of running the Cebu Bus Rapid transit (BRT). DOTr would be the direct government institution that oversees it, of course. But DOTr itself cannot run buses. Nor can it create an institutional appendage to run buses --this has to be created by law through a congressional act. There might be some who might rationalize that an executive order (EO) by the president might suffice but this is open to legal scrutiny. Nonetheless, this is the first order of the day --with the EO being the faster route. What is really strange is that this issue has been deliberated already by DOTr as early as 2014 and 2015, right after the project’s approval by NEDA and yet has not been addressed until now.

The second matter is that of running the buses on a daily basis. Certainly, even if the institution is resolved, it would be incongruous for the government itself to run buses as it would be best and more efficient for the private sector to do this. Or at least, this is what is done all over the world. One may think we can do this by the traditional franchising system we currently utilize for ordinary buses, but this does not work with the systems utilized by the BRT which results in its more efficient service. BRT operations will work perfectly with the service contracting mode.

Service contracting entails that a very detailed description of the service be defined. These include firstly the service plan. What are the routes to be served, how many buses are needed for each route, what are the schedules, how many spare buses are needed, and where the depot is located. It might also include the operations of the stations, the terminals, and the central control station. While the latter may be operated by the government, it would always be best to simply allow the private contractor to oversee the entire gamut of operations. Service standards are set, and penalties imposed for any infraction to these standards.

This goes back to the initial institutional aspect of the newly created government body. If this is created by congressional fiat or by presidential act, it needs to be in the form of a government-owned-and-controlled-corporation (GOCC). If it is simply an appendage of DOTr, then its budget would be incorporated into the DOTr annual budget which Congress enacts every year, a year before the year it is to be used, and thus, prepared a year before that. All government agencies run through this course --a two-year (sometimes three-year) budget cycle. This will result in a disaster if coupled with day-to-day operations such as running a budget service. A GOCC, on the other hand, does not draw a budget from Congress, enacts its own budget from the proceeds or revenues it generates the previous year.

Service contracting will then allow the GOCC to contract out the BRT services to a qualified and capable private BRT operator who will run the system following a pre-agreed contract of operations. Simple enough. The issue in this case is timing. When is this done? The contracting mechanism will take at least a year.