Urban bus contractual regimes in small- and medium-sized municipalities: Competitive tendering or negotiation?

EU Regulation 1370/2007 promotes competitive tendering as the main mechanism for awarding the provision of urban bus services. However, small concessions can be awarded by means of a negotiated procedure. This paper seeks to evaluate the performance of urban bus operators in small- and medium-sized municipalities according to their prevailing contractual regimes. Three types of procurement procedure are analyzed: competitive tendering, negotiated contracts and contracts negotiated indirectly with the interurban bus provider. A translog stochastic cost frontier is conducted using a panel dataset (312 observations) over a nine-year period from 2007 to 2015 for the municipalities of the Barcelona province. In line with recent empirical evidence, we find no cost differences between the three contractual procedures. However, cost inefficiencies emerge in relation to the size of the municipality: the smaller the municipality, the greater the inefficiencies. As for ownership, there are no performance differences between private and other forms of delivery. Economies of density are no longer apparent at annual provisions above 300,000 vehicle-kilometers or in municipalities with more than 50,000 inhabitants. Therefore, the non-tendering option, as provided for under European Regulations for small concessions, gives the same results as that found for competitive tendering and indirectly negotiated procedures