The contracting of urban bus services - recent Australian developments

Since 2011, very significant developments have occurred in the procurement and contracting of bus services in major Australian cities. After many years of 'grandfathering' (continuing rollover of negotiated contracts with long-established private operators), competitive tendering has been progressively implemented for bus services in Sydney and Melbourne, and is also planned for Brisbane. All bus services in Adelaide and some services in Perth, which were previously competitively tendered, have also been retendered. The paper addresses the context for these changes, the events that have occurred and their outcomes. The empirical evidence assessed shows that procurement through competitive tendering has reduced the costs of service provision, very substantially so where the services were previously provided by government monopoly operators, and rather less so, but still significantly, where contracts were previously negotiated with incumbent private operators. In both cases, improvements in service quality and delivery have also been achieved, resulting in increased patronage. Our assessment reinforces the need for robust operator procurement processes, and for mechanisms and incentives for operators to develop their services to better match market needs. The learnings from the recent experience are very relevant to further developments in procurement/contracting policy for urban bus services, in Australia and also internationally