Designing competitive tendering systems for the public good: a review of the US experience

Abstract

For two decades, most urban public transit services in the United States (US) have been provided directly by public authorities and supported by public subsidy programs. A substantial percentage of the public subsidies has been consumed by costs that have escalated well ahead of the inflation rate. Concurrently, the private bus industry experienced unit cost decreases (inflation adjusted). In response to the cost escalation of public transit and the cost control of the competitive market, some public transit authorities have competitively tendered a portion of public transit services to private bus companies. As US competitive tendering has grown, various approaches have been tried. Some public transit authorities have provided revenue vehicles for the use in tendered services; others have required private companies to supply their own vehicles. Tendering package sizes have varied from a single vehicle to more than 200. In some cases, public transit authorities have participated themselves in tendering, r...