Description and Challenges of the London Bus System
The London Bus Tendering Regime Principles and Practice[1]
Toner, JP[2]
Institute for Transport Studies, University of Leeds, LS2 9JT, UK
email:
[email protected] telephone: 00 44 113 233 6617 fax: 00 44 113 233 5334
Introduction
Since the introduction of bus service tendering in London in the mid 1980s, there
has been, according to London Transport Buses (1999), a dramatic improvement in
both the quality of bus services provided and the value for money achieved.
However, the rules of the game have changed considerably over time. Whereas in
the first instance a gross cost regime was used to let just a part of the network to
public sector operators, in recent years the whole of the network has been let in ...
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The last of these contracts expired earlier this year. To complete the process, the
Tendered Bus Division started to let competitive net cost contracts alongside
competitive gross cost contracts, the aim being to use the type of contract in any
particular case which delivered the best value for money and incentivised operators
to improve service quality. As of June 1999, only gross cost contracts have been
offered.
Impacts of tendering
London Transport Buses (1999) claims a dramatic improvement in both the quality
of bus services provided and the value for money achieved. Other authors have
assessed these claims: White (2000), White and Tough (1995), Kennedy (1995b).
Salient features include: cost reductions of 47% per bus mile between 1985/6 and
1998/9 (White, 2000); a reduction in the number of bids per contract from 7 in
early 1995 to 3 in late 1996 (ibid.); cheaper costs to the tendering authority of about
10% per bus mile for gross contracts rather than net (White and Tough, 1995); and
lower bid prices as the number of bids exceeds four (Kennedy, 1995b).
PART B: PRINCIUPLES OF BUS TENDERING
We mean by tendering the allocation [by government agency] of a protected or
exclusive right to exploit or carry out an activity (Baldwin and Cave, 1999) such that
consumers or the public gain an advantage for example, an efficiently produced and
competitively priced service (ibid.).
In the remainder of this section, we will