Bus tendering good practice guide: Foreword

Bus tendering good practice guide: Version 1.0

This Guide is intended to assist local authorities in England (outside Greater London) in procuring supported bus services as part of their wider Local Transport Plans.

Local authorities are able to secure the provision of local bus services that would not otherwise be provided on a commercial basis by bus operators by offering a contract for the provision of the service, in most cases after a competitive tendering process. This mechanism has enabled authorities to ensure that access to the transport system has been maintained and enhanced for a great number of people, particularly those without access to a car living in areas that would otherwise have limited public transport services. Currently around 20% of the total local bus service mileage in England (outside London) is supported by local authorities - the remainder being operated on a wholly commercial basis.

In recent years Government has substantially boosted funding available to authorities through the Urban and Rural Bus Challenge process ¹ and the Rural Bus Subsidy Grant (RBSG). The annual cost of supporting tendered local bus services in England (outside London) in 2003/04 was £332 million, including RBSG funding (£48 million) and Challenge funds.

Enabling local authorities to continue providing supported services remains a key element of the Government's 10-year strategy for transport. However, after a number of years of relatively stable prices the cost of supporting local bus services has been increasing in recent years and is a concern. Recent evidence from a number of sources indicates that local authorities have been facing annual cost increases of between 10% and 20% simply to secure the same level of supported service ² . As in all areas of public sector procurement there is a need to ensure that value for money is being achieved and that funding is allocated in a way that best serves policy objectives.

Atkins Transport Planning has, on behalf of the Department for Transport (DfT), been reviewing how local authorities procure their tendered bus services with a view to establishing best practice and better understanding the key drivers of cost increases and how these might be best managed. Research undertaken has also sought to identify how value for money could best be achieved in the very wide range of different local circumstances under which supported local bus services are needed.

The conclusions of the review are presented in this document in the form of a Good Practice Guide. While the Guide is aimed primarily at local authority officers involved in the tendering process it is anticipated that it will benefit others working in local authorities and elected members. It is also expected to be of value to bus operators. It is emphasised that the Guide does not represent the binding advice of the Department and serves only to disseminate information on process and identify good practice.

¹ Urban of Rural Challenge Funding amounted to £163 million over the life of the schemes.

² Estimates of tender price increases were derived from a number of measures comprising: analysis of changes in cost of bus tenders awarded in a given year against those awarded in the previous year, using cost per annual bus hour as an indicator of tender price; and analysis of ‘like for like’ tender replacement costs comparing new award price against the current price of the tender being replaced.