The Bus Contracting Model (BCM), formerly known as the Government Contracting Model (GCM) for the Public Bus Industry was announced in 2014. Starting from the second half of the same year, the Government began restructuring the public bus industry to a contracting model that enables the Government to make public bus services more responsive to changes in ridership and commuter needs, as well as inject more competition into the industry, thereby raising service levels for commuters over time.
The following parts will explain how the BCM works, in simple English. Alternatively, they are summarised in this video by the Land Transport Authority (LTA).
Latest: LTA’s Video on the Bus Contracting Model.
Part 1: Background in brief:
- Bus Service Operating Licences (BSOL) for SBS Transit & SMRT expire on 31 Aug 2016
- All operating assets (i.e. depots, buses) currently owned by both Government and Operators
- Slow response in the improvement of service standards due to a profit-driven business model:
- Bus operators earn revenue from fare collection, advertising, etc.
- Profit used to cover capital and operating expenses, and earn returns
- Bus operations geared towards reducing financial losses (buses are largely unprofitable as a whole, considering increasingly high bus operating costs, manpower costs and disproportionately low fares)
- Unprofitable services often do not receive improvements
Under the new model:
- Land Transport Authority (LTA) to own all bus assets:
Buses, bus depots, bus interchanges, fleet management systems, etc.
- LTA being the central bus planner, decides on bus services to be provided, and the service standards which operators have to meet
- Bus operators will bid for bus route packages through a competitive tendering process, and be paid a fixed fee to operate the bus services. Running costs are considered separately and will be paid fully by the Government.
- All fare revenue will be retained by the Government and to ensure the affordability of public transport fares
What are the new roles of bus operators?
- Operate their allocated bus services in accordance with specified performance standards
- Operate and maintain the buses and their onboard equipment (e.g. driver fare console (IDFC) and fleet management equipment) as leased from the Government
- Operate and maintain the Bus Interchanges and the new Bus Depot included in the Route Packages, including all equipment and systems provided therein
- Charge and collect the fares approved by the Public Transport Council, for travel on the Route Package Bus Services allocated, on behalf of the Government
- Provide bus service information at all bus stops and bus interchanges served by the Route Packages’ Services
- Provide customer management services, such as lost and found service, and a hotline for commuter feedback and enquiries.
- Continue to benefit from advertising revenue
- Operating assets will be leased from Government to Bus Operator as stated in the contract which Bus Operator has been awarded
Incentive Framework (Performance Standards for Operators)
Incentive Framework to encourage it to provide quality bus services to commuters and carry out good maintenance of the assets provided by the Government. If the Operator meets the standards, it will receive a performance payment of up to 10% of its annual service fee. On the other hand, if the Operator does not meet the standards, up to 10% of its annual service fee will be deducted. The five performance indicators are in the areas of:-
- Bus service reliability, with indicators on Excess Wait Time (EWT) and On-Time Adherence taking reference from the Bus Service Reliability Framework
- First and last bus punctuality to ensure that commuters can board the first and last bus of the day
- Maintenance of the buses provided by LTA
- Maintenance of the Bus Interchanges and Bus Depot awarded under the Route Packages
- Maintenance of the Bus Ticketing System
What are the advantages of this system?
- Strengthens the Government’s ability to respond more quickly to changes in travel demand and service level expectations
- Bus operators to focus more on operating the bus services and meeting service standards
- Lowering barriers of entry, introducing more market competition leading to the provision of better bus services in a cost-competitive manner that will benefit commuters.
So how will commuters benefit?
- A more responsive system that adapts to ridership patterns and commuter needs
- Greater competition and efficiency within the bus industry
- More reliable bus services with improved service levels
- Less waiting time between buses
The contract model is currently in use in London and various Australian cities; their transport systems which LTA is modelling from. The Government is now able to directly subsidize bus operations to maintain better service levels, even if such levels of service are unprofitable.
Part 2: Gradual transition to competitive tendering
In September 2016, bus services in Singapore were announced by the Land Transport Authority to be bundled into fourteen bus packages with about 300-500 buses each. The number of bus packages was previously announced to be twelve back in 2014 at the start of the Government Contracting Model scheme. The contracts will last for five years, and can be extended by another two years with good performance.
With the negotiations with the incumbent operators (SBS Transit and SMRT) complete, the Bus Service Operating License (BSOL) for the remainder 11 packages not tendered out as of 2016 has been extended for 2-10 years, starting from 01 Sep 2016. After these negotiated contracts expire, the bus services in the 11 packages will be gradually tendered out.
This gradual, phased transition will allow LTA to refine and improve on the management of contracts, as well as the tendering and handover process, and minimise risk of service disruption.
Part 3: Safeguarding the welfare of workers
Each new tender or change in contract for bus services can result in the movement of bus employees from one employer to another. To safeguard the welfare of the affected employees and ensure their smooth transition to the incoming operator, the Public Transport Tripartite Committee (PTTC) released the Guidelines on Good Employment Practices in the Public Bus Industry (the “Guidelines”) on 16 September 2014, detailing the obligations and responsibilities of both incoming and outgoing bus operators. These include the timeline for the offer of employment, recognition of the length of service, employment terms to be safeguarded, treatment of affected bus industry employees including those who choose to stay with the outgoing operator, as well as training for those who choose to join the incoming operator.
The three key assurances proposed by the PTTC are:
- All affected employees must be offered a job by the incoming operator;
- Affected employees must be offered employment terms which are not worse-off than what they have been enjoying before transition; and
- Affected employees can choose to join the new operator or be redeployed by their current employer, where feasible.
These employee aspects of the Guidelines have been incorporated into LTA’s tender documents, and will also be included into LTA’s subsequent contract with the Operator.
Part 4: Higher service levels
With the transition to a bus contracting model, the Government intends to also raise bus service levels to beyond those of the expanded BSEP.
Current Service Levels during 2-hour AM and PM Peak Periods:
- About 30% of bus services operating at headway of no more than 10 minutes
- 100% of bus services operating at headway of no more than 30 minutes
Expanded BSEP during 2-hour AM and PM Peak Periods
- About 35% of bus services operating at headway of no more than 10 minutes
100% of bus services operating at headway of no more than 20 minutes
Government Contracting Model during 2-hour AM and PM Peak Periods
- 50 or more % of bus services operating at headway of no more than 10 minutes
- 100% of bus services operating at headway of no more than 15 minutes
- All Feeder Services operating at intervals of 6 to 8 minutes.
As a result, an estimated 45% of bus services will have shorter intervals during peak periods when compared to the expanded BSEP service levels.
Part 5: Tendering Process
All tender submissions will be evaluated by LTA through a 2-envelope process for quality and price with greater weightage given to the quality proposal submitted by the tenderers. This was evident when UK bus operator Tower Transit won the Bulim Bus Package despite offering the third lowest bid of $125.6 Million per year, in contrast to the lowest $93.7 Million per year bid from SMRT.
LTA awards route packages (tenders) based on “Gross Cost Model”. The Operator which the tender would be awarded will be required to set up a local company to operate the Route Packages, with senior management overseeing its operations to be based in Singapore for better oversight and accountability.
There will also be provisions for additional bus capacity in the contract which will enable the Government to make expeditious adjustments to the Route Packages when necessary, in response to changes in ridership and commuter needs.
During the contract period (5-7 years), the service fee which is the Operator’s bid price for the package, will be adjusted to better reflect the operating climate by taking into consideration inflation, changes in wage levels, and fuel costs.
Separately, the Operator will be able to tap the Bus Driver Training Grant for new bus drivers trained and deployed on the bus services from the date of award of contract to December 2016.
The Operator will be paid the service fee on a monthly basis with deductions for non-operated mileage that is within its control, such as driver absenteeism.
Among other requirements, bus operators bidding for the package must have a proven track record of operating a fleet of at least 250 buses.
Route Packages (TC):
|Package||Incumbent Operator||Bus Services||Interchanges/
|Tower Transit||41, 49, 66, 77, 78, 79, 96, 97, 97e, 98/98M, 106, 143/143M, 173, 177, 183, 189, 282, 284, 285, 333, 334, 335, 941, 945, 947, 990||Bukit Batok, Jurong East, Clementi||Bulim Bus Depot|
|Go-Ahead Group||2, 3, 6, 12, 15, 17/17A, 34, 36, 43/43M, 62, 68, 82, 83, 84, 85, 118, 119, 136, 354, 358, 359, 382, 386, 403, 518/518A||Pasir Ris, Punggol, Changi Airport||Loyang Bus Depot|
|Tender Closed on 27 Oct 2016, 12PM||24, 70/M, 76, 130, 133, 135, 138, 162/M, 261, 262, 265, 268, 269, 800, 803, 804, 805, 806, 811, 812, 850E, 851, 852, 860 + 2 more new Bus Services to be launched||Ang Mo Kio, Yio Chu Kang, Yishun||Sungei Seletar Bus Depot|
Route Packages (NC):
|Bus Services||Depot (Predicted)|
|Operator: SBS Transit|
|2||5, 16, 57, 93, 120, 121, 122, 123/123M, 131/131M, 145, 160, 170/170A/170X, 195, 198, 272, 273, 400, 402||Ulu Pandan|
|Sengkang – Hougang
|5||27, 51, 80, 86, 87, 89, 89e, 102, 107/107M, 112, 113, 115, 116, 117, 132, 151, 151e, 153, 159, 161, 163/163M, 165, 324, 325, 371, 372, 6N and 3 new routes||Hougang|
|7||9, 13, 14, 14e, 25, 30, 30e, 35/35M, 40, 42, 45, 46, 168, 196, 196e, 222, 225, 228, 229, 401, 506, CT18, 4N and 1 new route||Bedok North|
|8||4, 10, 10e, 18, 19, 20, 22, 23, 28, 29, 31, 37, 38, 39, 47, 65, 69, 72, 81, 127, 129, 291, 292, 293, 513, 2N and 1 new route||East Coast|
|8||179, 181/181M, 182/182M, 185, 192, 193, 194, 199, 240/240M, 241, 242, 243, 246, 249, 251, 252, 253, 254, 255, 256, 257, 258, 405, 502/502A and 2 new routes||Soon Lee|
|Serangoon – Eunos
|9||11, 53/53M, 55, 58, 59, 60, 63/63M, 64, 90, 94, 101, 103, 105, 109, 134, 140, 141, 150, 154, 158, 315, 317 and 1 new route||Kim Chuan|
|9||7, 32, 33, 48, 74, 74e, 91, 92/92M, 95, 99, 100, 111, 147, 156, 166, 174, 174e, 175, 191, 197, 200, 201, 3N, 5N||Bukit Batok|
|Bishan – Toa Payoh
|10||8, 21, 26, 50, 52, 54, 56, 73, 88, 124, 125, 128, 139/139M, 142, 155, 157, 186, 231, 232, 235, 238, 410, CT8, 1N||Ang Mo Kio|
|Operator: SMRT Buses|
|Sembawang – Yishun
|4||167, 169, 171, 825, 853, 854, 854E, 855, 856, 857, 858, 859, 882, 883, 963, 963E, 963R, 965, 966, 969, 980, 981, NR1, NR2||Mandai|
|Choa Chu Kang – Bukit Panjang
|7||61, 67, 75, 172, 176, 180, 184, 188, 188E, 188R, 190, 300, 301, 302, 307, 308, 700, 868, 920, 922, 927, 970, 971E, 972, 975, 979, 982E, 983, 985, BPS1, NR3, NR8||Kranji|
|7||178, 187, 900, 901, 902, 903/903M, 904, 911, 912/912M, 913, 925, 926, 950, 951E, 960, 961, 962, 964, NR5, NR6, NR7||Woodlands|
TC = Tendered Contracts
NC = Negotiated Contracts
* = Number of years counting from 1 September 2016
- All Peak Period Short Service (PPSS) routes will be included as part of the various bus packages once the contracts with the private bus operators end.
- SBS Transit will be the principal operator for the following bus interchanges/terminals for Packages 4, 6, 7, 10, 11, 12, 13 & 14:
Bedok, Bishan, Boon Lay, Bukit Merah, Clementi, Eunos, HarbourFront, Hougang Central, Joo Koon, Sengkang, Tampines and Toa Payoh bus interchanges &
Buona Vista, Changi Airport, Changi Business Park, Changi Village, Ghim Moh, Kent Ridge, New Bridge Road, Queen Street, Shenton Way, Sims Place, St Michael’s, Tuas and Upper East Coast Bus Terminals.
- SMRT Buses will be the principal operator for the following bus interchanges/terminals for Packages 5, 8 & 9:
Choa Chu Kang, Sembawang, Woodlands and Yishun Bus Interchanges, Bukit Panjang Bus Park and Lorong 1 Geylang Bus Terminal.
- Marina Centre Bus Terminal will be co-operated by SBS Transit and SMRT Buses.
Changes to Bus Services:
Basic Bus Services:
With LTA being the central bus planner, it will continue to introduce new routes and amend current routes to suit the needs of commuters. While an overhaul of bus services is unlikely, several routes may be amended / split for better reliability. As more housing estates are being built, the number of basic services will only increase to suit new travel patterns.
An exception is cross-border services, which do not adhere to certain service standards of regular services owing to complex traffic conditions across the Causeway. It remains to be seen how these services will be tendered out to operators when service standards are difficult to implement for such services.
Fast-Forward services will be unchanged and tendered out along with the parent service, such as 97e tendered as part of the first Bulim Bus Package. However, the “Fast-Forward” naming concept will be changed to an “Express” bus service.
Chinatown Direct services are also retained and tendered out due to their popularity with residents.
Express, NightRider and Nite Owl services form part of the routes in various bus packages as well.
As PTOs are gradually handing over Premium services to private bus operators, premium bus services will not be operated by public bus operators with BCM assets. They will be gradually be fully transferred to private operators, or continue to be operated by their non-franchised divisions (such as SMRT’s Busplus charter division).
Taking over of buses
Main article at: Transitioning of Buses to the Bus Contracting Model
LTA has initiated the BCM initially using buses destined for SBS Transit but registered under the Bus Service Enhancement Programme (BSEP). These buses, destined for service with SBS Transit fleet but owned by the Government, were rerouted to operators of the first few BCM packages such as Tower Transit, the initial operator of the Bulim Bus Package.
To further expand the BCM bus pool, the Land Transport Authority said on 29 December 2015 that it would take over SBS Transit’s bus purchasing contracts worth S$164 million for 346 new bus purchases, scheduled for delivery in 2016 and 2017. It will also directly buy 50 buses, worth about S$23 million, which were delivered to SBST between June and December this year.
Among the 346 buses to be bought under the contracts, 100 are single-deck buses, while 246 are double-deck buses. 210 of these buses are scheduled for delivery in 2016, and the rest in 2017.
Among the 50 buses to be bought from SBS Transit, 12 are single-deck buses, while 38 are double-deck buses.
Milestone: Full transition
Main article at: Bus industry completes transition to Bus Contracting Model
On 11 August 2016, the Land Transport Authority (LTA) announced finalised plans leading up to the full transition of the bus industry to the the Bus Contracting Model (BCM). SBS Transit and SMRT Buses, the two dominant bus operators in Singapore, agreed to continue operating their existing bus routes for the next 2 to 10 years under a new BCM framework, which was implemented from 1st September 2016.
As part of the transition, all existing bus services in Singapore (previously operated by long-standing duopoly between SBS Transit and SMRT Buses) were divided up into 14 route packages with the first three packages, the Bulim, Loyang and Seletar Bus Packages, being announced between May 2014 and June 2016. The Bulim and Loyang packages have been awarded to Tower Transit Singapore & Go Ahead Singapore respectively, with operations commencing in May 2016 and September 2016 respectively. The Seletar package, released for tender in June 2016, will commence operations in the first half of 2018.
The remaining 11 route packages comprising existing routes operated by SBS Transit & SMRT Buses (consisting of ~80% of buses) will continue to be operated by the incumbent operators for a period of 2 to 10 years, after which the route packages will be up for open tender.
- SBS Transit will operate 8 packages consisting of 196 bus routes from 01 Sep 2016 for a sum of $5,322 million dollars.
- SMRT Buses will operate 3 packages consisting of 77 bus routes from 01 Sep 2016 for a sum of $1,865 million dollars.
These contract sums were reached through negotiations between LTA and SBS Transit / SMRT Buses. Rather than the mass purchasing of existing buses, LTA had opted to lease all operator-owned buses from SBST/SMRT until the end of their statutory lifespan (17 years with possible 2 years extension) for a fee equal to buying over the bus at net book value as of 1st September 2016 paid across the lifespan of the bus. At the same time, extra Government-owned buses will be leased to SBST/SMRT to meet service requirements as set by the LTA, and will be reallocated to their new operators as more route packages are handed over.
>Altogether, close to S$7.2 billion will be given to SBS Transit and SMRT Buses on this phase of the BCM transition, and in return, LTA would collect all fare revenue gathered by these bus operators. Similarly, the operators would have to deliver service standards set by the LTA.
The 11 packages are designed to not involve any change of operators for bus services currently operated by SBS Transit & SMRT Buses. As such, all employees of SBS Transit and SMRT Buses would not be affected by the full implementation of the BCM from 1st September 2016.
Purchase of New Buses
In 2015, LTA purchased 176 additional Volvo B9TL buses built to SBS Transit specifications. These buses were registered SG5000E – SG5175J, forming the first SG-prefix registered buses as part of the Bus Contracting Model.
In addition, LTA also purchased 60 MAN A95 buses (SG5740C – SG5799J) for the Bus Contracting Model in 2015. The last 10 units of these buses are equipped with USB Charging Ports, making them the first batch of public buses to feature USB Charging Ports.
In September 2016, LTA purchased another batch of 122 MAN A95 buses.
In late 2016, LTA also purchased another batch of 15 Alexander Dennis Enviro500 buses.
LTA News Releases (References)
- Transition to a Government Contracting Model For The Public Bus Industry (24 May 14)
- First Bus Package Under The Government Contracting Model Up For Tender (03 Oct14)
- Second Bus Package under the Government Contracting Model to Be Put Up for Tender in Second Quarter of 2015 (11 Mar 15)
- LTA awards first tendered bus package to Tower Transit Group Limited (08 May 15)
- LTA to take over SBS Transit’s contracts for new bus purchases – Channel NewsAsia
- LTA on Facebook (We Keep Your World Moving)
- Bus Industry to Complete Transition to Bus Contracting Model on 1 Sep 2016
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This article is updated as of 8 Oct 2016.