Bus Contracting Model (BCM)

The Bus Contracting Model (BCM), formerly known as the Government Contracting Model (GCM), is a gross-cost contracting model for public bus services in Singapore where Public Transport Operators bid for the right to operate bus routes under the Land Transport Authority.

First announced in 2014 and implemented on 1 September 2016, the BCM brought all public buses and related infrastructure under the ownership of the government. Under this model, LTA assumes the central role of planning bus services, while public transport operators bid for the right to operate the bus routes in a package.

Bus operators are paid to run bus routes according to service standards set by LTA. The competitive tendering process fosters competition in the bus industry, encouraging operators to adopt a low-cost operating model while running a reliable bus service for commuters, with financial incentives awarded based on good performance. The model also encourages operators to invest in areas like recruitment, staff training, and enhancing the professionalism of the bus workforce.

Presently, there are 14 bus packages managed by four operators in Singapore.

Bus Contracting Model (BCM) fundamentals

Under the BCM, bus operators are required to:

1. Lease operating assets from the Government as specified in the awarded contract.
2. Adhere to specified performance standards in operating their assigned bus services.
3. Operate and maintain the leased buses and onboard equipment (e.g., fare equipment and fleet management equipment) provided by the Government.
4. Operate and maintain the Bus Interchanges and new Bus Depots included in the Route Packages, along with all the equipment and systems provided within.
5. Collect and enforce fares approved by the Public Transport Council for travel on the allocated Route Package Bus Services, acting on behalf of the Government.
6. Provide bus service information at all bus stops and bus interchanges served by the Route Packages’ Services.
7. Offer customer management services, including lost and found services, as well as a hotline for commuter feedback and inquiries.

Additionally, an Incentive Framework is established to encourage operators to deliver quality bus services to commuters and maintain the provided assets effectively. If the operator meets the standards, it can receive a performance payment of up to 10% of its annual service fee. Conversely, if the operator fails to meet the standards, up to 10% of its annual service fee may be deducted. The framework includes five performance indicators covering:

1. Bus service reliability, incorporating indicators on Excess Wait Time (EWT) and On-Time Adherence (OTA) as per the Bus Service Reliability Framework.
2. First and last bus punctuality to ensure accessibility for commuters.
3. Maintenance of the buses provided by LTA.
4. Maintenance of the Bus Interchanges and Bus Depots awarded under the Route Packages.
5. Maintenance of the Bus Ticketing System.

Advantages of the BCM

The gross-cost contracting model, currently utilized in London and various Australian cities, serves as a model for LTA’s transportation systems. With this model, the government can directly subsidize bus operations to maintain better service levels, even if such levels are unprofitable.

The advantages of this system are:

• Enhances the Government’s capacity to swiftly address fluctuations in travel demand and service expectations.
• Allows bus operators to concentrate on running bus services and fulfilling service standards.
• Reduces entry barriers, fostering increased market competition that leads to the provision of better bus services in a cost-effective manner, benefiting commuters.

Commuters stand to benefit from:

• A more responsive system that adjusts to changes in ridership patterns and commuter requirements.
• Greater competition and efficiency within the bus industry.
• Improved reliability and service levels of bus services.
• Reduced waiting times between buses.

Higher Service Levels

With the transition to a bus contracting model, the Government intended to also raise bus service levels beyond those of the expanded BSEP.

As a result, an estimated 45% of bus services will have shorter intervals during peak periods when compared to the expanded BSEP service levels.

Safeguarding employee welfare

Tendering Process

LTA evaluates tender submissions using a 2-envelope process, considering both quality and price, with a higher emphasis placed on the quality proposals submitted by the tenderers. Tendering requirements include, among other criteria, a demonstrated track record of operating a fleet of at least 250 buses.

LTA awards route packages (tenders) based on a “Gross Cost Model.” The operator to whom the tender is awarded must establish a local company to manage the Route Packages, with senior management overseeing operations based in Singapore for enhanced oversight and accountability.

Provisions for additional bus capacity will be included in the contract, allowing the government to promptly adjust Route Packages as needed in response to changes in ridership and commuter needs.

Throughout the contract period (5-7 years), the service fee, which constitutes the operator’s bid price for the package, will be adjusted to better reflect the operating environment, considering factors such as inflation, changes in wage levels, and fuel costs. The Operator will receive the service fee on a monthly basis, with deductions for non-operated mileage under its control, such as driver absenteeism.

Additionally, the Operator can access the Bus Driver Training Grant for new bus drivers trained and deployed on the bus services, for a period of time after the contract award date.

BCM Route Packages

Bus services were consolidated into 14 route packages, each comprising approximately 300-500 buses, in August 2016. The contracts for these services are set to run for an initial five years, with the possibility of extension for another two years contingent upon satisfactory performance.

Contracts awarded from 2023 onwards allow for LTA to consider extensions ranging from two to five years after the initial five-year term.

The original inception of the Bus Contracting Model in 2014 originally planned for bus services to be divided into 12 packages.

The first three Tendered Contracts (TC) were for the Bulim, Loyang and Seletar Bus Packages, which were announced between May 2014 and June 2016. These packages were awarded to Tower Transit Singapore, Go Ahead Singapore & SBS Transit respectively, ushering in foreign operators into the local bus industry.

The remaining 11 packages were extended under Negotiated Contracts (NC) for periods ranging from 2 to 10 years, commencing from 1 September 2016. Upon the conclusion of these negotiated contracts, the bus services within these 11 packages will progressively undergo a tendering process. This phased transition approach enables LTA to refine and enhance contract management procedures, as well as the tendering and handover processes, while minimizing the risk of service disruption.

See also: Bus industry completes transition to Bus Contracting Model | Land Transport Guru

Timeline

Notes:

• Owing to periodic contract extensions, the final duration of many ongoing bus contracts is subject to change.

List of Bus Packages

Contract references and periods reflect the current and upcoming term(s) only.

Notes:

• Due to periodic contract extensions, the ultimate duration of many existing bus contracts may vary.
• The bus depots and bus interchanges/terminals linked with each package are subject to change, and bus services could be added or removed at LTA’s discretion.
• Service fees provided to bus operators are determined by the awarded sums announced during the contract award. These figures may be adjusted due to inflation and changes in operating mileage resulting from LTA route amendments, new bus routes, or withdrawn bus routes that affect the total mileage covered.

Former Bus Package Terms

Continued on Page 2:

• BCM Contract Extensions
• Dual-Depot Arrangements
• New Bus Services
• Rationalisation of Bus Services
• LTA Bus Assets
• Refurbishment of Buses
• Advertising on BCM buses
• Comparison of Old and New frameworks