Competitive Tendering as a Contracting Mechanism for Subsidising Transport: The Bus Experience

David Hensher and Ian P. Wallis

Journal of Transport Economics and Policy, 2005, vol. 39, issue 3, 295-322

Abstract: Competitive tendering (CT) is a popular mechanism for the provision of transport services where a major objective is the containment of the cost to government of service provision. Although the primary focus is recognised as cost efficiency, whereby the cost outcome should be conditional on a given level of service, difficulties in establishing appropriate tests for service level compliance has become a cause of concern regarding the effectiveness of the CT paradigm as a value for money initiative. This paper reviews the international successes and failures of CT as a subsidy reduction strategy within the bus sector, and promotes the idea of Performance Based Contracts as a way of recognising the real role of subsidy under the umbrella of a value for money objective. © 2005 LSE and the University of Bath

Date: 2005
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