Defending Contractors, Part 6: Contracting Fixed Route Transit

The first five installments of this series prepared National Bus Trader readers for a large part of their future. Paying even marginal attention to national and global trends, the forces shaping this future should be clear:

  • The rich are getting richer and the poor, poorer.
  • Most of Today’s drivers — in all public transportation modes, public and private — are earning perhaps a fourth of what they did 40 years ago, in Today’s dollars.
  • Transit ridership had been declining by roughly 10 percent nationally two years before the emergence of COVID-19. Studies show it has recovered to reach 35 percent of its already-diminished pre-COVID levels nationally.
  • Fare recovery is a pittance compared to yesteryear. In, 1977 (declared a crisis by many in the transit industry), farebox revenue covered only 50 percent of operating costs. Today, the highest “operating ratio” is in New York City, which covers 35 percent of its operating costs from farebox revenue. Chicago, Washington, Boston and Philadelphia did almost as well at 33, 25, 24, and 23 percent. San Francisco’s MUNI (the bus system) recovered only 13 percent. LA County covered nine percent. Houston and Kansas City, 7 percent. Shortly before COVID struck, Kansas City had abandoned fares altogether: It cost more to collect and process fares than they provided. Portland soon followed on selected routes; Las Vegas on double-decker buses.
  • Contracting (or “privatization”) of fixed route transit is not new. Transit bureaucracies became bloated in the 1980s: A study by former LACTC Commissioner Wendell Cox found that an hour of commuter/express service cost more than $300 – in 1985. In response, I was among the first proponents of what we then called “mixed mode.” No one listened. Yet to settle a County-wide transit strike in 1993, former Los Angeles Mayor Richard Riordan forced the then-Southern California Rapid Transit District (SCRTD) to contract out 37 routes. Long before Uber, COVID and a growing dissatisfaction with the quality of service 25 years later, the far-more-poor and -homeless “transit-dependent” began to abandon transit in droves.

    The failures leading to this situation have been covered in countless previous installments of National Bus Trader. I will not regurgitate them here.

    Privatization and Deprivation
    It is obvious that privatization will increasingly mean the difference between a community having a transit service or not. At its pathetic best, this shift will create tens of thousands of low-paying jobs for drivers. Many of these drivers will come from the ranks of the skeleton left of the motorcoach industry, as the charter and tour sectors have been decimated – perhaps never to return to pre-COVID levels.

    Some transit systems will contract out their entire system – most where ridership and/or farebox recovery are minimal. More commonly, transit agencies will use contracting to shed themselves of the least cost-effective components of service, those routes that their drivers least want to operate, and their worst (and most costly to maintain) vehicles. Most transit agencies have already shed themselves of the “cost-drains,” by contracting out paratransit service.) What this means for those private companies that inherit fixed route services is clear:

  • Out to bid will go the tightest routes that run behind schedule continuously, despite drivers forced to make constant safety compromises (see, and expose their carriers to a vast array of financial risks. (Contractors will indemnify the “lead agencies” for these deficiencies – which they will have no opportunities to correct.)
  • Drivers should expect to bring a lunchbox, and devour their meals at red traffic signals or when stopped in traffic; drinks will be guzzled through straws. (Yogurt and cold soup will become the drivers’ main meals.) Forget restroom breaks. Get used to disposable adult diapers.
  • Contractors will inherit the shifts which public sector drivers least want – night and owl shifts, runs through bad neighborhoods, split shifts that begin early and end late, or short route segments that might be “interlined” (if the contractor ran the entire system).
  • The oldest, close-to-mothball vehicles will be leased to the contractors for $1/year. The contractors will be required to maintain them. And their interiors and exteriors must be kept spotless (beyond at least a decade of dents and scrapes).
  • Many routes will be eliminated, short-lined or their frequencies increased. Expect more passengers to be angry and bitter.
  • Other than in lawsuits, the contractors will be invisible. Their names will not be emblazoned on the sides of the vehicles.
  • Particularly with the handful of global oligopolies that have emerged over the past two decades, bidding for even this chaff will be fierce. The winning bidder’s drivers will earn slightly more than minimum wages. And management will be thinned to the core They must say “yes” to anything a lead agency representative asks them about, and “no” to nothing. Their contracts may permit their company’s termination without cause. And it may permit the transit agency to unilaterally make routing and schedule changes during the contract period. Negotiate limits to this (or extra money) or walk away.
    With the worst routes, the worst schedules, the most fatigue-inducing shifts, the worse vehicles, the lowest salaries (some not including fringe benefits) and the thinnest and lowest-paid management, contractors will become magnets for incidents. If it is not already clear, their insurance carriers will be helpless. As insurance premiums soar, these costs will necessarily translate into still lower wages, fewer fringe benefits, deferred maintenance, and skipped or compromised pre- and post-trip inspections.

    Wake up carriers: “This is Your Life.”

    I could have titled this installment “Doomed and Damned.” But that would be misleading. There are actually things contractors can do to mitigate or soften the blows. And they can be done at many levels.

    Requests for Proposals (RFPs)

    Proposals issued to solicit bidders contain both gloom and opportunities. The best decision is often to walk away. Bidders must recognize that the lead agencies have to find some contractor. So there is a limit to the treachery in an RFP. Some provisions are odious. Among the worst is the assessment of liquidated damages – mostly for poor on-time performance. (Keep in mind that the schedules of most routes let out to bid are too tight to be driven safely). These damages are automatically deducted from the contractor’s monthly reimbursement. But most are so petty (e.g., $25 for every run that arrives at the last stop more than 10 minutes late) that it costs more to investigate and appeal them then the damages cost to pay. Occasionally, a contractor will not be paid at all for a route that runs a few minutes late (although this is more typically a brokerage ruse in NEMT services). Examine carefully whether any leeway is provided should your bus encounter a detour, a protest, a traffic accident or a parade.

    While monitoring by live individuals is a lost art, transit buses are filled with digital gizmos to capture everything from the vehicles’ position along the route (through GPS units) to the head movements of drivers (to observe mirror scanning and whether or not drivers clear their mirrors while pulling away from stops). But they will only “pull” the videos (typical transit buses contain eight to 12 cameras) when a collision occurs. To protect themselves, contractors will have to monitor their drivers’ performance. Otherwise, lead agency personnel may use the GPS “pings” to penalize a contractor for a bus’ lateness. See if there are any exceptions – such as allowing drivers extra time to secure a wheelchair. Or getting stuck in traffic.

    As a footnote, do not depend on your own unions (if your company has one) for much help. There are exceptions: In 2009, I helped one major union successfully sue every contractor in California for 5 ½ years of unpaid lunches and breaks. With no recovery time on any routes, there were no breaks. As noted, drivers ate or drank during those short moments when their vehicles were not moving. Restroom breaks were unavailable; drivers wore adult diapers or soiled their underwear and uniforms.

    Some lead agencies will insist on maintaining base stations radios with your frequencies, permitting them to “listen in” when they feel like it. As a natural reaction, get used to operating without much human contact between drivers and dispatcher. More frequently, even the mothball fleet your drivers will be operating will be littered with cameras, mobile data terminals, “clever devices” and all sorts of digital paraphernalia to capture your vehicles’ every movement and your drivers’ every gesture. But you will not find safety-helpful devices like retinal detectors or lane drift monitors, which might otherwise warn drivers of impending fatigue.

    Occasionally RFPs contain bright spots. For example, contractors occasionally get to design the routes and even select the stops – even in systems where route changes must proceed through a public hearing process. In the past, these opportunities came mostly with new services (like those connecting new light rail stations to major trip generators, or otherwise traveling through communities likely to use the light rail lines). Increasingly, contractors may have a chance to design routes as some are eliminated, and others consolidated. Contractors may be wise to hire planners (remember them?) to consult during such periods – just as they may engage them to write their proposals. Of course, few consultants know how to design routes or select stops, since robots have been doing this for the past 30 years.

    Finally do not ever agree to indemnity the lead agency for errors and omission made solely by the lead agency. If you can negotiate away this provision, try to. If not, walk away. Even without such indemnification, if you have an incident, plaintiff’s counsel will not always file against the lead agency. So your carrier will be stuck “holding the bag.” After all, why should a plaintiff’s counsel care since your company was forced to indemnity the lead agency and hold it harmless (along with a long a list of others)?

    Bloat your proposals with all the generic nonsense and safety-clichés you can. Your competitors will. You will not be held accountable for such content by the lead agency. Just be careful: You may be held accountable for more-specific promises these documents contain when a lawsuit catches up with you.

    Try to find out how the lead agency intends to evaluate the proposals. Usually a pre-bid “conference” is held. Sometimes, potential bidders may submit questions about the RFP in advance of this conference, at which lead agency officials will or may answer them. Be careful: If your questions violate the exploitative spirit of the lead agency’s intentions, you could single yourself out as undesirable.

    Do not fret if the terms are only generally draconian. There are sometimes ways to navigate through a dangerous operating environment. (A stringent and thorough hiring process is a good start – even while it will compound your driver shortage.)

    Vehicle Selection
    Typically the lead agency will make the vehicles for your use available for inspection, and you can select those you are willing to operate. Unfortunately, you may be given only a day or two for this exercise, and you will not usually be allowed to test drive any vehicles. (You may be allowed to start them and inspect certain things while they idle.) For this exercise, engage the finest mechanics you can, who can work the longest hours in a day. Spare no cost. As there are for evaluating passenger cars, there may be apps available to help perform this evaluation.

    In this task, there is no “Busfax” to help you out: Only one agency has used these buses throughout their lifetimes, and no outside source has any information about them. However, a transit agency may make the available fleet’s maintenance records available (often only on their premises, during normal business hours). If you can, hire a small army to comb through them. There are plenty of retired bus mechanics, and you may find some in the service area in which you are bidding. And they will know about deferred maintenance, and the overall quality of maintenance the vehicles they examined during their tenure with the lead agency. And they may know how to interpret the minimalist, often shorthand, notes entered into the computerized maintenance system for each bus.

    Finally, since you will likely lease the vehicles for $1/year, select as many “spares” as the transit agency will allow you to, and which you can store. (Some may allow a lot in order to keep your service on the road.)

    Route Selection
    Have a seasoned driver run the routes (with a bus) and time their tightness. Compare your realistic running times with the “cycle times” on the printed (or online) schedules. Note whether extra time is allotted for peak period travel. Figure out how you will staff each route (including changing drivers at route midpoints, and relieving drivers so that they can have meals and restroom breaks – especially if you have a union that requires this). Determine how far your storage yards are from the starts and ends of routes. Determine where you can position spares (with drivers) in case the mothball vehicles you are given break down. (You could be penalized financially for not “covering” these vehicles within a reasonable amount of time). Explore whether you can save money by changing the location of your storage yard, or adding others. You should be able to hire retired drivers in the service area to do many of these things. Again, often facing a three-year contract with two annual renewals, spare no expense for help. Pay particularly attention to where routes begin and end with respect to their distance from your existing storage yard(s). Or engage in some planning to obtain storage yards close to the start and end locations of the routes you select. You will likely be paid for your deadhead time (as well as for a reasonable time for pre- and post-trip inspections). But the cost of your combined deadhead time will affect you bid cost. Plus, you may incur overtime to cover certain combinations of routes. So do your homework thoroughly.

    Try to obtain information about the routes available from the transit agency’s monthly submittals to the National Transit Database reporting system. (While effortless to produce, this request will usually be denied.) If you can get them, pour over them. Also, if the agency still has them, engage someone to go to the agency’s headquarters and review the “on-and-off” and “on-board” profiles for each route available – if the agency still has such things. (The on-and-off print-outs will identify those boarding and alighting at each stop, on each run, throughout the day sampled. The on-board profiles will give you the loads at every stop, on every run, throughout the days sampled. Routes are sampled for weekdays and Saturday/Sunday/holidays.) Otherwise, obtain all the data you possibly can. Be careful: Very few consultants know how to review such data (few understand actual operations, much less scheduling). But some retired planners may know how to do this. If you cannot find one who has done this, think about not bidding. Otherwise, again, spare no expense.

    Accessibility Features and Equipment
    Examine every vehicle to insure that the securement system meets the criteria of 49 CFR 38.23(d) subparts (2) and (7). See if the retractors work. See if the straps match, fit together and are easily operable. (If not, you will need to replace them all – and remounting two retractors to seat leg frames (common on transit buses) is reasonably expensive. Retrofitting tracks or other floor fittings is impossibly expensive. And if securement fittings do not easily fit into various spaces in the tracks (most older buses contain “hex tracks,) you will have to replace the tracks. If you find these faults, do not accept that vehicle. Finally, ramps (on generally-newer low-floor-buses) are far less maintenance-intensive as are the lifts on old, high-floor buses.

    Also examine the doors, stepwells and handrails. Outward-opening jackknife doors can obscure the driver’s view of the passengers outside the rear stepwell. If you do not find intelligible, linear handrails on both side of the stepwell, you will have to replace them (or risk nasty lawsuits). Avoid buses where the riser heights between steps are uneven. Check the quality of the flooring to see if it (especially ribbed rubber flooring) is worn; you will have to replace it or risk more lawsuits. And avoid inward-opening doors. If you find a bus that kneels at the rear, consider it a blessing. (If not, you should be allowed to make this inexpensive modification).

    Final Cautions.

    If forced to operate under a broker, do not bid.

    Also, do not engage an attorney to examine the operating contract. Engage someone familiar with such things – perhaps a retired general manager (if you can find one). Also, make sure you include a cost-of-living increase for fuel, as prices can fluctuate wildly over the course of the contract.

    Finally, all your work may go for naught. Most bidders are selected based on some personal interview with the top team members – the bidder’s slickest salesperson. Bid scores are ignored. At the pre-bid level, ask whether or not the scores of your competitors will be released. (Usually they will not be, and you cannot risk challenging a loss, even while you can obtain this information through the lawsuit’s discovery process.) If the answer is “no,” think twice about bidding.

    Good luck. Welcome to transit service in America.

    Publications: National Bus Trader.