Governments need to make bus contract renewal processes clear: Tower Transit boss

SINGAPORE — Having a clear sight of how bus contracts are renewed is key for Tower Transit when it plans its bids, given how much is sunk into operations when it takes over, said the United Kingdom bus operator’s chairman Neil Smith.

Calling the renewal of contracts an obsession for the firm, Mr Smith said: “We started in Singapore a few months ago. We put a huge investment to come into this country. The idea that we have to leave after seven years is highly threatening to our business. The way we bid is governed by our sense of what will happen at the end of it.”

Mr Smith was among the speakers at a panel session on competitive tendering in the bus industry at the Singapore International Transport Congress and Exhibition yesterday. Tower Transit has made a foray into the local bus industry by winning the first bus package tendered by the Government last year, and began running 26 bus services out of the Bukit Batok, Clementi and Jurong East Bus Interchanges in May.

The S$556 million contract — the third-lowest among eight bids — is one of three that were put up for tender under the new bus contracting model.

The second contract was awarded to UK-based Go-Ahead, and bidding for the third package of routes in Seletar closes at the end of this month, as the whole public bus industry fully transits into the model.

Mr Roger Vahnberg, senior vice-president at Vasttrafik, Sweden’s agency for public transport services, viewed the tendering process as a partnership.

In Sweden, Vasttrafik and the operator would come together to form a management team, and plan the goals for the contract together, he said.

Commenting on Tower Transit's experience in the Republic, Mr Smith said it has been positive, and commended the authorities for the “effective financial support” for training bus drivers, which he experienced during the recruitment of 600 bus drivers for local operations. “They could see that was necessary," he said, adding this is "rare" elsewhere.

Mr Smith noted that governments will have to make tough decisions weighing both price and quality when awarding contracts.

“In all the time I’ve been in my business, I’ve never seen a high-quality, low-price bid except when the bidder made a mistake,” he said.

“If you take the lowest bidder, I promise you, you’ll probably fight from day one until the final day of the contract because the person has probably made a mistake, is losing money, and has to extract themselves, and they’ll do that by challenging every decision.”