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UK operator clinches first bus contract here

SINGAPORE — In a development that analysts expect to shake up the bus industry here, a foreign bus operator has beaten off keen competition — including from incumbent public transport operators SMRT and SBS Transit — to clinch the coveted maiden contract under the Government’s new bus contracting model.

UK operator clinches first bus contract here

Land Transport Authority (LTA) at the bulim contract announcement on May 8, 2015. Photo: Joy Fang

SINGAPORE — In a development that analysts expect to shake up the bus industry here, a foreign bus operator has beaten off keen competition — including from incumbent public transport operators SMRT and SBS Transit — to clinch the coveted maiden contract under the Government’s new bus contracting model.

United Kingdom-based Tower Transit will operate services from Bukit Batok, Clementi and Jurong East interchanges.

Its bid was evaluated by the Land Transport Authority (LTA) as being superior to 10 other bids submitted. 

Over the contract period of five years, the Government will pay Tower Transit an estimated S$556 million. Among the eight bidders which made it past the evaluation on the quality of their proposals, Tower Transit’s proposed price was the third lowest. 

Two other bidders, SMRT (S$453 million) and RATP Dev Transdev Asia (S$463 million) asked for less money to operate the routes.

The tender prices exclude adjustments for inflation, service variation and incentive payment, as well as changes in wage levels and fuel costs.

The LTA said Tower Transit’s bid “demonstrated a good understanding of ground conditions with proposed bus schedules that closely matched capacity to passenger demand, and with an optimal deployment of buses”. The company also emphasised “a strict maintenance regime for bus assets and infrastructure, with a good bus-to-technician ratio and detailed tracking of maintenance activities and records”, the LTA added. 

Offering career progression for all staff, Tower Transit also has comprehensive plans to attract and retain bus drivers, as well as train new employees, the authority added.

Did LTA seek to inject greater competition by not awarding the contract to one of the incumbent operators? Its chief executive Chew Men Leong would only say that the open tender process had given the authorities the opportunity to “choose the best operator that can deliver a high level of service at the most competitive price”.

Tower Transit is a sister company of Transit Systems, which has been running public bus services in Australia since 1996. Since 2013, Tower Transit has been operating about 650 buses in the UK, with 2,000 people on its payroll. 

The LTA had called for a tender in October last year, with the tender closing in January. A two-envelope process was used to evaluate the tender: LTA evaluated the quality of the proposals first. It only looked at the prices after the bids have passed the quality evaluation. 

Three separate bids from Aedge Holdings, Jinan Public Transportation Corporation and Jiaoyun Group-Travel GSH, failed the quality evaluation.

LTA described Tower Transit’s winning bid, which achieved the highest combined score for quality and price, as a “high-quality proposal with competitive price”. In particular, its proposal stood out for aspects of operations, manpower, maintenance, customer service and track record.

Mr Jeremy Yap, LTA deputy chief executive (public transport, policy and planning), said: “It is not whose proposal is inferior, it is whose is superior ... That having met the minimum level, then who stands out in terms of these areas we’ve described at a competitive price.”

At the LTA press conference announcing the winning bid, Tower Transit chairman Neil Smith cited the company’s strong track record and how it had spent eight years studying Singapore and its bus industry for potential business opportunities. “So when this process began, we already have a strong understanding of the challenges here and what the opportunities were,” he said. 

Pointing out that traffic conditions in London are “significantly worse” than here, Mr Smith said the company was confident that it can meet the LTA’s service standards. 

Tower Transit group chief executive officer Adam Leishman said its proposals focused a lot on making it attractive for people to work as bus drivers, such as by redesigning jobs, allowing flexible working arrangements and offering substantial training. “We work very hard to make it an aspirational job — it’s the life of the city,” he said. 

Adding that the company is “people-centric”, he said: “People are our passengers, people are our clients, people are our workforce ... what we try to do in our businesses is bringing that personal element back.”

Mr Smith said its manpower plans are reflected in the fee that it proposed for the contract. Acknowledging that it was not asking for the lowest fee among the bidders, he said: “We are trying to get the best people to drive. And in order to do that there is an additional cost.”

Under the contract, Tower Transit will operate the new Bulim Bus Depot, as well as ply 26 routes from the Bukit Batok, Clementi and Jurong East interchanges. It has to roll out the bus services by the second quarter of next year. Recruitment efforts will begin in earnest six to nine months before, the company said. 

Under the bus contracting model, the Government will collect all the revenue from the fares and pay the operator to run the routes.

The second package of bus routes was put up for tender last month. It comprises 25 bus services, including three new routes, that mainly cover Punggol and Pasir Ris, and will be operating out of the new Loyang Bus Depot.

Mr Leishman said his company is still assessing whether to bid for the second package. At least three of the unsuccessful bidders for the first package — French firm RATP Dev Transdev Asia (RDTA) and local operators Woodlands Transport and Travel GSH — told TODAY they will throw their hats into the ring again. The tender for the second package closes in August.

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