Contracting Practice in Fixed-Route Transit Service

Abstract

Contracting plays a significant role in U.S. public transit provision, but there is a gap between the majority of quantitative studies that report significant cost savings from contracting and the few qualitative studies that consider the political nature of an agency's decision about contracting. To fill this gap, the authors systematically examined agency decisions about contracting, by interviewing managers and directors at 13 California transit agencies. In interviews with agencies of various sizes and blends of contracted and in-house services, it was found that agencies have responded differently to fiscal pressures and to contracting as a provision strategy. Some have readily adopted contracting to provide all services, while others have used different strategies, such as part-time labor and varying wage scales, to enhance their cost-efficiency. Those responses are a result not just of economic analysis but also of the agency's institutional environment, relationship with its labor union, and the political and economic contexts in which it operates. This study broadens the current understanding of contracting as practiced by transit agencies today–-in particular, why agencies choose to contract or not and how agencies have used both contracting and other means to respond to financial pressure. The findings reemphasize that it is important for an individual transit agency to assess carefully its service lines and various measures of increasing cost-efficiency, and to maintain a cooperative relationship with its unions to determine an appropriate level of contracting for its own operating environment.