Government Contracting Model: Frequently Asked Questions
This article was created to address the general public’s most frequent questions and misunderstandings about the Government Contracting Model (GCM ). As announced in 2014, the Government will restructure the public bus industry under a “Government contracting model”, which will bring about a wave of changes to the public bus industry.
What is the GCM all about?
The Government Contracting Model (GCM) is all about the shift to a new framework where operating assets (Buses, Bus depots, Bus interchanges, etc.) will be owned by the Government and subsequently leased to bus operators. The Land Transport Authority (LTA) assumes the role of the central bus planner, and bus operators will bid for the right to operate packages of bus routes under a competitive tendering process. All bus routes in Singapore will be split into twelve route packages for tender, and the winning bus operators will be paid a fixed fee to operate the bus services. All collected fare revenue goes to the Government.
Previously, the public bus industry was dominated by a duopoly of two bus companies, SBS Transit and SMRT Buses. The new framework will inject more competition into the industry, thereby raising service levels for commuters over time. With contracts lasting for five years (two-year extension granted based on good performance), operators will be kept on their toes in maintaining their high service levels. It will also enable the Government to make public bus services more responsive to changes in ridership and commuter needs.
How will the GCM affect or benefit me?
Commuters on the ground will benefit strongly as the GCM will bring about higher service standards which they desire. Under the GCM, bus services will have scheduled headways of no more than 15 minutes during both the morning and evening peak periods, with at least half of the bus services having even shorter scheduled headways of no more than 10 minutes, and of these, the feeder services will run at even shorter intervals of 6-8 minutes.
In addition, buses will be more reliable with the strong emphasis on schedule adherence. A quality indicator known as Excess Wait Time (EWT), which measures individual buses’ deviation from schedule, forms an overall performance of a bus service. Operators will strive to keep the EWTs of bus services as low as possible to quality for performance incentives.
Will bus fares increase?
Fares are sure to increase over time, since such adjustments are still necessary to ensure the overall financial sustainability of the public transport system in addition to the inflation factor. Currently, bus fares are already disproportionately low as compared to other major cities and buses have consistently been making an operating loss for bus operators. SMRT announced a S$6.5 million operating loss for FY2015, up from a S$28.4 million operating loss for FY2014.
By deploying more drivers and buses on the roads, and bus operators bidding to keep themselves profitable, the Government will be the loss-making party which will likely have to increase fares to keep an already loss-making system financially viable, unless it decides to further increase subsidies. These points were echoed by then-Transport Minister Lui Tuck Yew in a 2014 Parliament sitting.
The short answer is Yes. Fares can only increase in the long run.
Why is the Government only recently embarking on the GCM?
The idea for GCM was first mooted in the Land Transport Master Plan in 2008. Since then, LTA had been studying the idea by visiting cities with bus contracting models such as London and Australia and accessing the benefits, with then-Transport Minister Lui Tuck Yew describing his meetings with officials at Transport for London and Metroline. In preparation for the GCM, the Government funded the Bus Service Enhancement Programme (BSEP), which was introduced in 2012 to gather Government-funded buses to be later reallocated to the GCM
Isn’t the Government already spending $1.1 billion on the bus industry?
Yes, we’ve all heard of the $1.1 billion pricetag. However, the $1.1 billion was allocated to the original Bus Service Enhancement Programme (BSEP) for the purchase of 550 new buses and rollout of 40 new bus routes, not the GCM, although technically the BSEP will eventually be absorbed into the all-encompassing GCM. The BSEP has since been expanded to a total of 1000 new buses across 80 new routes with further Government funding.
The Government is expected to spend billions of dollars more on the GCM, not only on the purchase of all bus assets, but on the construction of new bus depots, possible acquiring of existing ones, fleet management systems, and of course, money given to the successful operators of future route packages.
How does the GCM differ from the BSEP?
The BSEP was intended to boost the existing operations of SBS Transit and SMRT in the form of funding the purchase of new buses and the cost of operating them (which includes maintenance and manpower costs). Thereafter, these technically-Government-owned-but-otherwise-similar-in-all-aspects buses would be added to existing bus routes to boost capacity, or deployed on new bus routes planned by LTA.
The GCM is a shift to a new bus contracting framework which encompasses many aspects of bus operations, and will eventually absorb the efforts of the BSEP. The pool of Government-owned buses will eventually find their way to new bus operators, as assets loaned to them from the Government. While one leads to the other, the GCM and the BSEP are fundamentally different.
Who’s managing the planning of bus routes?
The Government of course. The Land Transport Authority (LTA) is the government agency in charge of transport matters and will be spearheading efforts to roll out the GCM. In the months leading up to the BSEP (launched March 2012), the LTA had assumed the role of central bus planner and will continue to do so for the foreseeable future. LTA will plan and amend bus routes, and decide on the service standards for operators to adhere to.
Enquiries and feedback regarding bus routes should be directed to LTA.
Why are there new bus operators in Singapore?
The simple reason is that bus operators are needed to manage the operation of buses. Rather than simply nationalizing bus transport, the bus contracting model intends to bring more competition into the industry, thereby giving operators the incentive to keep on their toes as well as keeping their day-to-day operations cost effective. To deliver much needed improvement to commuters, the GCM has opened the gates to foreign operators to enter the Singapore bus industry, where they can bring in much needed technical expertise and operational experience to the local bus scene. One example is the overall fleet management system which Tower Transit and the Go-Ahead Group is intending to bring into Singapore to aid with their bus operations. Tower Transit has also employed dedicated staff called ‘shunters’ that take care of bus movement within the bus depot instead of having bus captains do so, a practice it is adopting from its overseas operations.
When will I get to see the GCM in action?
Tower Transit, the operator of the Bulim Bus Package, will begin operations in mid-2016, taking over 26 existing bus services from SBS Transit and SMRT operating out of Jurong East and Bukit Batok interchanges. Later the same year, Go-Ahead Group will also begin operating bus routes under the Loyang Bus Package, comprising comprises 25 existing bus services originating from Changi Airport Bus Terminal, Changi Village Bus Terminal, Pasir Ris Bus Interchange and Punggol Bus Interchange.
Implementation of the GCM is expected to take place in stages across the next few years.
What if service standards drop under the new operator?
That’s unlikely to happen, although if new transport operators are unable to fulfill their basic obligations, it is likely that LTA will step in.
How will existing employees of SBST/SMRT be affected?
Each new tender or change in contract for bus services can result in the movement of bus employees from one employer to another. To safeguard the welfare of the affected employees and ensure their smooth transition to the incoming operator, guidelines have been drawn detailing the obligations and responsibilities of both incoming and outgoing bus operators. These include the timeline for the offer of employment, recognition of the length of service, employment terms to be safeguarded, treatment of affected bus industry employees including those who choose to stay with the outgoing operator, as well as training for those who choose to join the incoming operator.
The three key assurances proposed are that 1. All affected employees must be offered a job by the incoming operator; 2. Affected employees must be offered employment terms which are not worse-off than what they have been enjoying before transition; and 3. Affected employees can choose to join the new operator or be redeployed by their current employer, where feasible.
What happens to non-basic bus services?
With LTA being rather opaque about their bus planning matters, it is difficult to know about such future arrangements. However, since Fast-Forward Service 97e was tendered out along with the Bulim Bus Package, it is possible that existing Express and Fast-Forward routes will continue to be tendered out if LTA accesses them to be worth operating. The future of Chinatown Direct Services, Parks Services and Resorts World Sentosa Services remain unknown. NightRider Services and Nite Owl Services are likely to be re-organized under LTA to streamline them and reduce duplication of catchment areas. Existing Premium Services operated by SBS Transit / SMRT will likely be fully transferred to private bus operators or withdrawn, as LTA probably does not intend for Public Transport Operators to use Government-owned assets on Premium services.
More burning questions that we’ve failed to address? Feel free to leave your comments behind and we’ll be happy to try answering them. Once again, as a privately operated webpage, we bear no affiliation to any public transport operator or government agency.