Government Contracting Model (GCM)

WeHaveMoved1

The Government Contracting Model (GCM), now known as the Bus Contracting Model (BCM), for the Public Bus Industry was announced in 2014. All bus routes in Singapore which are operated by public transport operators such as SBS Transit, SMRT Buses, Tower Transit and Go Ahead Singapore are split up into fourteen (14) bus packages.

Learn more about the Bus Contracting Model at our updated article at Land Transport Guru by clicking here.

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The Government Contracting Model (GCM) for the Public Bus Industry was announced in 2014. Starting from the second half of the same year, the Government will restructure the public bus industry to a “Government contracting model”, enlabling the Government to make public bus services more responsive to changes in ridership and commuter needs, as well as inject more competition into the industry, thereby raising service levels for commuters over time.

The following parts will explain how the GCM works, in simple English. Alternatively, they are summarised in this video by the Land Transport Authority (LTA).

Contents:

Background

Transition to GCM

Welfare of workers

Service levels

Tendering process


Part 1: Background in brief:

Bus Service Operating Licences (BSOL) for SBS Transit & SMRT expire on 31 Aug 2016

All operating assets (i.e. depots, buses) currently owned by both Government and Operators

Slow response in the improvement of service standards due to a profit-driven business model:

Bus operators earn revenue from fare collection, advertising, etc.

Profit used to cover capital and operating expenses, and earn returns

Bus operations geared towards reducing financial losses (buses are largely unprofitable as a whole, considering increasingly high bus operating costs, manpower costs and disproportionately low fares)

Unprofitable services often do not receive improvements

Under the new model:

Land Transport Authority (LTA) to own all bus assets:
Buses, bus depots, bus interchanges, fleet management systems, etc.

LTA being the central bus planner, decides on bus services to be provided, and the service standards which operators have to meet

Bus operators will bid for bus route packages through a competitive tendering process, and be paid a fixed fee to operate the bus services. Running costs are considered separately and will be paid fully by the Government.

All fare revenue will be retained by the Government and to ensure the affordability of public transport fares

What are the new roles of bus operators?

Operate their allocated bus services in accordance with specified performance standards

Operate and maintain the buses and their onboard equipment (e.g. driver fare console (IDFC) and fleet management equipment) as leased from the Government

Operate and maintain the Bus Interchanges and the new Bus Depot included in the Route Packages, including all equipment and systems provided therein

Charge and collect the fares approved by the Public Transport Council, for travel on the Route Package Bus Services allocated, on behalf of the Government

Provide bus service information at all bus stops and bus interchanges served by the Route Packages’ Services

Provide customer management services, such as lost and found service, and a hotline for commuter feedback and enquiries.

Continue to benefit from advertising revenue

Operating assets will be leased from Government to Bus Operator as stated in the contract which Bus Operator has been awarded

Incentive Framework (Performance Standards for Operators)

Incentive Framework to encourage it to provide quality bus services to commuters and carry out good maintenance of the assets provided by the Government. If the Operator meets the standards, it will receive a performance payment of up to 10% of its annual service fee. On the other hand, if the Operator does not meet the standards, up to 10% of its annual service fee will be deducted. The five performance indicators are in the areas of:-

Bus service reliability, with indicators on Excess Wait Time (EWT) and On-Time Adherence taking reference from the on-going Bus Service Reliability Framework pilot

First and last bus punctuality to ensure that commuters can board the first and last bus of the day

Maintenance of the buses provided by LTA

Maintenance of the Bus Interchanges and Bus Depot awarded under the Route Packages

Maintenance of the Bus Ticketing System

What are the advantages of this system?

Strengthens the Government’s ability to respond more quickly to changes in travel demand and service level expectations

Bus operators to focus more on operating the bus services and meeting service standards

Lowering barriers of entry, introducing more market competition leading to the provision of better bus services in a cost-competitive manner that will benefit commuters.

So how will commuters benefit?

A more responsive system that adapts to ridership patterns and commuter needs

Greater competition and efficiency within the bus industry

More reliable bus services with improved service levels

Less waiting time between buses

The contract model is currently in use in London and various Australian cities; their transport systems which LTA is modelling from. The Government is now able to directly subsidize bus operations to maintain better service levels, even if such levels of service are unprofitable.


Part 2: Gradual transition to competitive tendering

Bus services in Singapore will be bundled into twelve bus packages, with about 300-500 buses each. For a start, LTA will tender out three packages of bus services, starting from the second half of 2014 for the first package, for implementation from the second half of 2016. The contracts will last for five years, and can be extended by another two years with good performance. In total, the three packages will comprise about 20% of existing buses.

The other nine bus packages, comprising the remaining 80% of existing buses, will continue to be operated by the incumbent operators (SBS Transit and SMRT). LTA will negotiate with the incumbents to run the nine packages under the contracting model, for durations of about five years when their BSOL expire on 31 August 2016. After these negotiated contracts expire, more bus services will be gradually tendered out.

GCM Package 1, titled “Bulim Bus Services”, has been announced, with tender closing on 19 Jan 2015.

This gradual, phased transition will allow LTA to refine and improve on the management of contracts, as well as the tendering and handover process, and minimise risk of service disruption.


Part 3: Safeguarding the welfare of workers

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, the Public Transport Tripartite Committee (PTTC) released the Guidelines on Good Employment Practices in the Public Bus Industry (the “Guidelines”) on 16 September 2014, 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 by the PTTC are:

  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.

These employee aspects of the Guidelines have been incorporated into LTA’s tender documents, and will also be included into LTA’s subsequent contract with the Operator.


Part 4: Higher service levels

With the transition to a bus contracting model, the Government intends to also raise bus service levels to beyond those of the expanded BSEP.

Current Service Levels during 2-hour AM and PM Peak Periods:

About 30% of bus services operating at headway of no more than 10 minutes

100% of bus services operating at headway of no more than 30 minutes

Expanded BSEP during 2-hour AM and PM Peak Periods

About 35% of bus services operating at headway of no more than 10 minutes
100% of bus services operating at headway of no more than 20 minutes

Government Contracting Model during 2-hour AM and PM Peak Periods

50 or more % of bus services operating at headway of no more than 10 minutes

100% of bus services operating at headway of no more than 15 minutes

All Feeder Services operating at intervals of 6 to 8 minutes.

As a result, an estimated 45% of bus services will have shorter intervals during peak periods when compared to the expanded BSEP service levels.


Part 5: Tendering Process

All tender submissions will be evaluated by LTA through a 2-envelope process for quality and price with greater weightage given to the quality proposal submitted by the tenderers. This was evident when UK bus operator Tower Transit won the Bulim Bus Package despite offering the third lowest bid of $125.6 Million per year, in contrast to the lowest $93.7 Million per year bid from SMRT.

LTA awards route packages (tenders) based on “Gross Cost Model”. The Operator which the tender would be awarded will be required to set up a local company to operate the Route Packages, with senior management overseeing its operations to be based in Singapore for better oversight and accountability.

There will also be provisions for additional bus capacity in the contract which will enable the Government to make expeditious adjustments to the Route Packages when necessary, in response to changes in ridership and commuter needs.

During the contract period (5-7 years), the service fee which is the Operator’s bid price for the package, will be adjusted to better reflect the operating climate by taking into consideration inflation, changes in wage levels, and fuel costs.

Separately, the Operator will be able to tap the Bus Driver Training Grant for new bus drivers trained and deployed on the bus services from the date of award of contract to December 2016.

The Operator will be paid the service fee on a monthly basis with deductions for non-operated mileage that is within its control, such as driver absenteeism.

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Tendering requirements

Among other requirements, bus operators bidding for the package must have a proven track record of operating a fleet of at least 250 buses.

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Route Packages

Route Package #1: “Bulim Bus Package” (26 Services)
Tender status: Awarded to Tower Transit
Operating out of Bulim Bus Depot.
Bus Services: 41, 49, 66, 77, 78, 79, 96, 97, 97e, 98/98M, 106, 143, 173, 177, 183, 189, 282, 284, 285, 333, 334, 335, 941, 945, 947, 990
Bus Interchanges/Terminals: Bukit Batok Int, Jurong East Int

Route Package #2: “Loyang Bus Package” (25 Services)
Tender Status: Awarded to Go-Ahead Group

Operating out of Loyang Bus Depot
Bus Services: 2, 3, 6, 12, 15, 17, 34, 36, 43, 62, 68, 82, 83, 84, 85, 118, 119, 136, 354, 358, 359, 382, 386, 403, 518
Bus Interchanges/Terminals: Pasir Ris, Punggol

Route Package #3: “Seletar Bus Package” (26 Services)
Tender Status: Open. Closes on 06 Oct 2016, 12PM.

Operating out of Sungei Seletar Bus Depot
Bus Services: 24, 70/M, 76, 130, 133, 135, 138, 162/M, 261, 262, 265, 268, 269, 800, 803, 804, 805, 806, 811, 812, 850E, 851, 852, 860 + 2 more new Bus Services to be launched.
Bus Interchanges/Terminals: Ang Mo Kio, Yio Chu Kang

Route Packages #3 to #12 will be announced progressively.
Future route packages will likely be based off new bus depots which are currently undergoing construction, such as: Sungei Seletar, Mandai, Ulu Pandan and Changi.

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Changes to Bus Services:

Basic Bus Services:

With LTA being the central bus planner, it will continue to introduce new routes and amend current routes to suit the needs of commuters. While an overhaul of bus services is unlikely, several routes may be amended / split for better reliability. As more housing estates are being built, the number of basic services will only increase to suit new travel patterns.

An exception is cross-border services, which do not adhere to certain service standards of regular services owing to complex traffic conditions across the Causeway. It remains to be seen how these services will be tendered out to operators when service standards are difficult to implement for such services.

Basic-Plus Services:

Express services offer unique connections between places that will not likely disappear with the implementation of GCM. Long express services (especially 502 and 518) may be amended / split for better reliability but the routing should largely remain the same.

Fast-Forward services will likely remain unchanged and tendered out along with the parent service, such as 97e tendered as part of the first Bulim Bus Package. This possibly indicates that LTA is receptive to the idea of Fast-Forward services, but more of such services are unlikely to be introduced.

The sole remaining Parks service will likely be converted to a trunk service. The fate of Chinatown Direct services are also unknown, but their connections will likely be retained due to their popularity with residents.

NightRider and Nite Owl services will likely be re-organized by LTA to reduce duplication and increase reliability. Night services have yet to be tendered out and may be re-organized at a later date.

Premium Services:

As PTOs are gradually handing over Premium services to private bus operators, it is likely that premium bus services will not be operated by public bus operators with GCM assets. They might be fully transferred to private operators, or continue to be operated by their non-franchised divisions (such as SMRT’s Busplus charter division).

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Taking over of buses:

LTA has initiated the GCM initially using buses destined for SBS Transit but registered under the Bus Service Enhancement Programme (BSEP). These buses, destined for service with SBS Transit fleet but owned by the Government, were rerouted to operators of the first few GCM packages such as Tower Transit, the initial operator of the Bulim Bus Package.

To further expand the GCM bus pool, the Land Transport Authority said on 29 December 2015 that it would take over SBS Transit’s bus purchasing contracts worth S$164 million for 346 new bus purchases, scheduled for delivery in 2016 and 2017. It will also directly buy 50 buses, worth about S$23 million, which were delivered to SBST between June and December this year.

Among the 346 buses to be bought under the contracts, 100 are single-deck buses, while 246 are double-deck buses. 210 of these buses are scheduled for delivery in 2016, and the rest in 2017.

Among the 50 buses to be bought from SBS Transit, 12 are single-deck buses, while 38 are double-deck buses

In total, LTA will be buying 112 Mercedes-Benz O530 Citaro single-deck buses and 284 Volvo B9TL buses for the GCM, worth around S$187 million. Based on our best guesses, Mercedes-Benz Citaros are drawn from SBS Transit’s Third Batch of 250 units, registered as SBS6866E onwards. Volvo B9TLs are drawn from SBS Transit’s Fouth Batch of 415 units, registered from SBS1Z onwards.

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Gallery:

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LTA News Releases (References)

Transition to a Government Contracting Model For The Public Bus Industry  (24 May 14)

First Bus Package Under The Government Contracting Model Up For Tender (03 Oct14)

Second Bus Package under the Government Contracting Model to Be Put Up for Tender in Second Quarter of 2015 (11 Mar 15)

LTA awards first tendered bus package to Tower Transit Group Limited (08 May 15)

LTA to take over SBS Transit’s contracts for new bus purchases – Channel NewsAsia

LTA on Facebook (We Keep Your World Moving)

Back to Bus Articles

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This article is updated as of 08 May 2015.

3 thoughts on “Government Contracting Model (GCM)

  1. My guess
    1st:Bulim
    2nd:Loyang
    3rd:Sungei Seletar
    4th:Ulu Pandan
    5:Mandai
    6:Changi
    7:Jurong Ind
    8:Sin Ming or Thomson
    9:Tampines Ind
    10:Bt Timah or Dairy Farm
    11:Portsdown or somewhere near CBD
    12:Somewhere near Bartley or Hougang

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