The evolution of tactical tendering in the Netherlands

1. The evolution of tactical tenderingin the Netherlands • Didier van de Velde, TU Delft / NEA • Pieter Hilferink, NEA • Lars Lutje Schipholt, inno-V

2. Introduction • Competitive tendering since 2001 • Aim: stimulate innovation to improve efficiency & increase number of passengers • 2/3 Netherlands (excluding 4 largest agglomerations) tendered • This paper • Review of opposite evolutions on the allocation of the tactical level • 4 representative cases • Reasons for opposite evolutions

3. North Holland • First tender in 2002 won by Connexxion • Limited tactical powers and detailed prescription of network • Little incentives for the operator to improve or promote services • Prescribed experiments have all been discontinued • Second 2 tenders in 2005 won by Connexxion • Minimum functional requirements (2/3 of budget) • Strong financial incentives to maximise ridership en customer satisfaction • Operator will implement many improvements • Passenger growth of 40% promised

4. South Holland • First tender in 2002 won by Arriva • Not much tactical freedom • Room for change after 1 year • Freedom did not result in the expected improvements • Second tender in 2004 won by Connexxion • Very limited prescription of network • Separate ‘development’ budget € 1 mln (‘operations’ budget € 24.4 mln) • Improved supply and a 20% better value for money

5. GGD Area • Performance contract in 2002 with Arriva • No commitment to ridership growth • Large understanding for limited focus (interdependencies, lack of perspective and current legal setting) • First tender in 2004 (just) won by Arriva • Further restriction of tactical freedom of operator • Even no responsibility for information provision and customer satisfaction • Creation of a Public Transport Bureau

6. North Brabant • First 2 tenders in 2001 won by Connex/BBA • Limited tactical freedom, room for experiments • Option for 2 year extension not used because of negative performance effects and negative results of experiments • Second 4 tenders in 2005 won by Arriva, Hermes and Connexxion • Separate ‘transport architect’ that prescribes pre-defined services • Selection largely based on price • Operator is invited to propose changes in network and timetable • Results disputed by loosing incumbent

7. Analysis of shifts • No clear trend at first sight • 50% increase service design powers for operators, 50% de-crease powers • Four presented cases diverge substantially in implementation • Different reaction to disappointment with first tendering

8. Allocation of the tactical level • 4 different solutions for same problem • Functional tendering of tactical level • Separate ‘development’ bureau by operator • Public transport bureau by authority • Commercial transport architect • Trend • Separation of operational en tactical level • North Holland is the exception

9. Analyses • Oversimplification of causes and solutions • Only simple organizational/technical solutions • Authorities sometimes learn from their own failures, but don’t learn from each other • Few people pay attention to ‘process’ aspects

10. What is more likely to happen? • Higher probability: • Authorities keep/increase influence on tactical level • Focus on social function • No room for commercial function • Authority is the (core-)entrepreneur • Juridification • Cost instead of quality focus • Downwards trend (less passengers, less revenues, less busses)

11. What is more likely to happen? • Lower probability: • Generalisation of North Holland example • Functional approach that stimulates costumer orientation and entrepreneurship • Working towards partnership • Need for more process/human orientated approach • More insight in operator’s logic and shortcomings of civil servants • More attention paid to steering mechanisms, both at tendering and during contract