Impact on Govt’s new bus contracting model on SMRT and SBST

Asked the Minister for Transport (a) what are the reasons for having SMRT and SBS Transit continue running nine out of 12 bus contract packages without a competitive tender in the initial period of the new bus contracting model even after their Bus Service Operating Licences (BSOL) expire on 31 December 2016; (b) whether during this initial period SMRT and SBS Transit will benefit from being paid the service fee with no fare revenue risk while not being subject to competition for their nine negotiated packages; and (c) when does LTA expect to put out a competitive tender for all 12 bus packages.

Parliamentary Question on 4 August 2014

Mr Gerald Giam Yean Song asked the Minister for Transport (a) what are the reasons for having SMRT and SBS Transit continue running nine out of 12 bus contract packages without a competitive tender in the initial period of the new bus contracting model even after their Bus Service Operating Licences (BSOL) expire on 31 December 2016; (b) whether during this initial period SMRT and SBS Transit will benefit from being paid the service fee with no fare revenue risk while not being subject to competition for their nine negotiated packages; and (c) when does LTA expect to put out a competitive tender for all 12 bus packages.

Mr Lui Tuck Yew (Minister for Transport): The move to the Government contracting model is a major shift, involving more than 270 bus services across the country. The LTA is therefore adopting a gradual approach by tendering three packages initially while retaining the current operators in the remaining nine packages. This is to ensure a smooth transition and minimise the risk of disruption to bus services and inconvenience to commuters. A gradual transition provides time for new operators to become familiar with our market, and for LTA to refine and improve on the tendering and handover processes for each successive tender.

The Bus Service Operating Licences (BSOL) of SMRT and SBST will expire on 31 August 2016. At that time, the nine packages that they will continue to run will also move to a Government contracting model. Since the service standards for these nine packages will be similar to that of the three tendered packages, we can use returns from the competitive tenders as a reference for our negotiations with the operators on the nine packages. Contracts for the nine packages will vary in duration and we will continue to gradually move more of them in phases towards competitive tendering when the contracts expire. We expect more than half of bus packages to be competitively tendered by the early 2020s, and the rest thereafter.

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Source: Singapore Parliament Reports (Hansard)

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.