Contract Service: A Good Thing?

In December, 1996, shortly after the second phase of the San Fernando Valley Transit Restructuring Study was completed, MTA Lines 96, 167, and 177 were contracted out to Charterways TMI, which was quickly acquired by Laidlaw Transit Services (who had bid against them and lost). Contracting these lines prevented fine-tuning of the first two phases and implementation of the remaining phases because, under the original MTA contracts, major realignments or cutbacks of a contracted route were not allowed. Thus even when a line was not under contracted operation, it could not be restructured if one of the contracted lines had to be modified to do so.

As an example, one alternate SFVTRS proposal for Line 152 and Line 169 would have involved Line 96 and that would have not been possible. Subsequent MTA contracts have allowed for more flexibility, but any changes between contracted and non-contracted service now have to be cost-neutral; since there is a per-hour cost difference between in-house and contracted service, any such changes would require that the United Transportation Union, which represents MTA's bus drivers, would have to agree to route segments being transferred between contractors and MTA operating divisions. Another, less desirable, alternative would be for a contracted route segment brought in-house to operate fewer hours.

There was a provision in the contract with Laidlaw for Line 177 which allowed the transfer of part of the line to Glendale Beeline, but MTA has continued to pay for the operation of that portion of Beeline 3.

The MTA board seems to believe in contracted operation despite relatively poor performance of Laidlaw over their three year "reign of terror". Equipment was allowed to fall into disrepair, with broken doors and wheelchair lifts, severely damaged seating, non-displaying destination signs and inoperative air conditioning (although Laidlaw did acquire seven used buses from a San Francisco-area operator in 1998 to operate Line 177 -- the longest of the three lines -- and Line 167; those buses appeared to be better maintained than the former RTD coaches leased to Laidlaw), runs were cancelled without warning (which caused violations of the MTA "last run must run" policy on many occasions), and high driver turnover resulted in a lot of off-schedule (and sometimes off-route) operation. Even though they lost the MTA contract at renewal time, the Laidlaw Transit Services website has plenty of propaganda on what a "great" job they do. (It doesn't mention that they filed for bankruptcy not long after acquiring Greyhound.)

Below is the fourth quarter 1999 customer satisfaction report from MTA Operations. Laidlaw had approximately 84 complaints per 100,000 boardings; all of MTA's Metro Bus Divisions combined had 144. ATE/Ryder (the other contractor) had about 44, and TCI (MTA's shuttle line contractor) had 17. Given that the lines Laidlaw and ATE/Ryder operated are among the lowest-ridership lines in the Metro System, receiving a total of 128 complaints per 100,000 passengers is dismal.


Laidlaw lost the contract to operate these lines for a second term; MTA's Operations Committee voted in April, 2000 to transfer Lines 96 and 167 to Coach USA (which had been operating LADOT's DASH and Commuter Express lines since Laidlaw lost those contracts; subsequently, LADOT contracted with Connex for most of its service) and Line 177 to First Transit (who also got the rest of Laidlaw's contracted lines and all of the lines operated by their former incarnation, ATE/Ryder). The full MTA board heard a challenge from Laidlaw, but upheld the original award; the new contractors began operating those lines at the end of June, 2000.

And the contracted lines -- even with new contractors -- still created the highest level of passenger complaints per 100,000 boardings, as evidenced by the report for February/March/April 2003:


Of note is that in February, 2001 MTA transferred Line 177 to Coach USA because of First Transit's poor performance. Subsequently, in 2003, First Transit acquired Coach USA's transit division, which is strikingly similar to the Laidlaw maneuver.

As of August 1, 2005, MTA's contractors are:
Transportation Concepts, Inc. (TCI) -- Lines 96, 167, 218, 603 (North Region)
Southland Transit, Inc. -- Lines 177, 254, 256, 266, 270, 605 (East Region)
First Transit, Inc. -- Lines 125, 128, 130, 205, 214, 225, 232, 607, 608, 625 (South Region)


MTA Contracted Lines - North Region (Metro San Fernando Valley and Westside/Central) in blue, East Region (Metro San Gabriel Valley and Gateway Cities) in orange, South Region (Metro South Bay and Gateway Cities) in green

Lines 96 and 167 were transferred to TCI from First Transit. Lines 177, 254, 256, 266 and 270 were transferred to Southland Transit from First Transit. Line 605 was transferred to Southland Transit from TCI. Lines 607, 608, and 625 were transferred to First Transit from TCI. This was a reorganization of contracted service into three regions, with a single contractor for each region, rather than having multiple contractors in each area and every contractor operating some portion of service throughout MTA's service area.

An anomaly was Line 622 (the I-105 Nightline Shuttle, to replace the canceled late night trips of the Metro Green Line), which began operation as an "experimental service" June 26, 2005 -- before the new contracts were put in force -- which was finally added to the South Region contract (it had been run by TCI for the first year, and then was canceled one year after that) in June, 2006, along with the addition of new Line 577X to the East Region contract and new Line 634 to the North Region contract. Line 225 was transferred to Palos Verdes Transit in September, 2006. and new Line 626 was added to the South Region contract in December, 2007. Proposals to cancel Lines 177, 254, 256, 608 and 634 in June, 2007 are pending public hearings in February.

Laidlaw Transit, apparently still trying to get back into MTA's good graces, bid on all three of the new 2005 contracts but failed to win any of them; they were the lowest bidder on the South contract, but MTA rejected their bid because "weaknesses were identified in [their] proposed maintenance program ... their proposed safety program was not considered comprehensive and their proposed key personnel have minimal relevant experience in the operation of similar size service." (This is hardly surprising, given their poor performance in maintenance and safety during the 1996-99 contract period.)

First Transit also bid on the North contract, as did Connex (LADOT's current contractor). Southland Transit, the winner of the East contract, was created in 2001 as a merger of San Gabriel Transit and R&D Transportation Service, who were two of the contractors involved in the disastrous Smart Shuttle experiment. TCI also bid on the East contract. Surprisingly, First Transit did not bid on the East contract, despite the fact that they were already operating most of the lines assigned to that region.

Those interested in the staff reports for each region's contract can read them at the MTA website (North, East, South); Adobe Reader required.

Nevertheless, the only downward trend in complaints on contract-operated lines is relative to the overall downward systemwide; the report for September through November, 2006 still shows more than twice as many complaints on contracted lines as the highest Metro division:


It is possible that the trend can be reversed at some point in the future. On June 23, 2005 the MTA board approved installing their new Automated Transit Management System (ATMS) in the buses operated by contractors; when fully operational, ATMS will be able to provide real-time data on passenger boardings, on-time performance, and the like. Combined with the still-high level of passenger complaints, there may be a basis to challenge the continued operation of non-shuttle lines by contractors. Time will tell.


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