A FIRM that runs buses in London and Australia has beaten SMRT and SBS Transit to the right to operate an inaugural government bus contract, despite not putting in the lowest bid.
Tower Transit, which had the third-lowest bid among eight shortlisted firms, was yesterday awarded a five-year contract by the Land Transport Authority (LTA) - the first major step in a restructuring of the public bus industry to raise service levels for commuters on the back of direct government subsidies.
The London-based firm bid $556 million for the five-year contract, higher than the lowest bid by local SMRT at $453 million. The highest bid came from a British firm, Go-Ahead, which put up a price of $693 million.
The contract, which effectively breaks a three-decade-old duopoly held by incumbents SMRT and SBS Transit, involves operating the new Bulim Bus Depot - off Jurong West Avenue 2 - and 26 bus services from the Jurong East, Bukit Batok and Clementi bus interchanges.
The services currently run by the incumbents will be progressively transferred to Tower Transit from the second quarter of next year.
Tower Transit will not own the buses and other infrastructure such as bus interchanges as these will be held by the Government.
But the firm will operate, manage and maintain the assets, and this includes hiring bus drivers for its operations.
The new tender will also mean that the fleet serving the area will expand from 290 buses to 380.
Tower Transit will not keep revenues from fares but it will be paid an estimated total fee of $556 million over the contract period.
In return, it must meet stipulated service standards, including scheduled headways of no more than 15 minutes in both directions during the morning and evening peaks. Feeder services will have to run at shorter intervals of six to eight minutes.
Asked why the contract did not go to SMRT, which had submitted the lowest bid, LTA chief executive officer Chew Men Leong said at a media conference that the focus was on quality, more than bid price.
"Tower Transit had the highest combined total score for quality and price," he said, without disclosing further details on the evaluation process and how each variable was weighted.
This article was first published on May 9, 2015.
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