Second bus contract goes to another foreign player

Second bus contract goes to another foreign player

Britain's Go-Ahead Group was yesterday awarded the second government bus contract - making it two in a row for foreign players.

With the lowest bid of $497.7 million, it beat seven other shortlisted firms, including incumbent public transport operators SBS Transit and SMRT, to clinch the Loyang package of 25 bus services in Pasir Ris and Punggol.

The sum is for a five-year contract with the possibility of a two- year extension and is about $134 million lower than the highest bid.

The first government bus contract for Bulim, named after a new depot to be built off Jurong West Avenue 2, was awarded to London-based Tower Transit in May.

The tenders are part of the Government's move to a bus contracting model, to increase competition in public bus services.

The Loyang package comprises three new services and 22 existing ones now run by SBS Transit. They will be run by Go-Ahead in two phases from the third quarter of next year, with the firm also managing Pasir Ris and Punggol bus interchanges, and the new Loyang Bus Depot.

Go-Ahead beat three local firms. "In terms of quality, the overall bids were actually closely matched - in fact, so closely matched that pricing of the bids became an important decisive factor," said Land Transport Authority (LTA) chief executive Chew Men Leong yesterday.

In the LTA's two-envelope process for evaluating bids, quality has a higher weighting and is evaluated first before price is looked at. The Loyang tender, launched on April 15, attracted 10 bids. Eight were shortlisted based on quality. LTA said Go-Ahead won with the highest combined quality and price score.

SBS Transit's senior vice-president of corporate communications Tammy Tan said: "We are naturally disappointed at not being awarded the tender." She said the firm would help ensure a smooth transition.

This is Go-Ahead's first bus contract outside Britain, where it has a fleet of around 4,600 buses. It is the largest bus operator in London with a market share of 24 per cent.

Go-Ahead said it will have 900 employees here, and expects to generate total revenues of around $500 million over the five years.

Go-Ahead had made the highest bid of $693 million for the Bulim contract. Said Mr David Brown, chief executive officer of the Go-Ahead Group: "We have had a longer time to understand the market and risks and therefore priced accordingly."

As for the LTA, the tenders gave it "a better sense of the overall pricing required", said Mr Chew. "We will have a better benchmark to refer to when we go into negotiating contracts for the remaining nine packages with the two incumbents."

With a fifth of bus services being tendered out initially, the rest will be run by the incumbents under negotiated contracts of about five years from September next year.

The third government bus contract tender will likely be called in the first half of next year, said LTA group director for public transport Yeo Teck Guan.

This article was first published on November 24, 2015.
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