Report supports NSW contract tendering


A report aimed at improving public sector management has highlighted support for tendering NSW bus contacts

Report supports NSW contract tendering
Report supports NSW contract tendering
August 14, 2012

A report aimed at improving public sector management has highlighted support for tendering of New South Wales metropolitan bus contacts, providing cost efficiencies are demonstrated over existing contracts.

The NSW Commission of Audit Final Report, released last week, says the ‘next generation’ of bus contracts are welcomed, but must demonstrate "cost efficiencies over the existing contracts where possible".

The report included 132 recommendations and was released by NSW Premier Barry O’Farrell on Thursday.

The report says four years after the current seven-year contracts were introduced in 2005 at a cost of around $900 million per year there was no performance management regime in place.

According to the report, this resulted in poor performance and poor service not being addressed and some bus services being more costly than needed.

"The Auditor General (in 2010) noted that there were variations in service levels between public and private operators; services were not always reliable; and the contracts were negotiated directly with existing operators rather than tendered," the report says.

"It was suggested that a competitive tender may have allowed decreased cost to be passed on to customers."

The report says an independent review prepared for Treasury in 2010 also recommended the renewal of the bus contracts in 2012 be restructured.

According to the report, the review found that the cost of the bus contracts per service kilometre in NSW was $6.25 -
higher than in Perth at $5.89, Brisbane at $4.61 and Melbourne at $4.55.

The review also found that the contracts awarded operators for outcomes they had little control over,
and that
opportunities existed to rationalise spare buses and redeploy the excess to improve utilisation.

In its official response to the report, the government confirms the contracts for regular bus services in Sydney will be competitively tendered for the first time, in two stages, commencing in July 2012.

"The new contracts will embed customer service and reliability performance measures to deliver service improvements," the response says.

"The government will also examine the potential for greater contestability in the provision of road maintenance."

The NSW Long Term Transport Master Plan’s draft report is due to be released for public comment in mid-2012, and the final plan due to be released by the end of 2012.

The government established the Commission of Audit last year to develop a framework for the NSW public sector.

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