Tender shock rocks Sydney


Worst fears have come true for some long-serving Sydney operators as NSW bus tenders are announced

Tender shock rocks Sydney
Tender shock rocks Sydney

By David Goeldner | November 7, 2012

Metro-Link, Hopkinsons and Busabout – all family-run bus businesses in Sydney’s outer-western Region 3 face oblivion following today’s NSW Government tender results, sending shockwaves through the industry.

Also affected by today’s bombshell is Reg Kermode’s Comfort Delgro Cabcharge (CDC) Westbus operation, which lost its runs to Busways operating across Sydney’s Blacktown to Penrith service area.

Busabout and CDC will continue to operate in other as-yet-to-be-tendered regions, but the axe has started to swing from NSW Transport Minister Gladys Berejiklian, aiming to create a more efficient Sydney bus network.

It appears clear that the preferred model is one operator per region, except where companies have merged, as is the case with Veolia Transdev’s Shorelink.

There are 15 regions in the Sydney network, 11 in private hands, and four run by the State Transit Authority.

While it is a sad day for the Oliveri (Metro-Link) and Hopkinson families in particular, bus industry identity Neil Smith finally achieves his goal to operate bus services in Sydney by winning Region 3 through his company Transit Systems Australia, the parent company of Adelaide’s Torrens Transit.

Transit Systems CEO Clint Feuerherdt says the appointment of the contract by Transport for NSW was ultimately a win for residents and the community.

"We’re excited to bring our extensive experience in running and optimising transport systems to the NSW market and look forward to delivering innovative long term solutions and value for money to the community and to the government," Feuerherdt says.

Veolia Transport Australasia CEO Jonathan Metcalfe was similarly upbeat with the tender result, where Veolia Transdev retained the northern suburbs Region 12, saying it was the result of "excellent business performance to date and a compelling and innovative bid."

As part of each bid, competitors for each tender were required to state how services would improve in the contract area under their operation.

Veolia Transdev’s bid pledged to improve bus departure time punctuality, improve the way employees interact with customers, expand off-peak, evening and weekend services, and ‘target actions that will ensure Veolia Transdev Shorelink meets the performance benchmarks established in the KPI regime’.

"We have a proud history of being at the leading edge of bus reform in NSW," Metcalfe says.

"We were the first to sign the new era contracts in 2004 and also were able to roll out 60 Metro buses in 2010 in our other NSW bus company.

"The new Shorelink contract is the latest example of this."

Metcalfe says a key reason for success in retaining Region 12 was the ability to show how Veolia Transdev could be both internationally proven and locally relevant.

"We will integrate Veolia Transdev programs into the business and continue to enhance our existing strong links in the north shore community," he says.



WINNERS AND LOSERS

There will be status quo in at least two of the four regions assessed in the first tender round.

Family-run Forest Coachlines will retain region 14, which operates in the Terrey Hills-based outer northern Sydney area, adjacent to its neighbour Veolia Transdev which retained region 12.

The new contracts announced on November 7 are for five years, with a three year right of renewal subject to meeting performance standards. The new contract holders in each region and the contracted service improvements include:

Penrith, Mt Druitt, St Marys, Richmond and Windsor – Region 1:

Contract awarded to Busways, with approximate number of journeys assessed at 8 million a year.

Liverpool, Fairfield and Holroyd – Region 3:

Contract awarded to Transit Systems Australia, with approximate number of journeys at 5.5 million a year.

Berowra, Hornsby, Gordon and Chatswood - Region 12:

Contract awarded to Veolia Transdev, operating as Shorelink, with approximate number of journeys at 1.5 million a year.

Chatswood, Belrose, Terrey Hills and St Ives – Region 14:

Contract awarded to Forest Coach Lines with approximate number of journeys at 2.5 million a year.

According to Gladys Berejiklian’s Transport Ministry, the four Sydney metropolitan bus service contracts now decided under competitive tender would result in customer service improvements and average savings of more than $18 million a year.

"The new Sydney metropolitan bus service contracts impose a very strong customer focus and detailed key performance indicators," Berejiklian says.

"Simply renegotiating with the existing operators – as had been done in the past – would likely have resulted in contract cost increases," she claims.

"In May, the NSW Government announced that the contracts would be open to competitive tender for the first time and this has succeeded in driving service improvements for customers and gaining better value for taxpayers."

Berejiklian says Transport for NSW will now focus on ensuring customers experience a smooth transition to the new operators, progressively taking over operations in their respective regions from April next year.



MIXED EMOTIONS

Within 24 hours of the announcement, BusNSW Executive Director Darryl Mellish considers the new contracts as representing a shift to greater government control though a comprehensive penalty-based performance regime.

"With regard to the estimated $18m savings, if you take out of this amount the cost of the tendering process and the savings from the government-run Transitway in Region 3, it is difficult to fathom how the balance remaining could have not been achieved by negotiation," he says.

"We will of course be keeping a close eye on performance under the new contracts and what impact changes may have on the travelling public."

Commenting on the failure of Westbus, Metro-link, Hopkinsons and Busabout to retain their contracts, Mellish believes that each operator still has an important role to play in the industry.

"Their experience and local knowledge would be of great benefit to our customers," Mellish says.

He says ongoing plans following the Region 3 announcement is ‘very much up in the air’ for these operators with Transit Systems still with ‘some time’ to put together the resources needed to start the contract in about 12 months from now.

Mellish says BusNSW would seek a meeting with Transit Systems Australia who currently provide services in other states.

And despite the disappointing result for four of the incumbent operators, Mellish nevertheless congratulated Forest Coach Lines, Busways and Veolia Transdev on their successful bids.

The second tender round is scheduled for July 2013 and will include another four service regions covering Liverpool, Glenfield, Ingleburn, Bringelly, Hoxton Park, Blacktown, Rouse Hill, Castle Hill, Dural, Parramatta, Lakemba, Mortdale, Punchbowl, Roselands, Campbelltown, Narellan and Camden.

You can also follow our updates by liking us on Facebook