A case for negotiated performance-based contracting rather than competitive tendering in government public transport (bus) service procurement

Australian federal and state governments have entered numerous free-trade agreements with other nations. A focus of these agreements and related policies is the requirement for participating governments to procure goods and services via public tender. While such tendering is purportedly to obtain ‘value-for-money’ solutions for governments, in practice, tendering is often aimed at procuring goods and services at the lowest possible price. Against this blanket approach there are circumstances in which alternatives to tendering can and should be utilised. This paper reviews academic research over the past decade, in particular research developed for and presented at Thredbo Series Conferences, which examines how public transport and particularly bus services should be procured in the context of a discussion about service cost and quality. It outlines the successful implementation of negotiated performance-based contracting (NBPC) in Victoria, Australia, in respect of its bus network, and concludes that there is no reason why competitive tendering should be viewed as the most appropriate method of procurement in each and every instance or even the ‘default’ position. Indeed, when there are existing private providers of such services, NPBC appears to be a better alternative to tendering.