BKK Budapest: competitive tendering of bus services kicks off

Today, BKK, the transport-organiser of Budapest, capital city of Hungary, issued the first call for competition regarding the operation of bus services in Budapest.

One of the main tasks of BKK is to prepare and open up the Budapest bus service market for competitive tendering that shall contribute to service quality, efficiency improvement and cost savings. Up until now, there has been only one service operator in this field, BKV (Budapest Transport Company) owned by the Municipality of Budapest, which faces serious problems at the moment: the average age of the bus fleet is extremely high (around 17 years), and in terms of the fleet it provides a low service level: no air-conditioning, mostly high-floor vehicles and often unacceptable interior and exterior appearance. BKV is undercapitalised and its development projects managed by BKK are focusing on the fixed-rail infrastructure and rolling stock utilising the EU Cohesion Fund.

Currently in Budapest there are 1,400 buses participating on a daily basis in the urban public transport service. The 239 bus routes transported 548.6 million passengers in 2010, which represents 40% of the total number of passengers. The total annual vehicle kilometre of the bus network is 92.7 million.

A considerable amount of the bus operations services is to be tendered out gradually in the next two years.

The procurement process has two stages and it will practically be very similar to that of Transport for London’s, customised to local needs and legal requirements. In the first stage we open the tender in order to shortlist the applicants that comply with our basic requirements.

  1. The first stage will be open for applications on an ongoing basis for a period of four years starting on 21 October 2011.
  2. The second stage of the process is the competition by the applicants that are on the short list at the start of the second stage. Awarding a new service contract at this stage will always entail a competitive tender for each individual new contract for different service volumes. The vehicle kilometre volume required by a typical service contract can be fulfilled by a fleet of 30 to 300 buses, the latter figure representing a typical bus depot size in Budapest.
    The first stage has now started, while the first competition for a specific service contract (“second stage”) is planned to start in January 2012.

The most relevant information regarding the forthcoming contract:
• The service contract is based on vehicle kilometre as set by BKK. The gross cost contract entails revenue risk at the PTA.
• Different sizes of mostly new buses are determined (midi [around 8m], normal [12m] and articulated buses [18m]).
• Possibilities and duties concerning depots will be determined in the second stage of the procurement.
• The service contract will be for a fixed term. The length of the period will be determined at the second stage, considering the break-even time of the investment.
• A bonus-malus SLA system with quality incentives will be introduced regarding schedule, cleaning, air-conditioning and other service elements,
and further specifications to be published in the tendering documentation.

The tendering process is fully compliant with EU public procurement rules and is fully transparent. BKK encourages all experienced and well-established bus operators to submit their applications to this call.

The official procurement procedure is in the Hungarian language and since the governance system restructuring described above is on-going, the first tender will be managed formally by BKV under the supervision of BKK.

Please follow the direct link below to the relevant TED page in English:

Background information: A decision made in late 2010 by the General Assembly of the Municipality of Budapest has introduced a new governance structure for public transport: BKK (Centre for Budapest Transport) was established. A new professional transport-organising authority was founded with the duty to ensure integrated transport management among the different transport sectors (public transport, road and bridge maintenance, taxis, parking, cycling and walking). Within this governance model, BKK is located between the local government and transport operators. All strategic, developmental, management, ordering and control functions are being integrated into the organisation until mid-2012. BKV will continue to be the incumbent operator of fixed-rail services in Budapest, to be contracted by BKK.

Friday, 21 October 2011

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