Competitive tendering in the Netherlands: 6 lessons from 6 years of tendering

In various countries in Europe public transport authorities are tendering out services. They use the power of the market (by choosing between several bids) and combine it with strong public influence (by developing public goals into a clear set of requirements). Various authorities set the requirements at different levels, from requirements developed as general demands on the services to a complete set prescribed vehicles, routes, and timetables. These different levels of requirements necessitate different contracting strategies, with net-cost contracts being more obvious when the operator has a lot of freedom to develop services and gross-cost contracts when the authority largely decides what services should be delivered. In the Netherlands, national regulation leaves a lot of room for the 18 regional transport authorities to experiment with various forms of tendering and contracting. That has resulted in a landscape of various forms of tendering. The Dutch regional transport authorities have discovered a tension between a solid tendering phase on the one hand and a solid concession phase on the other. When they develop their demands and contract in the tendering phase they feel the need for clear and uncompromising requirements. They feel this need to thwart possible strategic overbidding by the operators: it has to be crystal clear what services they are expected to offer during the concession period. The contract needs a closed character. In the concession phase, after the concession is awarded to an operator, they start feeling the need for flexibility to keep the services in line with changing demands, political priorities, changing funds and new spatial development. The caveat is that, due to the strong competition, the operators have entered bids at low prices, which significantly reduces their ability to accommodate the changing wishes of the authority. In that case the contract really would need an open character. Many transport authorities have been searching for a good balance between fixing the right services in the tendering phase and allowing flexibility during the concession phase. This study considers the following questions. what various forms of tendering are seen in Europe? What contracting strategies fit those forms? What balance do tendering and contracting strike in terms of fixing the agreements in the tendering phase and allowing for flexibility during the concession period? How can an unbalance between the two be repaired? For the covering abstract see ITRD E137145.