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Privatized bus service experience in Denver, CO

I have been watching with interest the debate brewing in Milwaukee as it relates to contracted bus service.

I thought I would share with your city, the Regional Transportation District’s (RTD), Denver, favorable experience with contracting out bus service.

The RTD began using private contractors to operate its bus routes in 1989.

This was in response to Colorado Senate Bill 164 (SB 164), passed by the Colorado legislature in 1988, that requires the RTD to provide at least 20 of its service through private contractors.

The RTD has met or exceeded the State requirement in every year except 1999 (From November 1999 through May 2000, the RTD was not in compliance with SB 164 due to the termination of a bus operating contract for nonperformance).

In May 2007, the legislation was amended to provide for “a system under which up to 58 of the District’s service” is provided by private contractors.

SB 164 also requires that the RTD compare the cost of its own internal service to any bids from private contractors to ensure that cost savings are achieved.

The RTD has performed this calculation prior to the award of any bid for contracted bus service.

Over a nine-year period studied (in the 1990’s), RTD saved $40.1 million in operating costs through contracting for a portion of its fixed route bus service.

This represented a savings of 17.5 over the incremental cost of operating the same service in-house. The annual dollar savings attributable to contracted service has increased over the last recent years.

In addition to the operating cost savings reviewed in the study, RTD saved between $25 million and $30 million in capital costs over the same period due to eliminating the need to construct additional internally operated bus maintenance and storage facilities.

Finally, the initial State legislation required that there be no layoffs as a result of privatization and the implementation of privatized service delivery.

Additionally, all four private contractors providing privatized service to the RTD have been organized by the local union.

We continue to save through the prudent implementation of contracted bus service at RTD in Denver, Colorado.

Phillip A. Washington, General Manager and Chief Executive Officer Regional Transportation District, Denver, Colorado.