Transit Service Contracting (for laymen) Part 4 – Where are we now?

This is a late addition to a three-part series I wrote in August 2020. Then in the early stages of the pandemic and its disruptive effect on public transportation, the government suddenly discovered what other countries have been doing for a long time; service-contracting. Almost two years have passed, and it now became a byword. But the funny thing is, nowadays, it is always synonymously said with “libreng sakay.” Why? I have no idea.

Transit service contracting does not mean “free rides” anywhere in the world. No country offers free public transportation (except Luxembourg), regardless of the contracting mechanism used. Our government simply just suddenly decided to make certain rides free, but this is in relation to the COVID-19 protocols and hitched it to the newly-found “service contracting” idea. Now it is stuck and the Service Contracting Program and “libreng sakay” are always lumped together in the same sentence. To the public, these two have become synonymous, as if one program.

Which is really unfortunate. Service contracting is the better, if not the best, mechanism to contract out public transportation, which transport practitioners and commuter advocates had been pushing for some time. Lumping service contracting together with free rides projects sends a wrong message and misleads the people on what service contracting really is and the substantial benefits it brings to the sector. Worse, when “libreng sakay” will end, which it eventually will, people will blame service contracting for the sudden vacuum and the added item to their daily budgetary expenses. The riding public can’t separate the two --they have been peddled as one.

Service contracting in public transportation does not mean “free rides,” may it be in the US, Europe, Japan, Singapore, or anywhere else. Service contracting is a specific contract mechanism as we have discussed in the first three parts of this series. Passenger fares are part of this scheme --it is how it is collected and who collects which differs from our current “traditional” passenger-to-driver. Instead of the traditional “operator/driver provides the service; passenger pays operator/driver; government regulates” way, service contracting institutes the better way where operator/driver provides the service, passenger pays the government (or its representative), and the government pays the operator. All these are written down in a service contract which also includes the terms of the service, the responsibilities of the parties, and the “minimum performance standards and specifications” or MPSS.

Service contracting is not “libreng sakay.” It simply doesn’t make sense to lump the two and it has no technical or social justification. It would even place a huge unnecessary burden on the public sector. I believe the government has to resort to this because of the disconnect between the technical, legal, institutional, and contractual aspects of service contracting and the difficulty in its financing and budgetary aspects. Service contracting requires a specific institutional reality to execute, something which DOTr and LTFRB do not have. If the government is really serious about this, the key is to address the institutional aspect first! We will discuss this next week. (To be continued)