Route Contract (Gross Cost) / legal aspects / Legal Instruments / Tendering Documents

Tendering Documents
Tendering documents are one of two legal instruments most useful in establishing a gross-cost route-contract system. The other is the gross-cost route-contract itself.

Selecting a bus operator through competitive bidding
The success of a gross-cost route-contract depends not only on getting the general contract design and individual provisions of the contract right, but also on devising an appropriate method for awarding the contract. Tendering documents are used to select the bus operator. Competitive bidding is usually deemed the best option.

Competitive bidding is not the only method that can be used by an authority to select a bus operator. But there are three main reasons why it is usually the best approach.

Competitive bidding ensures transparency, fairness and accountability in the award of the contract. These are especially important considerations if the transport authority wants to reduce public criticism of its choice of bus operator.
Competitive bidding provides an element of competition in the award of the contract. It’s generally accepted that there are essentially two basic types of direct competition in the urban bus transport market — competition for the market and competition in the market.

Although it’s limited in time (the duration of the contract) and in location (a specified route or routes), by necessity a gross-cost route-contract creates a monopoly in favor of the bus operator. Since there can therefore be no competition in the market (i.e. bus services on the specified route), it’s important to compensate for this by creating competition for the award of the contract.

Competitive bidding is usually mandatory. Most countries have public procurement rules in place which mandate competitive bidding for the award of public contracts.

These rules, generally established by a law, are either of general application (all government contracts, including those to be entered into by a public body such as the transport authority), sector specific or both. In 1994, UNCITRAL adopted a Model Law on Procurement of Goods, Construction and Services.