Standards for Competitive Contracting Exposed

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The Standards for Competitive Contracting were included in ALEC's 1995 Sourcebook of American State Legislation. There is no adoption or approval information available. ALEC has attempted to distance itself from this piece of legislation after the launch of in 2011, but it has done nothing to get it repealed in the states where it previously pushed for it to be made into law.

ALEC Bill Text

Competitive contracting should be designed to maximize the potential for obtaining quality service at the lowest possible cost. This requires adherence to design principles that foster a competitive market. The following requirements should be included in state law.

1. Limitation of Contract Size. Contracts should be limited in size such that no operator or group of operators controls a major portion of service. This preserves competition and limits the potential for corruption. having small contracts (for example, 25 to 50 buses) protects the public from loss of service in case of contract default.

2. Limitation of Contract Duration. To foster a healthy competitive environment, contracts should be of limited duration-not more than five years including extensions or renewal options.

3. Rotation of Contract Expiration. Contract expiration dates should be rotated, and, as much as possible, should be distributed throughout the calendar year to avoid disruption of services and to promote the most effective use of administrative time.

4. Contact Flexibility. Contracts should be flexible such that an operator guarantees a unit price for a range of service levels (for example, plus or minus ten percent) without the need for a change in contract. This allows for service flexibility and also ensures that if one operator defaults, others could provide substitute service.

5. Contract Specificity. Contracts and requests for proposals should be precise and unambiguous. Notwithstanding the “plus and minus” service provisions, requests for proposals must accurately specify total revenue miles, total revenue hours, days of operation, and each component of operation and performance, including performance standards and penalties, that would affect the response to a request for proposals or the performance of an operator. All potential contractors must bid on the same specifications.

6. Labor Arrangements. Contracts and requests for proposals should not specify labor arrangements except that the contractor must meet all applicable local, state, and federal labor laws.

7. Opening of the Proposals (Bids). All proposers should be required to submit sealed proposals or bids by the due date, these should not be opened prior to the due date, and they should all be opened on the specified date.

8. Open Proposal (Bidding) Process. Except for proprietary information such as a company’s financial records, all proposals and proposal materials are public property and should be made available upon request.

9. Advertising Requests for Proposals. Advertisements of request for proposals must be widely distributed to encourage competition, and the public authority must allow sufficient time for requests for materials prior to prebid conferences or time periods for questions and answers.

10. Timing of Award and Commencement of Service. Sufficient time should be allowed between contract award and the start of service. Failure to allow sufficient time could limit competition, increase costs, or result in contract default.

11. Mid-term Negotiation of Price. Price negotiation after execution of a contract should be prohibited to assure fairness and realize cost-effective service. Contract rates must either be fixed or indexed using a broad indicator of price increases (such as the Gross National Product Implicit Price Deflator).

12. Uniform Standards. All providers of public transit services, public and private, should be held to the same standards and subjected to the same level of monitoring. The standards that apply to cancellation of contracts or the assessment of penalties must apply to all.

1Wendell Cox & Jean Love, (excerpted) Privatization For New York, New York State Senate Advisory Commission on Privatization,