AdC advises best practices for public road passenger transport service contracts

​Press Release 01/2021
AdC advises best practices for public road passenger transport service contracts
 
The AdC sent to municipalities, Inter-Municipal Communities (CIM) and Metropolitan Areas (AM) a set of guidelines for good practices in the public transport sector. The guidelines are intended to promote competition and efficiency to be taken into account when signing public road passenger transport service contracts, a process that is currently underway in Portugal.
 
This process was launched following the implementation of Regulation (EC) No. 1370/2007, of 23 October and Law No. 52/2015, of 9 June, which approves the Legal Regime for the Public Passenger Transport Service and it will involve the award of a significant number of contracts.
 
As a result of a decentralization process, the service is disaggregated by a large number of entities that are responsible for road transport operation (the transport authorities). Most municipalities (around 85%) chose to delegate or share their competence with the 21 CIM and AM in Lisbon and Porto.
 
The AdC, in the scope of its mission of supervision and monitoring of markets, has been alerting to a set of good practices for promoting competition and efficiency in conceding public service contracts, in particular involving the attribution of exclusive rights, across the economy. Some of these matters are particularly relevant in the case of the public road passenger transport service.
 
Among other points, the AdC advises transport entities to give priority to competitive bidding in public service exploitation, instead of the direct award of contracts.
The AdC advises that the pieces of the procedure and the contract must define, among others, a system of incentives / penalties associated with the operator's performance and a scheme for monitoring the effective fulfilment of public service obligations.
 
The AdC also highlights the importance of access to strategic information to promote participation in the competitive procedure. It also highlights the importance of providing obligations in the contract for reporting essential information by operators to transport authorities, with penalty schemes in case of non-compliance.
 
Moreover, the AdC advises that the duration of the public service contract should be limited to the period strictly necessary for the provider to recover the investment made and obtain a return on the capital invested under normal operating conditions.
 
AdC also advises that public service contracts should be subject to tenders as often as possible, in order to reduce the risk of a mismatch between contractual conditions and market reality.
 
According to the document sent by the AdC to the transport entities, they should also privilege the opening of a new tender instead of the extension of the concession period.
 
The AdC furthermore defends the importance of ensuring the effectiveness of the system of equitable and non-discriminatory access to public passenger transport interfaces and terminals.
 
With this initiative, the AdC expects to contribute to the adoption of a set of best practices that allow for more efficient decision-making and concession procedures and to promote more participation in the tenders.
 
Best practices are addressed to transport authorities, as entities that are responsible for planning, organizing and concession of services.
 
The implementation of best practices will make it possible to promote competition in the market, to the benefit of consumers, namely in terms of better quality of service and / or greater innovation, and in terms of the efficient allocation of public resources.
 
March 5, 2021

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