3.2 Mapping the processes of procurement per region

- Utrecht’s public authority, the province of Utrecht, publicly tenders operating contracts (concessions in the Netherlands) for the operation of buses and trams. To focus on the operators, Qbuzz is the operator of the largest operating contract. As the ‘concession owner’, it does not only operate the buses but also procures them. And, as the operating contract is already publicly tendered, the e-buses do not need to be tendered. Qbuzz is also in charge of procuring and operating the charging infrastructure. In this value chain, every company is privately owned. Only the concession provider is a public authority.

- In Hamburg, all the involved companies are publicly owned. The e-buses are operated by public transport operator VHH, while the buses are procured and owned by the city of Hamburg. Procurement takes place through public tendering.

- In Pécs, the e-buses are operated by a national, publicly owned company. The e-buses are procured and owned by a public company owned by the local governments. Procurement takes place through public tendering. What is unique in this value chain is that the energy production comes from a nuclear power plant in the area. This plant and the electric infrastructure are owned by a private company. The situation is historically developed. The charging infrastructure and electric busses are public companies, owned by the municipality. In the future, Pécs expects that the transport will be organized by private companies and that the busses will be financed with public capital. So, a public tender is in order.

The conclusion is that we share the same ambition in providing more sustainable public transport but there are differences in the value chains for public transport. This means that practices are not always 100% transferrable due to these different contexts.

3.2 Mapping the processes of procurement per region

To map the regions procurement processes, we have used a flowchart template based on the report Public procurement of Sustainable Urban Mobility Measures. Authors: Frederic Rudolph and Stefan Werland (Wuppertal Institute, 2019).

Figure 3: Flowchart Public procurement of Sustainable Urban Mobility Measures

Here is an overview of the regions.

Turku

Turku Climate Plan sets the target for zero-emission public transport by 2029. Turku Region Public Transport Föli procures operation with competitive bidding from several private bus operators. In addition to this, a municipality-owned Turku City Transport Ltd operates as an independent transport operator that does not participate in transport tenders. The bus lines are bundled together and the operation for the bundled bus lines is procured through competitive bidding. These biddings are carried out frequently based on when the previous operating contracts expire. The buses are procured and owned by the bus operators. The transition to zero-emission busses will be carried out step by step when new bus lines are set for competitive bidding.

Phase 1: Bundling bus lines for competitive bidding

Turku Region Public Transport Föli selects the bus lines to be bundled for the round of competitive bidding. The bus lines available for the bundle are those with ending contracts. The bundles are designed to be appealing and of a suitable size for the operators to make the procurement of the operation as efficient as possible.

The product from phase 1 is the bundle of bus lines for tendering.

Phase 2: Preparing the call for tenders

First, Föli prepares the call for tenders. This specifies the minimum requirements that the transport operator must meet. These are both requirements for the public transport network, such as how often and where buses must run and requirements for information and monitoring, sustainability, personnel and vehicles. After the call for tender is prepared, Föli presents it to Turku Region Public Transport Committee. The committee decides either to approve the proposal or return it for preparation.

The product from phase 2 is an officially confirmed call for tender.

Phase 3: Tendering

First, Föli invites transport operators to submit an offer through a European tender. The received tenders are carefully evaluated by the call criteria. All eligible tenders are awarded points based on the price, the number of e-buses and other criteria stated in the call. Föli prepares a proposition for the Turku Region Public Transport Committee on which tenderer will be awarded the operation on tendered bus lines. The Committee makes the official decision based on Föli’s proposal.

The product from phase 3 is an operating contract.

Phase 4: Implementation

The new contract holder has typically 6 months until the operation starts. The implementation also requires commitment from Föli, as it supervises the implementation and draws up an agreement.

The product from phase 4 is the operation on tendered bus lines.

The City of Hamburg owns the two transport companies Hamburger Hochbahn (HHA) and Verkehrsbetriebe Hamburg-Holstein (VHH). Therefore, the object of procurement is buses and infrastructure rather than transport services. The procurement process is performed by the transport companies. Being owned by a public authority, the transport companies must meet German and European public procurement regulations. Therefore, public tender and procurement procedures can be more complex and lengthier than procurement by private companies. As a result of the ownership structure, public transport companies have generally less pressure or motivation to innovate and investments in the future are not rewarded that much. The main features of the procured buses and infrastructure are defined by the transport companies. Requirements of public transport operations are agreed with the authorities. However, VHH does not only offer transport services to Hamburg but also to adjacent municipalities, which have their requirements (age, type and configuration of the buses). The procurement of buses is generally awarded based on the lowest price and additional criteria (quality, compatibility with existing infrastructure, etc.).

The bus procurement process in Hamburg

Phase 1: Definition of requirements and technical specifications for buses

At this stage, Hamburg transport operators are relatively free to define their requirements.

Phase 2: Performing European tender procedure

As the buses are being purchased with public money the tender procedure needs to follow European rules to allow equal opportunities for all. The procedure is more complex and particularly difficult when it comes to procuring innovation which contradicts the requirement for buying well-established and proven technology.

Phase 3: Testing phase

Every procurement includes a testing phase. The buses are being used in everyday service and need to drive for 2,000 km without any defect. Deficiencies have to be remedied by the manufacturer and the testing distance starts from zero. The test phase and thus the procurement is concluded when the bus has driven the full distance without any issues.

Public Transport in Malta and Gozo is operated by the same company called Malta Public Transport (MPT) which forms part of an international network of transport companies present in four continents. Being a private company, the procurement of buses (the diesel buses currently in operation) is not done through a public procurement process. One has to keep in mind that, unlike most countries, Malta uses left-hand traffic which limits greatly the availability of manufacturers. Usually, a prototype is brought for the testing phase. Once the testing phase is over, the order is then done in phases.

In Gozo in 2019, six electric buses were bought through a public procurement process by the Ministry for Gozo as a part of the EU-funded SMITHS project. The purpose of the purchase was to operate between a park and ride and the ferry in Mgarr. However, the construction of the park and ride was delayed and to date, these e-buses are not in operation. In the meantime, discussions were underway on who will be operating these e-buses. MPT was decided to be the operator. However, the starting time and the possible other routes have not been decided.

Even though a few years ago MPT invested in diesel buses with Euro 5 and Euro 6 diesel technology and without a legal obligation to shift to electric buses, MPT has the interest to invest in electrification with the intervention of other funding, including EU funding. Considering that there will be funding involved as an aid, such e-buses will be bought through a public procurement process similar to what was the case for the procurement of the Gozo e-buses.

The e-bus procurement in Gozo

Phase 1: Preparation & planning

The need for this project arose from the daily traffic congestion at the port of Mgarr, creating a lot of pollution0 threatening the welfare of passengers, inhabitants and the environment. Since one of the main aims of the strategy is to reduce carbon and greenhouse gas emissions, it was decided to operate this park & ride service using electric buses. Considering the existing policies and the general trend towards the electrification of public transport, this was a decision in the right direction.

The chosen public procurement process was an open procedure. That means that bidders could place their bids and the cheapest technically compliant bid will be awarded the tender.

Phase 2: Publication and transparency

The open procedure for the procurement process was chosen because it ensures a high degree of transparency since any bidder is free to submit an offer.

The specifications for the procurement of these buses were done in conjunction with Transport Malta (the National Transport Authority) who are also partners in the SMITHS project. Also, the necessary market research was done to ensure that specifications were realistic.

Along with the specifications for the actual buses, a maintenance agreement that all the bidders had to sign and agree with to be awarded the tender, was also created.

Phase 3: Submission of tenders & selection of tenderers and Phase 4: Evaluation of tenders and award

Bidders had a fixed timeframe, approximately 1 month, to submit their bids. After the tender closing date, the bids were opened to be evaluated by the evaluation committee. The committee evaluated all offers against the criteria in the tender document. These included the selection criteria, the technical offer and the financial bid. Only the bids that satisfied all criteria were considered for the final ranking of the award. The tender was awarded to the cheapest compliant bidder.

Phase 5: Contract implementation & management

As per tender obligations, the e-buses were manufactured and delivered to Gozo.

Since the park & ride is being constructed and the e-bus operation was linked to the service, the e-buses are not yet in operation.

Livorno

So far, there is no procurement for acquiring new e-buses in Livorno Province. Some companies have recently been testing one model from a Chinese manufacturer and another from an Italian manufacturer along with one of the two main service lines crossing the town.

The companies are soliciting the Municipality of Livorno to pay attention to forthcoming opportunities for financing innovative sustainable public transport from national funding. The regional transport system is undergoing a significant change modifying the overall

scenario. There will be only one operator for the entire regional territory starting on 1 November 2021. Autolinee Toscane, a private company linked to a major European group, will manage Tuscany's entire public transport system, following an open tender held by the Tuscany Regional administration. From that date, there will be a single company for the whole region and it will be the first experience in Italy. The new operator will replace 2,100 buses, half of which will be replaced in the first four years and the first 200 buses within a year. Considerable investments are planned, spread over 11 years of the contract, which will be used for new buses, buildings, bus shelters and new technologies (Automatic vehicle monitoring, passenger counters, software).

Utrecht

The province of Utrecht publicly tenders operating contracts (concessions) for public transport, meaning bus and tram. There are currently two operating contracts in the province, one of which was tendered by the now defunct City Region of Utrecht, another public authority that ceased to exist in 2017. The operators of the contracts are responsible for procuring both diesel and electric buses.

Both concessions will expire in 2023, although due to the corona crisis, an extension to 2025 is being considered. The province of Utrecht is now preparing the tendering process for the new concessions. To put the new concession(s) on the market properly, the province of Utrecht (PU) first evaluates the two current concessions. Part of the evaluation is how the operation of public transport went, what aspects must be retained or, on the contrary, let go and whether these concessions responded adequately to current developments. Another point is whether PU’s management has led to the right results. The result of the evaluation provides input for drawing up a memorandum of principles. It is expected that in the new concessions, the operators will again be responsible for the procurement of buses, as is common in the Netherlands, but this has yet to be decided.

The procurement of operating contracts (concessions) in Utrecht

Phase 1: Compiling the memorandum of principles

The memorandum of principles describes the principles and objectives for the new concession(s). Tendering is a way to conclude a contract with a transport operator about the complete concession. This contract and the offer from the transport operator must match the goals the PU wants to achieve. Important topics in the memorandum are: - the concession area (one or more concessions)

- the scope of the concession (whether or not additional forms of transport, whether or not assets are owned or managed) - the division of roles between the PU and the carrier - the distribution of risks concerning the freedom to initiate developments - the main transport-related transport choices - the method of tendering - the flexibility - the financial leeway - the duration (normally 8– 10 years, maximum 15 years)

The final version of the memorandum of principles for the new concessions is a decision of the provincial parliament Provinciale Staten.

Phase 2: Compiling the program of requirements (PvE)

The program of requirements specifies the minimum requirements that the transport operator must meet. These are both requirements for the public transport network (how often and where buses/trams must run) and requirements for information and monitoring, sustainability, personnel and vehicles. The PvE is part of the contract. The PvE is made in two steps: 1. the draft PvE that goes to municipalities, the Regional Consultation of Consumer Organizations on Public Transport (ROCOV) and transport operators for consent and remarks. 2. the final PvE, which has to be agreed upon by the executive board of the province, Gedeputeerde Staten.

Phase 3: Tendering

Through a European tender, the province invites transport operators to submit an offer. After careful evaluation of the offers, utilizing the evaluation criteria set in the tendering documents, The Provincial Executive, Gedeputeerde Staten, determines which operator will be awarded the concession. The procedure for publishing the tender up to and including the final decision takes approximately nine months.

Phase 4: Implementation

The new concession holder needs about a year and a half to prepare for his/her activities. The new concession starts in December 2023, or, if the current concessions are extended, December 2025. The implementation also requires commitment from the province: supervising the implementation and drawing up an agreement.

In Hungary, all the local public transport-related purchase or procurement activities are carried out by municipality-owned organizations, based on their own local public needs or initiatives. The sources of funding predominantly come from the European Union, the central budget of Hungary and the own resources of the larger town and city municipalities that invest in environment- and climate-friendly ways of transport.

The procurement process starts with the identification of development needs. At Pécs, the significant problem of the local public transport is the obsolete, outdated and polluting vehicle fleet and the high level of polluting and harmful emissions.

The set objectives are sustainable transport, reducing public transport emissions and key network infrastructures. Good energy production and infrastructure background provided by E.ON (E.ON Electricity Supplier Ltd, Distribution System Operator in South Transdanubia).

Paks has the same problems, objectives and needs for efficient energy production and infrastructure as Pécs.

The procurement of e-buses in Pécs and Paks

Phase 1: Securing funding

To ensure the financial background, the Municipality of Pécs works on funding e-buses and charging infrastructure and construction of a new hall building. The funding comes from the European Union Structural Funds, Government of Hungary. The programs: IKOP (Integrated Transport Development Operational Program), with European Regional Development Funds (ERDF).

Paks: same funding and programs.

Phase 2: Defining the requirements

To be able to perform a public procurement, the Municipality of Pécs defines the requirements: the main features of the buses, compliance with legal regulations and related services, such as guarantee, training of bus drivers, the technical requirements of the new solo buses. The evaluation criteria is defined by Municipality of Pécs. Further optional items are also taken into consideration.

Paks: same product for public procurement.

Phase 3: Tendering

Tendering with the Municipality of Pécs; (the tendering process was coordinated by Pécs Urban Development Plc, subsidiary of Pécs with 100 % ownership rights). Three bidders were invited to the public tender. BYD’s vehicle fulfilled the requirements of the tender.

The tendering process in Municipality of Paks was coordinated by Protheus Plc, a subsidiary of Paks with 100% ownership rights). Three bidders were invited to the public tender. Solaris vehicle fulfils the requirements of the tender.

Phase 4: Contracting assets

Contracting assets with the Municipality of Pécs; The tender has been awarded to BYD. The contracting authority still has the option for optional items (8+2 buses [2 buses is the option]) for further agreement. The output of Phase 3 and 4 is a contract.

Contracting assets with the Municipality of Paks; The tender has been awarded to Solaris. The contracting authority still has the option for optional items for further agreement. The bid contained 6 solo and 4 midi Solaris buses. Exercise a contractual option was not utilized. The output of Phase 3 and 4 is a contract.

Phase 5: Implementation

Pécs; for the implementation of charging infrastructure and e-buses, agreements are made in connection with transport services and operation. Tüke Busz Plc. with the help of the Municipality (as the asset owner) operates local public e-bus transport.

Paks: Paks Transport Ltd. takes over service provision from Volánbusz Ltd. Paks Transport Ltd. with the help of Municipality (as the asset owner) operates local public e-bus transport.

When comparing the processes of procurement of the regions it is noticeable that the different phases in the processes are similar in phases 2, 3 and 4. It is only the starting point from which the process starts that is different. This has to do with whether or not regions have experience in offering electric public transport. When there is no experience yet, the process starts with identifying the need for development to introduce zero-emission for the buses (Gozo and Pécs and Paks) and with looking for the necessary funding (Pécs and Paks). The regions that have gained experience with e-buses start the process with the favourable bundling of bus lines (Turku), with the terms of service (Hamburg) and conditions for upscaling the number of e-buses and the organization that is required for upscaling (Utrecht).

After the starting phase, the regions follow the phases of defining the requirements, tendering and operation/ implementation.

Another difference that characterizes the implementation of the phases is whether a region tenders the e-buses (Hamburg, Gozo and Pécs and Paks) or tenders the entire operating contract (Turku and Utrecht). The authorities of the regions all follow a European tender procedure, with differences in the tendering the e-buses or of the entire operating contract. E-buses in Hamburg, Gozo and Pécs and Paks are tendered in a public tender, and in Turku and Utrecht the operators can set up their procedure for procuring the e-buses.