Use of subcontracting in bus franchising could be one relatively easy means of protecting the interests of incumbent small- and medium-sized operators on those networks, a further senior industry member familiar with that overarching type of collaboration has said.
Under such an approach, franchise contracts that are awarded to large operators could allow – or require – those businesses to subcontract work to SMEs. While not a franchised environment as far as accepted practice so far goes, work in Cornwall between Cornwall Council and Go South West on an ‘umbrella’ agreement for supported local services has seen success with that tactic.
In early 2020, Go South West was awarded an eight-year contract for the county’s subsidised bus network that falls under the Transport for Cornwall brand.
Prior to commencement, it engaged with three SME operators that were already active in that field to subcontract the work that fell under their existing contracts. The approach has largely been successful and could form a blueprint for local authorities that choose to pursue franchising and are serious about maintaining SME involvement in doing so.
Benefits are clear from Cornwall approach
Devolution in Cornwall had already extended the county’s powers to franchise bus services. Go South West Managing Director Richard Stevens says that when the Go-Ahead subsidiary bid for the subsidised routes in 2019, it prepared a ‘package’ submission for all of them.
While not a franchise contract, what was ultimately awarded shows many similarities with the approach in Greater Manchester via the Bee Network.
“I proposed that we would run everything,” says Mr Stevens. “But within my submission was the opportunity for any small operators that had bid for ‘their’ package of work to effectively be paid the price they had put into Cornwall Council by us. We could not say ‘bid what you want’, but the reality was that we would work with any of the existing small operators.”
Why? “I wanted to make sure that those small operators were protected,” he continues. Although the local authority had not put forward such an option in its tender documents, it was open to proposals from bidders around operation and packaging.
Go South West’s approach was accepted. The operator and council agreed the umbrella contract to sit above the individual awards. Mr Stevens immediately contacted the three SME operators that would have lost work to the large business and invited them onboard under the subcontract mechanism. They agreed.
Subcontracting ‘can move to bus franchising’
From there, documentation for those SMEs was compiled by Go South West on what was required of them. They operate Transport for Cornwall branded services to the same standard as those delivered directly by the large operator. The brand is the same, livery is the same, ticket machines are the same, and ticketing products are the same. As is the case with the Bee Network, the customer need not concern itself with the operator’s identity.
While the number of SME operators active on the Transport for Cornwall subsidised network recently fell to two after the exit of Summercourt Travel, preservation of the involvement of businesses of that size under the award of one large umbrella contract contrasts with the rollout of franchising in Greater Manchester.
Fears exist that similar could follow under franchising in other areas. Via the Go South West tactic of subcontracting, the SMEs involved have broadly the same terms as the main contract holder. That allows them to procure the necessary vehicles. Any penalties for poor delivery wash through. Mr Stevens points out that by being able to bid in the first place, the SME is compliant with the tendering body’s requirements.
In Cornwall, Go South West works closely with its SME partners. Support with items such as administration, ticket machines and BSOG reporting is provided. Gross and net-cost are both represented in the subcontracts and those operators are paid up front rather than in arrears. They have an open door to Go South West where service tweaks may be needed. The large operator is the conduit to Cornwall Council.
From a Go-Ahead point of view, working with subcontractors “is not that arduous,” and Mr Stevens likens it to having an outstation or sub-depot. “They do their accounts and compliance. We audit compliance and monitor performance and do fleet checks around maintenance.” At times of difficulty, the larger operator can even lend vehicles or driving staff.
Is subcontracting an easy fix for bus franchising?
Central to the approach in Cornwall is that neither the awarding body nor the customer should have cause to notice whether services are delivered by a group operator or an SME. Mr Stevens believes that it could transfer to franchise contract procurement relatively easily, although eligibility to tender criteria may require some thought.
He describes the approach in Cornwall as being one that is relatively straightforward. The awarding body still has control; its requirements feed through to the SMEs involved by way of Go South West.
The large operator effectively acts as a corporate manager of the services delivered by those small businesses, and key is that they originally bid to Cornwall Council, not to Go South West. “I think it could work under a franchising model,” Mr Stevens continues. Cornwall has shown that where an awarding authority wants to protect SMEs, it can do so.
