Contracting For Public Transit Services: Evaluating the Tradeoffs

When considering public transit, travelers typically judge whether it serves desired destinations in a timely manner and at a reasonable cost – often in comparison to traveling by private vehicle. How public transit agencies choose to operate their services – their networks, service frequency, and fare structures – to compete with private vehicles and provide mobility for those without them is the subject of this synthesis. Specifically, we examine the "make" or "buy" decision in public transit: Should government agencies operate (make) transit service directly, or does it save money to contract with private firms (buy) to operate transit service? The latter option is often called "contracting out" or, less accurately, "privatization."Whether to make or buy transit service has fueled highly charged political debates that frequently cleave along partisan lines. Liberals often favor direct public provision of government services, and fear that contracting with private firms for service usually hurts labor. Conservatives tend to favor competitive procurement of goods and services, and assert that contracting for transit service is almost always more efficient than direct government provision. However, the issues at stake are far more subtle and complex than these competing perspectives, which are often offered in black and white at public meetings and depicted simplistically by the media.In this synthesis we aim to bring both nuance and rigor to bear on what can be noisy ideological debates over the costs and benefits of contracting out for transit service.