Lessons in Public-Private Transit Service Contracts

"New Orleans' public transit system takes center stage in a new report [pdf] highlighting the boons and pitfalls of contracting out public transit services to private companies in the United States and Europe," writes Beau Evans.

The "A Bid for Better Transit" report—by New York-based TransitCenter and Washington, D.C.-based Eno Center for Transportation—focused on six cities in total, including Los Angeles, Vancouver, London, Stockholm, and Oslo in addition to New Orleans. "Given the risk of private companies' profit margins outweighing the public's interest, the New Orleans arrangement serves as a cautionary tale for other cities and transit agencies interested in contracting out public services to private companies," explains Evans of the report's findings.

The report's evaluation of New Orleans centers on the "delegated management" service contract the New Orleans Regional Transit Authority entered with Transdev, a large France-based transit company, in 2009.

Here's how Evans describes the report's summary of New Orleans' experience in that contract:

RTA's initial contract with Transdev in 2009 proved key to strengthening New Orleans' crippled transit system, the report says, pumping up RTA's ridership from 11.4 million in 2008 to 19.8 million in 2016. (Although that's down from RTA's peak post-Katrina ridership of 23 million in 2012, the report notes.) But the quick-fix, $65 million contract largely glazed over how RTA - and by proxy, New Orleanians - would retain oversight over the foreign company running its transit system.

The article by Evans includes a lot more detail of the history of the Transdev deal, including the most recent developments, dating back to August of this year.