January 19, 2009
Getting into the Race on Procurement Issues
By Michael P. Melaniphy
APTA BMBG Procurement Committee
Vice President Public Sector
Motor Coach Industries Inc.
In auto racing, when the cars approach the starting line, the crew chiefs will usually call over the radio and tell the driver to “Tighten your belts, it’s time to go racing.” As we begin 2009, that seems like pretty good advice for those of us in the public transportation industry as well. After coming off a year that saw some of the biggest ridership gains of our generation, we should expect 2009 to be a race to find ways to retain those new customers and grow our public transportation systems.
This is going to be a very exciting year for our industry. The general public and many of our elected officials see and appreciate the benefits of safe, efficient, and accessible public transportation. In many cases, we no longer have to explain why public transportation is important; instead, we have to develop new ways to effectively convey our expansion plans and the mechanisms needed to fund them. The overwhelming positive results of many tax initiatives across the country this past year support this new reality.
In 2009, we hope to see the new federal funding legislation drafted, debated, and enacted. By all indications, this legislation should bring with it record funding levels. The federal government will have new leadership this year and, as a result, so will the Federal Transit Administration. This will be on top of the new federal procurement regulations as outlined in 4420.1F. Add to that the anticipated economic stimulus package being proposed by President-elect Obama. By all indications, this package is expected to invest significant new funding into our public transportation infrastructure. This bodes well not only for transit systems, but also for the broad spectrum of private sector partners specializing in the transit field. This includes consultants in multiple disciplines, vehicle manufacturers, engineers and architects, construction firms, project management organizations, suppliers, and yes, even lawyers.
The new administration has made it abundantly clear that time is of the essence. As such, the public and private sectors must work together toward a common goal of building better systems with expanded capacity in a sustainable way as quickly as possible. This means that we must find methods to expedite the procurement process in mutually beneficial ways.
One of the key components of that process will be an equitable allocation of risk. Taking the time to understand more fully the implications of risk allocation and the multiple mitigation strategies that exist can yield quantifiable benefits for all parties. Look for this to be a key issue in 2009.
As we face a worldwide economic contraction, we must be cognizant of the potential impacts on our industry. In general, transit is a low-margin industry for the private sector. As companies review their business units in these challenging economic times, some are making tough decisions about whether to remain in the public transportation business at all.
We need competition to maintain a healthy industry. Bid proposals by multiple bidders are one of the basic tenants of the public sector procurement process. As such, it is incumbent upon the public sector to draft solicitations that take into account the realities of the current economy. This includes realistic bonding, insurance, and indemnity requirements, as well as performance criteria that are not excessively punitive in nature.
As the public transportation industry grows, we have the opportunity to improve the efficiency, safety, and image of the service put on and under the street. The private sector has made noteworthy gains in all of these areas. Vehicles are smarter, better looking and cleaner, construction techniques are greener, and new software is allowing us to do things unimaginable just a few short years ago. The state of the art is advancing rapidly, and it is going to be exciting to see how the implementations of these new technologies are going to transform our industry for the better.
It’s time to tighten up those belts and get up on that steering wheel because we are headed for a fast-paced and exciting ride in 2009, and the green flag just dropped.