Contracting for public bus transit: do techniques employed make a difference in service outcome?

The evidence suggests deductions for non-performance and competitive solicitation methods are key determinants of contractor performance. A penalty provision is strongly associated with an increase in unit cost, while a competitive solicitation method reduces unit cost. The evidence is inconclusive for fixed price contract and contract length. The findings support the idea that contracting techniques impact contractor performance. The potential for cost savings may not be fully realized unless techniques that focus on competitive contracting are employed. Future research that addresses contract design factors for other services in other settings will provide information to help policy makers choose among the numerous contract design options.