Quality tendering and contracting service design Comparing the Dutch and Norwegian initiatives Frode Longva, and Bård Norheim Institute of Transport Economics

2 Objective of the presentation/research  Develop a new contracting and tendering regime in Telemark County Norway  Based on international experiences  Adopted to Norwegian reality  Within a rapidly changing environment

3 Competitive tendering and freedom in service design at the tendering stage

4 Various forms of quality tendering

5 Temporary conclusions on quality tendering  Several innovating and promising ways to introduce tactical freedom  partly with huge changes in the design as a result  The greater design freedom, the greater potential for innovation and rising production volume  but also harder to evaluate and control  The more quality criteria included, the more focus on internal cost- efficiency  very close to standard gross-cost tendering  None had sufficient basis for service improvements in contract period  net-cost contract: high risk - low gain  reducing income risk or increasing income potential

6 Indirect quality tendering in Telemark  Tendering out performance contracts  creating super incentives  Maximised freedom for operator in contractual period  within specific constraints: minimum service levels  Threatening competition (if the service fails)  in connection to a quality satisfaction index  Simple and objective tendering procedure  Price the sole criteria

7 Examples of incentives and value of the contract- with initial service level and cost structure (euro)

8 Outcome of the first tender  Not a change of operator, but a new consortium of local operators  “Metro-bus” development (8 to 3 lines)  “Double frequency for half the price”  Invited local municipalities to co-finance the development  Promising, but too optimistic?