Mandatory tendering of public service obligations needs a considerable “transition period”

Kohledreieck Bahn 2000In the last decade, three legislative railway packages have aimed at opening up national markets and making railways more competitive and interoperable at EU level. Regulation 1370/2007 on public passenger transport services by rail and by road, published in December 2007, set out a framework for awarding public service contracts and compensating for public service obligations but not a common approach to awarding contracts for rail passenger transport. Despite the new EU legislation, the modal share of rail in intra-EU transport has remained modest.

Specialists and railway market players believe that, in the present juridical framework, the performances of railway passenger transport services are insufficient as regards the quality of services and the operating efficiency. 54% of the respondents to the Eurobarometer poll in 2012 were not satisfied by their national and regional railway systems. In the Consumer Markets Scoreboard 2011, the general level of satisfaction of train passengers was of 6.7/10, a lot less than the level of most consumer goods and services. Consumers gave railway services a weaker score than to all the other transport modes and ranked them 27th of 30 services markets, shows the recitals submitted by the European Commission on the amendment of several provisions of Regulation 1370/2007 which refer to the market opening for domestic passenger railway transport services.
There are a number of obstacles to improving railway companies’ quality of service and operational efficiency. These relate first of all to access to the market for domestic passenger services and the lack of competitive pressure. In many Member States this market is closed to competition, which not only limits growth, but creates disparities between those Member States that have opened their markets and those that have not. Different national approaches to opening of the market for domestic passenger transport services by rail prevent the emergence of a genuine Internal Market for rail passenger services.
The main objective of the European
Union’s transport policy is to establish an internal market for transport contributing to a high degree of competitiveness and the harmonious, balanced and sustainable development of economic activities. The 2011 Transport White Paper stated that rail should account for the majority of medium-distance passenger transport by 2050.
This modal shift would contribute to the 20 % reduction of greenhouse gas emissions provided for in the Europe 2020 Agenda for smart, sustainable and inclusive growth.
The White Paper concluded that no major change in transport would be possible without the support of an adequate rail infrastructure and a smarter approach to using it.
The European railway transport systems and networks are still different and most of them operate according to distinct particularities and specifications adapted to national needs. Their harmonisation based on a common denominator is not simple to achieve and perhaps it will not be simple over the next decade either.
Maybe that is why the first three railway packages have not managed to shape a common area for the railway transport activity in Europe. Debates on the topic, especially those referring to the rights of railway passengers, liberalisation, interoperability, infrastructure investments, and the modal shift of freight or the mutual acceptance of rolling stock have been troublesome, yet a common denominator, an algorithm valid across Europe, could not be established. The European Commission, with the support of interested parties, tries to solve in practice the problem of European transport system harmonisation by proposing a number of 6 legislative projects, those composing the already well-known Fourth Railway Package. The Commission believes that this legislative package will complete the process. One of these legislative proposals refers to the amendment of Regulation 1370/2007.
Based on these facts, the draft proposal, launched by the Commission at the beginning of the year, set as general objective the improvement of the quality of railway passenger transport services and the stimulation of their operational effectiveness, thus increasing the competitiveness and the attractiveness of railways compared to other transport modes and developing the Single European Railway Area.
This proposal encompasses common rules on the award of public service contracts for passenger transport by rail, together with accompanying measures to increase the success of competitive tendering procedures.

More dialogue between railways and national enforcement bodies will allow a smoother implementation of the Regulation (EC) 1371/2007 on rail passengers’ rights and obligations. At a workshop organised by the Community of European Railway and Infrastructure Companies (CER) and the International Rail Transport Committee (CIT) on 10 May in Brussels, more than 80 experts from railway undertakings, national enforcement bodies, European institutions, and other transport stakeholders outlined their experience with the regulation. The discussions clearly underlined the importance of a better dialogue between stakeholders when implementing the European regulation.
“By offering a common discussion platform for railways and national enforcement bodies, we want to contribute to the qua-lity of the services offered to rail passengers. That is why we also decided to continue offering all respective actors a useful forum to exchange ideas and at the same time an opportunity to network and make contacts across borders. In a year from now, we will be happy to gather again all stakeholders to a second workshop on rail passengers’ rights”, Libor Lochman, CER Executive Director, stated.
“The European dimension to the Rail PRR means that the approach must be at a high-level although taking national differences and the exemptions allowed by EU Member States into account. The CIT and CER are convinced of the value of interpreting and applying the Rail PRR across the European Union in the most uniform way possible”, Cesare Brand, CIT General Secretary, pointed out.

Future procedures for the attribution of public service obligations should be fully transparent

The mandatory tendering of public service obligations starting with 2019, as proposed by the European Commission, has raised serious problems and has generated many debates among the railway passenger transport operators and railway associations. There have been and there are still doubts, if not fears, from both sides on this proposal included in the Fourth Railway Package. The majority of the parties involved have expressed their concern about this potential legislative measure. The European Commission has conducted a large-scale European poll, among the passengers and the railway transport operators, railway associations, infrastructure managers, transport ministries, safety authorities or other ministries and representative bodies.
Regarding compulsory competitive tendering, 45% of respondents favoured flexible options akin to those of the negotiated procedure for public procurement and transitional periods for gradually putting all public service contracts out to tender (80% of respondents). The majority of respondents (60%) agreed that the creation of rolling stock leasing companies would help to improve access to rolling stock and a large majority (75%) called for full access to technical information to be provided by the infrastructure manager.
“CER is concerned about the mandatory tendering of Public Service Obligation as being the only applicable award mechanism. We do not believe that open tendering will by all circumstances deliver better results than direct award or in-house provision. We call upon Member States to be pragmatic and to allow enough flexibility when it comes to Public Service Obligation. This is particularly needed in the case of smaller Member States where the cost linked to the tendering can overcome the benefits it is deemed to generate.
The compulsory tendering certainly implies new prospects arising. Those who will dare to look ahead and abroad will find new business opportunities and might easily and rapidly become efficient and successful bidders. On the other hand it implies the risk of losing Public Service Obligation contracts and this can create very complicated issues both for staff and at financial level. The right balance should therefore be found and it should be up to competent authorities to make the choice of the appropriate award mechanism. This is what I personally hope for all railway companies and for our customers. As a tax-payer and a citizen, we all deserve the most economic approach”, declared Libor Lochman as part of a poll launched by Railway PRO in March when we wished to find out the opinion of the associations that represent the European railway sector.
“To facilitate the preparation of tenders, and hence enhance competition competent authorities need to ensure that, whilst protecting business secrets, all public service operators interested in making such a submission receive certain information on the transport services and infrastructure covered by the public service contract. The principle of reciprocity is an important means of counteracting distortion of competition; this principle should apply not only to Member States, but also to companies from third countries that wish to participate in procurement procedures within the Union”, states a report initiated by Mathieu Grosch, member of the Committee on Transport and Tourism.
Thus, the European rapporteur proposed several amendments to the initial text proposed by the European Commission for the amendment of Regulation 1370/2007 on the attribution of public service obligations.
“Preparing railway undertakings for competitive tendering for public service contracts requires some extra time to allow effective and sustainable internal restructuring of companies to which such contracts were directly awarded in the past. They should therefore already take action to phase-in this tendering procedure, although it is not until 2029 (and not 2019 as provided by the original text introduced by the European Commission, in January, when the Fourth Railway Package was adopted) that all public service contracts in the field of public rail passenger transport have to be awarded in accordance with the procurement procedures laid down in this Regulation”, stipulate the proposals submitted in July.
Adjustments to complex systems such as rail passenger services need sufficient time in order to be carried out successfully. For that reason, the time limits proposed by the Commission – 2019 and, for expiry of existing contracts, until 2022 – seem too short.

[ de Elena Ilie ]
Share on:
Facebooktwitterlinkedinmail

 

RECOMMENDED EVENT: