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Charlotte, North Carolina

Keywords: Transit, Competitive Bidding, Failed Contract

Paratransit Service

The City of Charlotte, North Carolina operates a transit service for the elderly and disabled that employs about fifty workers. Around 1993-1994, the city decided to privatize night and weekend service as a way to cut costs. The number of passengers served during these periods was low, yet the city still required a dispatcher, supervisor, and drivers to be on staff at all times. To avoid these expenses, the city contracted out with several local taxi companies to provide the service. Taxis were paid between $18 and $20 for each trip. Since these companies needed to have supervisors and dispatchers on duty full-time anyway, it was thought, the city should save money by having the service privately provided. In addition, at the time the city was having problems getting enough drivers to work these less-desirable shifts. For these reasons and others, the city did not submit its own bid to provide the service in 1993-1994, an otherwise common practice in Charlotte.

The service was brought back in house in 1995 following several complaints from paratransit riders. The taxi drivers were not accustomed to working with disabled clients, and viewed them as less desirable passengers compared to their other customers. In contrast, city drivers worked with disabled clients every day, and often knew their regular passengers by name.

As part of the citys efforts to increase efficiency, the entire service (days, nights, and weekends) was put out to bid in 1996. Public employees won the contract because their bid was significantly lower than their two competitors, Davey Transportation and Laidlaw. The city won the contract with a bid of $12.60 per trip, compared to the competitors bids of $16.95 and $20.49 respectively. The successful city bid was assembled by Charlotte DOT staff with the assistance of KFH, a private consulting firm. The taxi companies that had provided the service previously did not bid on the contract, in part because the did not have the number of vehicles necessary to run the service full-time. The new three-year contract went into effect in July 1997.

This year the city expects to provide the service for $160,000 below the bid price. Most of these savings have come from reductions in overtime pay, which has declined significantly since the city instituted automated shift scheduling. Half of this money will be divided equally among the employees, which amounts to an annual bonus of $1,600 per full-time employee, paid quarterly. Part-time employees also receive the bonus, based on the number of hours worked. On average, the gain sharing program amounts to about 7 percent of an employees total pay, which averages between $25,000 and $30,000 per year.

Case based on interviews with Mr. Lynn Purnell, July 2, 1999 and August 6, 1999.