Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Annex 5: Passenger Service Contract Guide
Annex 5
Passenger Service Contract Guide
1 Introduction
Before drafting a Transport Services Contract, some form of gateway procedure
should have been adopted that would include a thorough feasibility study, a review
of options, and a continuing assessment of value for money at particular
stages of the procurement process, including before the process commences and
immediately prior to execution of the Transport Services Contract, as is indicated
in the body of the Toolkit.
A key difference of approach between civil law and common law jurisdictions is
the interpretation by the judiciary of Transport Services Contracts between what
was written and what was intended. Under civil law, Transport Services Contracts
need not set out what is already included under the civil code. These points were
also highlighted in Annex 4, Introduction to the Guide for a Concession Transport
Services Contract.
1.1 Purpose
The three main objectives of a Transport Services Contract are the following:
• Promote understanding of the main responsibilities and risks undertaken by
parties to the Transport Services Contract;
• Specify service levels to be delivered by the private sector and the flow of
payments from the Passenger Transport Authority (PTA) to the Contractor
without extended negotiations;
• Establish consistent approach and pricing among bidders in any competitive
tendering procedure following the introduction of the reforms.
1.2 Key Factors
This Guide was developed for application to passenger transport services and
assumes that the contract will be let by a Passenger Transport Authority (PTA),
which could be a government ministry or a separate national or regional entity.
This may give rise to the need for a government guarantee if the PTA is not an
arm of government and if the PTA payment flows in favor of the Contractor are
likely to be substantial.
The simplest form of Transport Services Contract (TSC) would be based on the
Contractor operating and carrying out light maintenance on public sectorprovided
assets. Contractual matters become more complex if some or all of the
assets are supplied by other private sector entities (see Annex 4, Concession
The World Bank Page 283