80. In order to justify their investment in new buses, Transdev have advised that they would need long-term contract security over the York & Country services that the buses would be used to deliver. Ideally, they would seek an 8-year contract (the maximum possible under English law), with a clause to provide mitigations against voluntary termination by the local authority.
Currently, CYC holds a contract with Transdev to operate services 14, 19 (Saturday), 20, 24, 25 and 26. These contracts are due to expire at the end of August 2024. A 3-year extension can be
offered, but Transdev are unlikely to accept this due to the ongoing operating losses they are incurring as a result of significantly increased operating costs and reduced patronage since the
services were tendered in 2019. An inflationary uplift would be included in the CYC’s extension offer but would still leave the operator in a loss-making position. The council cannot simply award a new contract to Transdev. Under the Public Contract Regulations 2015, a competitive tender will need to be carried out in 2024 to establish a new operating contract.
81. This brings about several challenges:
- Even without considering ZEBRA2, increased operating costs are likely to result in tender prices being 40-50% higher than they were in 2019 for a Euro VI-based service. The recent announcement of further BSIP funding mitigates this to some extent, however CYC is likely to need to make some difficult decisions on future tendered service provision. Some decision making may also be complicated due to the announcement that any future BSIP funding will be paid to the anticipated Mayoral Combined Authority.
- If CYC is awarded ZEBRA2 funding, it could opt to tender some or all of its services with an EV requirement. However, by doing this, the majority of local operators would be unable to submit a
compliant bid, leading to potentially even higher tender prices as a result of a less competitive process.
- If the ZEBRA2 funding announcement was delayed for any reason, the council would need to proceed with its tender regardless due to the looming contract expiry date. Unless an alternative funding source could be found, tenders would then need to be on a Euro-VI basis, with no guarantee that the operator would be able to make use of any ZEBRA2 funding should it be awarded at a later date...
- Ultimately, if the ZEBRA2 bid is successful, a decision may need to be made by the council as to whether to pursue a tendered network which is as extensive as possible, or one which is as
clean as possible but with fewer services.