Cost Plus for public services

The Straits Times has an article about the experience of other cities in awarding the operation of public bus services:

1. Tender system
2. Cost-plus system

The experience of the other cities has been quite clear. The tender system, where the bus services are awarded to the operator that provides the lower cost, leads to deterioration of services.

The cost-plus system leads to a more effiicient service, as the operator is required to meet performance standards which include cost and quality of service. They are not required to take care of factors that are beyond their control, such as fluctuating demand, competition and the cost of oil or wages.

I hope that the cost-plus system is adopted.