Contracting for Mobility: A Case Study in the Los Angeles and Puget Sound Regions
Contracting for Mobility is part of our research report series examining the FTA Sandbox Program in the Los Angeles and Puget Sound Regions. Click here to access the other research reports and learn more about the program.
New privately-run mobility services are now ubiquitous in many urban regions. These include ride-hailing (e.g., Uber, Lyft, and Via) as well as on-demand micro-mobility services such as shared electric scooters and bicycles. While these services are private ventures, companies and public entities can partner to deliver services that augment or enhance public transit. The formal basis for these relationships are often codified in a legal contractual agreement. These contracts are essential, allowing cross-sector partnership and goal setting, as well as legal assignment of risks, liabilities, requirements, and payments.
Of course, public transportation agencies contracting with private entities for services is not a new concept. Agencies routinely form agreements for services, ranging from information technology to station cleaning to bus and paratransit operations. Lessons and best practices for those traditional agreements abound.
What is different with the new mobility on-demand (MOD) services is that they are often run by startup companies with different business models and expectations. Public agencies and MOD companies alike have limited experience contracting on these types of services. Startups rely on venture capital to subsidize service and attract riders, and often operate at a loss to establish market share and lure customers. Some studies have suggested that these services compete directly with public transit, further incentivizing transit agencies to explore partnerships. However, policies and best practices for service partnerships between public transit agencies and private ride-hailing companies are still nascent. Existing regulations do not necessarily line up with the kinds of services offered by MOD companies, often creating conflicts or misunderstanding regarding eligibility, data sharing, and project mission.
A clear, robust contract is thus fundamental to any MOD partnership. However, aligning actions, data sharing, and risk allocation between parties with distinct goals and operating procedures is time-consuming and difficult. Agreeing in writing to the duties of each party involved establishes roles and responsibilities, leading to a clear relationship and understanding of each party’s goals and intentions. If done effectively, establishing data sharing agreements, assigning risks, and stipulating performance metrics guides both parties towards desired outcomes throughout the term of the agreement. A good contractual relationship also allows for fine-tuning and flexibility if changes occur or new information arises.
Best practices and lessons learned from existing contracts and partnerships can facilitate knowledge sharing and produce improved processes and greater odds of program success. The MOD Sandbox project in the Los Angeles and Puget Sound regions provides a valuable case study for contracting as the project includes public, private, and research organizations as well as two distinct local contexts under the same national program.
This paper covers the process that developed the contracts for the MOD Sandbox pilot projects in the Los Angeles and Puget Sound regions. It discusses the nuances of interactions between private companies and public agencies, including non-disclosure agreements, data sharing, and the challenges and opportunities faced between the transit agencies and the MOD provider as well as between the other entities involved in the service provision and evaluation of the project. It compares and contrasts how contracts developed between transit agencies, private sector providers, and researchers. It concludes with recommendations for how the contracting process can be improved to ensure better project outcomes.