As a result of high and rising transit costs, many transit agencies in the United States and throughout the world have turned to the private sector as an alternative. Deregulation can save public money and result in more innovative and responsive van and bus service. But competitive contracting is the only widely viable private-sector alternative to high and rising public transit costs in low-demand markets such as those in the United States and where full public control of transit is desired.

Although there is much opposition to competitive contracting, a well-designed, carefully monitored competitive contracting program yields direct savings of more than 30 percent in the United States. A number of studies of competitive contracting indicate the service quality, safety, and reliability of contracted services equals or exceeds that of the public sector.

The success of transit contracting rests on three fundamental principles: public control, competition and cost effectiveness, and open access and process. First, the public authority has a responsibility to the riders and taxpayers to ensure that public services meet quantity and quality standards that are set by government—this requires public control. Second, competitive-contracting programs must foster the development and maintenance of a truly competitive market so that costs are kept under control. Third, these two principles are best served when all interested parties have access to the procurement process and records.