The contract that could: How service contracting can improve public transportation and help Filipinos

What can be done to help address the transportation woes of a city that loses P3.5 million per day due to traffic congestion? In a Q&A livestream—titled “A Better Normal” and organized by podcast platform PumaPodcast and Asia Society—urban planner Benjie de la Peña proposes a new way jeeps and buses can ply Metro Manila’s roads more efficiently: have the government rent them.

He’s referring to service contracting, an “agreement whereby a contractor supplies time, effort, and/or expertise instead of a good”. In this case, the contractor is the transport operator, offering a transport service defined by an agreed number of kilometers and trips per day. The government, their client, will pay the operators a fixed amount and collect the fares from passengers themselves, possibly through an automated system.

Currently, many jeepneys operate on a boundary system, where the driver’s profit is whatever’s left after gas expense and vehicle “rent” to the operator. This puts pressure on the driver to take on as many passengers as possible per trip, in as many trips as they can make for the day. This incentivizes poor road behavior, like stopping to load passengers at non-designated areas, adding to our traffic problems.

Compounding this issue is the general community quarantine (GCQ), these jeepneys are still not allowed, creating unrest among drivers as they struggle to feed their families. This also makes commuting more challenging for the public, with some lining up at rail stations as early as 4:00 A.M. to ensure that they get to work on time.

By employing service contracting, drivers are assured a fixed salary. And since the number of passengers per trip is no longer a concern, this makes the current general community quarantine (GCQ) period a good transitional phase for service contracting until it becomes, potentially, a permanent arrangement.

“[The driver’s] job is to pick up the passengers but most importantly, [their] second job is to fulfill performance requirements: is it clean, is it safe. And in the time of COVID, [they] can say, ‘I can only take on half the amount of passengers,’” said de la Peña.

While several groups welcomed the proposal, some suggested that it wouldn’t come without its own bumps in the road. Atty. Zona Tamayo of the Land Transportation Franchising and Regulatory Board (LTFRB) mentioned the apprehension of some drivers to transition to a new system. “We can’t blame them naman po… because they’ve been doing this for, let’s say, the past 30 years. Some even inherited the operation or driving of the jeep,” she said.

ASec. Tony Lambino of the Department of Finance cited a huge number of competing requests for the government’s stimulus package, a barrier considering the proposal’s P32 billion price tag for a three-month run. “Our deficit is already higher than 8% of GDP, and the bills that we’ve seen in terms of economic stimulus plan, let’s just say that they blow up the deficit,” he said.

But for de la Peña, it could be a measure well worth the price.

“Competitiveness is not just about our tax levels, because we can have the lowest taxes in the world, but if our workers are exhausted and there’s a high cost to business not because of the taxes but because of the transportation in doing business, then we’re not competitive,” he said.