FEDERAL TRANSIT ADMINISTRATION

PRIVATE ENTERPRISE PARTICIPATION IN

TRANSPORTATION PLANNING AND SERVICE DELIVERY

Introduction

The Federal Transit Administration (FTA) recognizes the indispensable
role of private enterprise in meeting the transportation needs of the
public. Private sector operators are important for the delivery of
transportation services in every community, in their role as either
direct providers of services they choose to offer the public, or as
contractors who deliver public transportation or specialized
transportation services. Along with experience and knowledge, the
private sector brings additional resources, flexibility, and competition
to the transit community. The interconnected nature of America's
transportation network demands that public transportation providers work
with the private transportation industry to maintain the vitality and
effectiveness of every component.

To achieve the community benefits that private sector transportation
providers offer, they must participate fully in Federally-funded public
transportation programs, from the early planning stages through the
implementation of service. The following information is intended to
assist both public sector and private sector parties in learning more
about opportunities for private enterprise participation in the delivery
of public transportation services.

What should private sector providers do if they want to be more involved
in transportation planning or service delivery?

To get more involved in the transportation decisions made in their areas
and to take advantage of opportunities for providing services, private
sector operators should become familiar and involved with the
procedures, products, and players in transportation planning. In
urbanized areas, transportation funding decisions are made by a
metropolitan planning organization (MPO). MPO's are comprised of state
and local officials, including representatives of public transit
operators, and are responsible for working with providers of
transportation services to prepare long and short-range plans for
delivering those services. These plans form the basis for decisions on
improving transportation systems and services. In rural, non-urbanized
areas, transportation planning is managed at the statewide level by
State Departments of Transportation (State DOTs).

Joint regulations issued by FTA and Federal Highway Administration
(FHWA) require the public to be involved in the transportation planning
process and specifically require that private providers be consulted in
developing transportation plans and programs in both urban and rural
areas. Public involvement processes must be proactive and provide
complete information, timely public notice, full public access to key
decisions, and opportunities for early and continuing involvement
throughout the transportation planning and programming process.

What you, the private provider can do.

1.  Attend MPO meetings.

> The proceedings of MPOs are open to the public, including private
> sector operators. Private providers can attend meetings of the MPO
> Board of Directors, as well as the many committees that advise the
> Board, to offer insight and ideas on how to serve new customer markets
> or better serve existing riders. By participating in these meetings,
> private sector providers may learn the status of transportation plans
> and funding programs, as well as procedures for voicing their service
> suggestions and proposals. In addition, they can use these occasions
> to make valuable contacts with state and local officials, including
> public transit providers, for service and contracting opportunities.

2.  Review and comment on the TIP.

> One of the critical documents prepared by the MPO is the
> Transportation Improvement Program (TIP), which should encourage to
> the maximum extent feasible the participation of private enterprise.
> The TIP lists transportation improvement projects and services
> proposed over the coming three years -- in effect, a menu of potential
> contract opportunities. By participating in the planning process or by
> simply reviewing the TIP, private operators can gain advance notice of
> possible future contracting opportunities. Contact your local
> Metropolitan Planning Organization or local planning agency to learn
> more about the planning processes, the availability of the TIP, and
> how you can become more informed.

3.  Participate in the STIP process.

> As with MPOs, the work of State DOTs in managing statewide planning is
> equally open to the public, including private sector providers. The
> Statewide Transportation Improvement Program (STIP) serves the same
> function as the TIP in metropolitan areas, listing projects and
> services proposed over the coming three years. Contact the State DOT
> or local planning agency to learn more about the statewide planning
> process, the availability of the STIP, and how you can become more
> involved.

Why should State DOTs, MPOs and transit agencies work with private
sector providers to plan and deliver transportation services?

State DOTs, MPOs, and transit providers can gain valuable insight on
customers' needs and opportunities for service improvements from locally
based private sector providers who may be aware of mobility needs and
strategic opportunities to serve those needs, have the equipment and
staffing capabilities to serve selected customer markets at lower costs
than public providers, and be able to assemble resources and deliver
services more quickly than public providers.

Federal laws and regulations require FTA grantees to involve the private
sector in the planning process and encourage private sector
participation in delivering transportation service. Federal statutes and
FTA regulations mandate that in the annual development of the proposed
program of projects, private transportation providers must be consulted;
they must be allowed to examine and comment on each project; and those
comments must be considered especially when a public provider prepares a
final program of projects.

What opportunities are there for private sector providers to deliver
public transportation services?

Opportunities for private sector providers generally fall into two
categories: (1) introducing private transportation service to new or
expanded customer markets, and (2) contracting with public providers to
provide service on particular routes or to particular customer markets.

Direct Service to New or Expanding Markets. Important new opportunities
for service development often exist in the areas of job access and human
service transportation. Private providers may be uniquely qualified to
serve these potential customers by providing access and circulator
services connecting activity centers such as major employers, health
care facilities, shopping centers, and government offices to the larger
regional transit authorities.

Private operators can work with government officials and the general
public to identify markets for offering new or improved transit service;
they may also decide to offer services directly to those customer
markets. State and local governments in the course of preparing plans
and budgets for future services, should seek involvement and advice from
private sector providers. The private sector may propose that their own
directly operated transportation services be included in the Federally
assisted program. To qualify, the private sector must be authorized by
local authority to provide such service and the service must qualify
under one of FTA's programs (described below) as an eligible public
transportation service.

Contracting with Public Providers. Private sector providers may also
provide service under contract to public transit agencies in corridors
and communities within the service areas of those public operators.
Suburban employment and activity centers and other community-based
markets are among the many "niche" customer bases that private sector
providers may be uniquely qualified to serve.

> The Americans with Disabilities Act of 1990 (ADA) requires public
> transit systems that provide fixed route service also provide ADA
> Complementary Paratransit Service. Many systems contract for this
> service. An FTA grant recipient in compliance with the ADA can treat
> as a capital expenditure up to ten percent of its annual formula
> apportionment under the urbanized and rural area formula grant
> programs to provide this service. This means that contracting
> opportunities may exist wherever this service is provided.
>
> Express commuter service in selected corridors and implementation of
> vanpool programs are two additional types of service that transit
> providers may find can be provided more efficiently by the private
> sector. Public transit operators can use Federal funds to contract for
> these services.
>
> Transit providers in both urbanized and rural areas are permitted to
> contract with private companies to provide service. Transit providers
> in all areas, regardless of size, may use FTA funds to pay for the
> capital costs of contracted service. Cities with a population under
> two hundred thousand can also use operating assistance funds to
> contract for service. Transit providers must follow third-party
> procurement rules when contracting to ensure competition.

What Federally-funded transportation programs provide special
opportunities for private sector participation?

Important opportunities to provide service exist particularly in the
areas of job access and human service transportation. Human service
transportation generally refers to programs designed for individuals
with lower incomes, persons with disabilities, elderly persons, and
sometimes children and youth. Private providers may be uniquely
qualified to serve these specialized travel markets.

On behalf of the Federal Interagency Coordinating Council on Access and
Mobility, FTA is leading an interdepartmental effort known as United We
Ride to promote coordinated human service transportation delivery
systems and improve access to transportation-disadvantaged populations.
This initiative emphasizes the need to develop coordinated
transportation plans at the State and local level. Private operators
have the opportunity to be active participants in the development of
these plans. The United We Ride initiative encourages communities to
develop a family of services that range from fixed route bus, to shared
ride, to demand response, to volunteer systems that offer a wide rage of
mobility options for consumers.

Specific FTA-administered programs that present opportunities for
participation by private providers include the Urbanized and
Non-urbanized Area formula programs. As noted above, public entities and
private non-profit agencies that receive funds under these programs may
contract with the private sector for service. In addition, private
for-profit companies may qualify for Federal funds under the following
programs and services:

> **Elderly Individuals and Individuals with Disabilities Program**.
> This program is designed to provide mass transportation service to
> meet the special transportation needs of elderly persons and persons
> with disabilities. While private operators cannot be direct recipients
> under this program, purchase of service by a recipient of Federal
> funds under this program is an eligible capital expense and therefore
> provides opportunities to contract for services with the private
> sector.

**Intercity Bus Transportation Program.** A state must use 15% of its
annual apportionment under the rural formula program to support
intercity bus service unless the Governor certifies that the rural
intercity bus needs are adequately met. If the Governor has not made
such a certification, funds may be available for contracting out
intercity bus service. Private intercity bus companies can be either
subrecipients of the state or contractors. This is one of the few
exceptions that permit contractors to receive funds as a subrecipient of
a direct recipient, in this case, a state. Information regarding the
status of the intercity bus program in a particular state is available
through the state department of transportation or the FTA Regional
Office.

> **Over-the-Road Bus Program.** FTA provides direct assistance to
> private providers of over-the-road buses for the incremental cost of
> equipment and training required by the ADA. By law, all the recipients
> under this program are private providers. FTA annually solicits
> applications and competitively selects recipients under this program
> through a notice placed in the Federal Register and posted on the FTA
> web site. Additionally, there are contracting opportunities in private
> providers' costs for lift and/or training services.
>
> **Job Access and Reverse Commute Program.** This program funds local
> specialized services and may provide contracting opportunities for
> smaller private providers. Projects must be included in a local plan
> that is developed through a collaborative planning process involving
> transit and human service providers and other interested parties such
> as private transportation companies. Congress designates the local
> eligible projects each year as part of the Appropriations Act. The
> projects are listed each year in the annual Federal Register Notice of
> Apportionments that is available on the FTA web site
> (www.fta.dot.gov).

How does FTA monitor opportunities for private enterprise participation?

Planning Program Oversight. On an ongoing basis, FTA Regional Offices
and FHWA Division Offices jointly oversee local planning efforts. At
least every two years, FTA and FHWA jointly review planning processes in
each State to ensure that they are being carried out in compliance with
Federal requirements. At least once every three years, FTA and FHWA
jointly review planning processes in each of the largest metropolitan
areas (over two hundred thousand in population) and certify that they
are meeting all statutory and regulatory requirements. Private
enterprise participation in these planning processes is one of the
planning elements monitored.

**FTA's Oversight Reviews.** FTA conducts about 180 Triennial Reviews
each year, completing a review of all grant recipients of Urbanized Area
formula funds every three years. The Triennial Review includes a review
of the grantee\'s oversight of private provider performance and
compliance with FTA regulations, including the statutory protections for
the private sector. Similarly, FTA conducts periodic State Management
Reviews of the States' administration of the Non-urbanized and Elderly
and Persons with Disabilities programs.

Compliance. If FTA finds, when conducting oversights or reviews, that a
grantee has not met these requirements, FTA will seek appropriate action
by the grantee to come into compliance.

What should a private sector operator do if it is not being given the
opportunity to participate in community transportation planning?

If a private sector transportation provider feels that it is not being
afforded the opportunity to participate in transportation planning, it
should first contact the responsible planning organization for the local
area \-- the MPO in urbanized areas and State DOT in rural areas. It
should convey its interest in becoming involved in planning processes
and attempt to work through any problems. Federal requirements for
private sector participation in the transportation planning work in
metropolitan rural areas are clear and specific, and an expression of
interest or discussion of the issues may serve to address the problems.
Please refer to Appendices A-C of this document for legal references to
the public provider's obligations.

If the private provider is not satisfied with the results, the next step
is to contact the responsible FTA Regional Office regarding its
concerns, including as many specifics as possible about the
complaint**.** While FTA does not mandate specific procedures to foster
private sector participation in the operation of transit services,
private participation in metropolitan planning has been a requirement
for more than a decade.

Statutory Protections for the Private Sector

49 U.S.C. 5307 (c)(2). Public Participation Requirements. Federal
transit laws and regulations require recipients of Federal financial
assistance to consult with private transportation providers in
developing and finalizing a program of projects.

49 U.S.C. 5323 (a)(1). General Provisions on Assistance. FTA funded mass
transportation equipment or facilities may operate in competition with
transportation service provided by an existing mass transportation
company only if the Secretary of Transportation determines that the
program provides for the participation of private mass transportation
companies to the maximum extent feasible.

49 U.S.C. 5323(d). Charter Bus Operations. Federal transit law prohibits
recipients of Federal financial assistance from providing charter
service, except under certain circumstances. **Any charter service that
is provided by FTA recipients must be "incidental." This means that the
charter service may not interfere with or detract from regularly
scheduled mass transportation service or shorten the life of the
equipment or facilities. The charter rule is summarized in a separate
brochure available from FTA. For further information, the complete text
of FTA's Charter Service regulation can be accessed on line at
<http://www.fta.dot.gov/library/legal/charterservice/index.html>**

**49 U.S.C. 5323(f). School Bus Operations.** Federal transit laws and
regulations limit the use of public transportation to transport students
to and from school and school-sponsored activities or trips in
competition with private transportation providers. In general,
recipients of FTA grants cannot provide transportation for students and
school personnel if that transportation excludes the general public or
competes with private school bus operators. The school bus rule is
summarized in a separate brochure available from FTA. The complete text
of FTA's School Bus Operations regulations can be accessed online at
<http://www.fta.dot.gov/library/legal/schoolbus/>

For more information, contact your FTA Regional Office:

Region 1 (CT, MA, ME, NH, RI, VT)

55 Broadway, Suite 920

Cambridge, MA 02142-1093

Phone (617) 494-2055

Fax (617) 494-2865

Region 2 (NJ, NY, VI)

One Bowling Green, Room 429

New York, NY 10004-1415

Phone (212) 688-2170

Fax (212) 668-2136

Region 3 (DC, DE, MD, PA, VA, WV)

1760 Market Street, Suite 500

Philadelphia, PA 19103-4124

Phone (215) 656-7100

Fax (215) 656-7260

Region 4 (AL, FL, GA, KY, MS, NC, PR, SC, TN)

61 Forsyth Street, S. W., Suite 17T50

Atlanta, GA 30303

Phone (404) 562-3500

Fax (404) 562-3505

Region 5 (IL, IN, MI, MN, OH, WI)

200 West Adams Street, Suite 320

Chicago, IL 60606

Phone (312) 353-2789

Fax (312) 866-0351

Region 6 (AR, LA, NM, OK, TX)

819 Taylor Street, Room 8A36

Fort Worth, TX 76102

Phone (817) 978-0550

Fax (817) 978-0575

Region 7 (IA, KS, MO, NE)

901 Locust Street, Suite 404

Kansas City, MO 64106

Phone (816) 329-3920

Fax (816) 329-3921

Region 8 (CO, MT, ND, SD, UT, WY)

12300 West Dakota Avenue, Suite 310

Lakewood, CO 80228-2583

Phone (720)-963-3300

Fax (720) 963-3333

Region 9 (AS, AZ, CA, GU, HI, NV)

201 Mission Street, Suite 2210

San Francisco, CA 94105-1926

Phone (415) 744-3133

Fax (415) 744-2726

Region 10 (AK, ID, OR, WA)

915 Second Avenue, Suite 3142

Seattle, WA 98174-1002

Phone (206) 220-7954

Fax (206) 220-7959

Appendix A: Statutes

**49 U.S.C.** §**5303(f)(4)** Before approving a long-range plan, each
metropolitan planning organization shall provide . . . private providers
of transportation . . . with a reasonable opportunity to comment on the
plan in a way the Secretary of Transportation considers appropriate.

**49 U.S.C.** §**5304(a)** Transportation improvement plan. Development
and update. -- In cooperation with the state and affected mass
transportation operators, a metropolitan planning organization
designated for a metropolitan area shall develop a transportation
improvement plan for its area. In developing the program, the
organization shall provide . . . private providers of transportation . .
. with a reasonable opportunity to comment on the proposed program. The
program shall be updated at least once every two years and shall be
approved by the organization and the chief executive officer of the
State.

**49 U.S.C.** §**5304(d)** Notice and comment. ---Before approving a
transportation improvement program, a metropolitan planning organization
shall provide . . . private providers of transportation . . . with
reasonable notice and an opportunity to comment on the proposed program.

49 U.S.C. §5305(e)(1) Transportation management areas, Certification. At
least once every 3 years, the Secretary shall ensure and certify that
each metropolitan planning organization in each transportation
management area is carrying out its responsibilities under applicable
laws of the United States. The Secretary may make the certification only
if the organization is complying with section 134 of title 23 and other
applicable requirements of laws for the United States and the
organization and chief executive officer have approved a transportation
improvement program for the area.

49 U.S.C. §5306 Private enterprise participation in metropolitan
planning and transportation improvement programs and relationship to
other limitations.

(a) Private enterprise participation. A plan or program required by
    sections 5303, 5304, or 5305 of this title shall encourage to the
    maximum extent feasible the participation of private enterprise. If
    equipment or a facility already being used in an urban area is to be
    required under this chapter, the program shall provide that it be
    improved so that it will better serve the transportation needs of
    the area.

(b) Relationship to other limitation. ---Sections 5303-5305 of this
    title do not authorize---

    1.  a metropolitan planning organization to impose a legal
        requirement on a transportation facility, provider, or project
        not eligible under this chapter of title 23; and

    2.  intervention in the management of a transportation authority.

49 U.S.C. §5307(c) Public Participation Requirements. Each recipient of
a grant shall\--

(1) make available to the public information on amounts available to the
    recipient under this section and the program of projects the
    recipient proposes to undertake;

(2) develop, in consultation with interested parties, including private
    transportation providers, a proposed program of projects for
    activities to be financed;

(3) publish a proposed program of projects in a way that affected
    citizens, private transportation providers, and local elected
    officials have the opportunity to examine the proposed program and
    submit comments on the proposed program and the performance of the
    recipient;

(4) provide an opportunity for a public hearing in which to obtain the
    views of citizens on the proposed program of projects;

(5) ensure that the proposed program of projects provides for the
    coordination of mass transportation services assisted under section
    5336 of this title with transportation services assisted from other
    United States Government sources;

(6) consider comments and views received, especially those of private
    transportation providers, in preparing the final program of
    projects; and

(7) make the final program of projects available to the public.

# Appendix B

# Joint FTA/FHWA Planning Regulation

# Planning Assistance and Standards, 23 CFR Part 450

**Section 450-212(a), Public Involvement**. Public involvement processes
shall be proactive and provide complete information, timely public
notice, full public access to key decisions and opportunities for early
and continuing involvement. The processes shall provide for . . . (2)
Timely information about transportation issues and processes to . . .
private providers of transportation . . . affected by transportation
plans, programs, and projects.

**Section 450-214, Statewide transportation plan. Section (c).** In
developing the plan, the State shall . . . (3) provide for public
involvement as required under section 450.212.

**Section 450-216, Statewide transportation improvement program
(STIP).**

**Section (a).** Each State shall develop a statewide transportation
improvement program for all areas of the State . . . . The Governor
shall provide for public involvement in development of the STIP as
required by section 450.212.

**Subpart C, Metropolitan Transportation Planning and Programming.**

**Section 450-316 Metropolitan transportation planning process:**
Elements.

Section (b)(1). In addition, the metropolitan transportation planning
process shall

\(ii\) Provide timely information about transportation issues and
processes to . . . private providers of transportation . . . affected by
transportation plans, programs, and projects . . . .

**Section (b)(4).** Provide for the involvement of . . . appropriate
private transportation providers . . . .

**Section 450.322. Metropolitan transportation planning process:**
Transportation plan. Section (c). There must be adequate opportunity for
public official (including elected officials) and citizen involvement in
the development of the transportation plan before it is approved by the
MPO, in accordance with the requirements of section 450.316(b)(1). Such
procedures shall include opportunities for . . . private providers of
transportation . . . to be involved in the early stages of the plan
development/update process.

The complete text of the joint Federal Highway Administration and
Federal Transit Administration "Planning Assistance and Standards"
regulation, 23 CFR Part 450, can be accessed online at
http://www.fhwa.dot.gov/hep/23cfr450.htm

Appendix C: Private Enterprise Provisions in FTA Circulars

The following Circulars provide statutory, regulatory and policy
guidance to applicants and recipients concerning private enterprise
provisions applicable to FTA recipients.

**Circular 8100.1B**, Program Guidance and Application Instructions for
Metropolitan Planning Grants, October 25, 1996.

Chapter I, 1. j. "An opportunity must be made available for
participation of private enterprise in developing and implementing
transportation plans and programs."

The complete text of the Federal Transit Administration "Program
Guidance and Application Instructions for Metropolitan Planning Grants"
can be accessed on line at

<http://www.fta.dot.gov/legal/guidance/circulars/8000/429_5943_ENG_HTML.htm>

**Circular 9030.1C**, Urbanized Area Formula Program: Grant Application
Instructions, October 1, 1998.

24\. Private Enterprise Concerns

a\. Participation by Private Enterprise (Reference to **§**5306(a);
5323(a)(1)(B); 23 CFR Part 450.322(c); Federal Register Notice "Private
Enterprise Participation," of April 26, 1994 (59 Fed.Reg.21890 et seq.
(1994); 49 USC **§**5303-5306)

b\. Acquisition of Private Mass Transportation Facilities (Reference to
49 USC **§**5306(a); 49 USC **§**5323(a)(1)(C))

The complete text of the Federal Transit Administration "Urbanized area
formula Program: Grant Application Instructions" can be accessed on line
at
<http://www.fta.dot.gov/legal/guidance/circulars/9000/433_1152_ENG_HTML.htm>

**Circular 9040.1E,** Nonurbanized Area Formula Program Guidance and
Grant Application Instructions, October 10, 1998.

X. Other Provisions

3\. Private Enterprise Participation

4.  Charter Service

5.  School Transportation

The complete text of the Federal Transit Administration "Nonurbanized
Area Formula Program: Grant Application Instructions," can be accessed
on line at

<http://www.fta.dot.gov/legal/guidance/circulars/9000/433_1182_ENG_HTML.htm>

**Circular 9070.1E,** The Elderly and Persons with Disabilities Program
Guidance and Application Instructions, October 1, 1998.

VI. Other Provisions

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6.  Private Sector Participation

The complete text of the Federal Transit Administration, "The Elderly
and Persons with Disabilities Program Guidance and Application
Instructions," can be accessed on line at

[**http://www.fta.dot.gov/legal/guidance/circulars/9000/433_1208_ENG_HTML.htm**](http://www.fta.dot.gov/legal/guidance/circulars/9000/433_1208_ENG_HTML.htm)

**Circular 9300.1A**, Capital Program: Grant Application Instructions,
October 1, 1998.

VI\. 9. Private Enterprise Concerns.

> a\. Participation by Private Enterprise (Reference to 23.) CFR Part
> 450, and 49 CFR Part 613 (Planning Assistance and Standards); 49 USC
> **§**5306(a); 49 USC **§**5323(a)(1)(B); 49 USC **§**5303(f)(4); 23
> C.F.R. Part 450.322(c). 59 Fed.Reg. 21890 et seq. (1994); 49 USC
> **§§**5303-5306.)
>
> b\. Acquisition of Private Mass Transportation Facilities (49 USC
> **§**5306(a); 49 USC **§**5323(a)(1)(c).

c.  Charter and School Bus Operations (5323(d); 5323(f)).

The complete text of the Federal Transit Administration "Capital
Program: Grant Application Instructions," can be accessed on line at
<http://www.fta.dot.gov/legal/guidance/circulars/9000/433_1223_ENG_HTML.htm>