Competitive Aspects in the Metropolitan Region of Recife Bidding Terms for the Delegation of Its Urban Bus System

Abstract

This paper discusses aspects related to competitiveness in the ITB (invitation to bid) of the public tender for the concession of the urban bus public transport services in the RMR (Metropolitan Region of Recife) in the Brazilian northeastern region. The bid was made public through a consortium formed by the two major cities of the RMR-Recife and Olinda, and the government of the State of Pernambuco. Throughout the paper, the basic features of the bidding terms are presented and some aspects of these characteristics that undermine competitiveness are pointed out and submitted to criticisms. Aspects such as the small number of lots, the lack of diversification of lot sizes and the possibility of forming consortia with unlimited number of participants were targeted. In order to prove the criticisms stated, a simulation of an arrangement amongst incumbents is presented, based on the rules of the tender, in which the allocation of incumbents ex post bidding does not differ from the ex ante scenario. Thus, the main objective of this article is to assess whether good practices that foster competition were followed by the ITB and the main conclusion is that competitiveness was put in jeopardy.