Study: Direct award as a model for success

In Austria, direct awards are doing well. This is also underpinned by a new short study by the University of Cologne.

Study Presentation

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Within the framework of the joint initiative "Our Railways", the trade union vida and the Vienna Chamber of Labour warn of a privatisation mania that could be imminent for railway contracts in the EU. In Austria, direct awards are doing well. This is also underpinned by a new short study by the University of Cologne. "It is a myth that competition and the lowest bidders lead to better rail price performance," says the author of the study, Prof. Dr. Tim Engartner, in a press conference: A tendering competition does not bring any cost advantage.

Direct award

Traffic will also not be increasingly shifted from road to rail through tenders. Public tendering procedures in the railway sector are common practice in Germany, while in Austria they rely on direct award procedures and "that's a good thing," Engartner notes. This is because tender competitions in Germany prove that there are virtually no advantages over direct awards. In Germany, for example, around 2.4 million public procurement procedures are offset by legal costs of 19 billion euros.

Prof. Dr. Tim Engartner Trade union vida

"Tendering competition is more complex and costly for both the contracting authorities and the contractors and is therefore at the expense of the taxpayers."

Prof. Dr. Tim Engartner, Universität zu Köln, Studienautor

Direct awards are much more cost-effective. In addition, it would take twice as much time as direct award procedures. From Engartner's point of view, more targeted investments in rail transport are also needed. In both Switzerland and Austria, high per capita investments lead to "pleasing" results for rail passengers.

What would EU tender competition mean for Austria's railways?

What would a tendering competition mean for the successful Austrian railways? What scenarios can be derived from the study results for railway employees and passengers? What factors make the red-white-red railways a Europe-wide role model? Olivia Janisch, Deputy Chairman of the Board of Directors Chairwoman of the vida trade union and the vida railway department comments on the study results.

EU Commission remains true to its liberalisation dogma

How public service transport is financed, organised and awarded for all people in the EU is regulated in the so-called PSO Regulation. For Deutsche Bahn, the European legislator – Council and European Parliament – provides for a choice between direct award and competitive tendering, explains Janisch. "The European Commission, on the other hand, remains true to its liberalisation dogma and is pushing ahead with harmful tendering competition, although in the European Union direct award has proven to be a successful model and around 70 percent of public service transport is awarded by the public sector - in Austria it is over 80 percent of rail passenger transport," criticises the vida trade unionist.

Olivia Janisch, Deputy Chairman of the Board of Directors Chairwoman of the vida trade union and the vida railway department STEFANJOHAM

"Those who save on personnel and training endanger the safety of employees and passengers."

Olivia Janisch, stv. Vorsitzende der Gewerkschaft vida und des vida-Fachbereichs Eisenbahn

More competition on the railways means less rail

The examples from the study "Failed Decisions in the Direction of Competition – Success Criteria for the Shift of Traffic to the Rails" show that the tender competition leads to a weakening of the railways: routes have been discontinued, investments in infrastructure and rolling stock have been neglected. After any initial discounts, tickets quickly became more expensive. The quality and scope of services, cleanliness, reliability and punctuality decreased.

The fixed costs for competing railway companies, including track access charges, energy and rolling stock, are high. Therefore, savings can only be made on personnel. As can be seen from the study results, this leads to wage and social dumping as well as to violations of labour law regulations.

Saving on staff entails a higher security risk, not only due to the higher workload and the general shortage of personnel. In particular, if training standards are lowered, life and limb of employees and passengers can also be endangered. Uniform training guidelines are urgently needed in the EU and must meet the highest standards. This is also the only way to prevent wage dumping, ensure cross-border recognition of licences and thus improve the quality of rail transport for the benefit of people.

Direct award: The stable backbone of public transport

The railway system in Austria is a successful model. It is an expression of the political will to shape public transport for the benefit of the population. The employees and the people in the state want to continue to see this will. The top priority at the moment is the urgently needed investment in personnel and the maintenance of high training and safety standards. The success factors such as the integrated group, long-term secured infrastructure financing, sufficient investment in materials and the direct award of passenger transport services must not be attacked. "They are the stable backbone of public transport in Austria and must not be sacrificed at the altar of the liberalisation religion," Janisch affirms.