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Phoenix will identify three foundation corridors for Bus Rapid Transit.

The city of Phoenix has determined a company with a five-year contract to provide bus service is failing to live up to its agreement. The city sent a letter demanding that First Transit improve performance and even began withholding payments.

Phoenix says First Transit, the company responsible for about 30 percent of the city’s bus service, is in violation of its contract worth up to $147.5 million.

Here’s how the agreement works: the city provides the buses and in exchange, First Transit maintains the buses and provides service for a dozen routes, including: Van Buren, Buckeye, McDowell, Thomas, Indian School, 43rd Avenue, 51st Avenue, 59th Avenue, 67th Avenue, 75th Avenue, 83rd Avenue and the MARY circulator. 

Written Notices

In March, the city issued a letter of concern and in June, Phoenix Public Transit Director Maria Hyatt sent a formal written Notice to Cure to First Transit, Inc. It spelled out two major contract violations: on-time performance and missed service. This is the first service-related cure letter the city has issued in recent history.

In its letter, the city wrote that First Transit’s adverse performance has “negatively impacted the City’s and the region’s passengers” and “is also damaging the City’s relationship and reputation with its passengers.”  

In January, city staff observed 31 buses that pulled out of the West Transit Facility late. In April, they reported 21 buses pulled out late. While most buses were between 6 and 15 minutes late, one bus pulled out 28 minutes late.  

Phoenix requires each route have a minimum on-time performance of 94 percent. On-time allows up to five minutes past the scheduled time. During the first four months this year, the city found at least eight out of 12 routes failed to meet on-time performance each month.

The city’s letter also points out a violation referred to as "missed service." That can mean a trip that is not 50 percent completed or is more than 30 minutes late.

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Passenger Impact

Passenger Holly Zortman said she’s experienced it along Indian School Road.

“It’s been like an hour, hour and a half late one time. It was pretty bad," she said.

Zortman, who said she relies on the bus every day to get to work, is among the estimated 1.1 million passengers that use the 12 routes each month. So is Sandra Maxwell. She rides the bus at least every other day to get to school, run errands and socialize.

“We went to breakfast at Burger King and then we went to Wal-Mart,” she said while waiting with a friend at a bus stop near 36th Street and Thomas Road. ”Early in the morning is excellent, at like 6, 7, 8 [o'clock], but like at 9 [o'clock], this time of day, it’s not as good.” 

First Transit's Response

The company has not responded to KJZZ’s request for comment, but sent a response letter to the city. In it, First Transit blames several factors: they said finding and keeping qualified drivers and maintenance technicians is tough. In fact, they reported 50 percent turnover among technicians. First Transit said it recently raised pay, increased recruitment and improved training. 

In its letter dated June 16, the company said “our actions will generate significant improvement in our staffing levels over the next 30 to 60 days.”  The company listed 342 current drivers with a target of 390 and an expectation to be fully staffed by Aug. 31.

First Transit also pointed out local management shortcomings and said it is taking steps to improve in that area. And, the letter mentions “growing pains” from the two most recent service expansions.

The expansions were part of Proposition 104, a voter-approved initiative in 2015 to increase and extend a sales tax to primarily fund transportation projects. Phoenix refers to the 35-year plan as T2050 and it included extra hours and increased frequency of bus service.

A city spokesman told KJZZ they held extensive talks with First Transit and another contractor, Transdev, which handles other city routes. The spokesman said the expansion was done in two phases to ensure both companies could hire enough staff to operate and maintain their fleets. Transdev has received no warning letter from the city.

Phoenix’s contract with First Transit allows it to assess liquidated damages using a formula based on contract violations. Since January, Phoenix has withheld more than $80,000 in payments.

What's Next?

The city gave First Transit until July 16 to show “marked improvement.”

Lars Jacoby, public information officer for Phoenix Public Transit, provided the following statement:  

“We would note that an ‘opportunity to cure’ is an administrative tool available in most contracts whereby the contract holder notifies the service provider of areas where performance requires improvement, and allows that contractor the opportunity to implement performance improvements.

“Please know that staff are continually working with First Transit on the issues outlined in the letter, and will continue monitoring their performance (as we do with all of our contracted services) throughout the life of our contract with First Transit (through June 30, 2018), with the goal of providing optimal service for our bus riders that depend on the 12 routes that First Transit operate.”