Contracted Maintenance Services At the Ministry of Transportation, in Ontario

In 1996, the Ministry or Transportation (MTO) began the transition from an in-house delivery of maintenance services to a fully outsourced delivery model. Prior to then, the ministry had contracted approximately 50% of the winter equipment fleet, although the ministry managed and directed all of the work. The ministry carried out a full business case assessment including jurisdictional scans and a risk analysis of options for, and benefits from, outsourcing maintenance operations. The ministry’s goals were to ensure service standards would be met, achieve value for money, and create an environment that is conducive to the development of new methods and technology. As a result of the assessment, the ministry decided to outsource the majority of its maintenance services provided value for money could be realized. The ministry’s role would concentrate on policy and standards development, priority setting, contract monitoring and evaluation. By 2000, the ministry had outsourced almost 100 percent of maintenance operations. A blended approach of two contract types, Managed Outsourcing (MO) contracts and Area Maintenance Contracts (AMC), was developed to ensure a viable and competitive supplier base. In MO areas a number of functional contracts are managed and directed by the ministry. In AMC areas, the contractors perform most or all of the maintenance activities in a given geographic area under a lump-sum payment system. The AMC contractor manages and plans the work in order to fulfil the standards and specifications in the contract. There were a number of challenges moving from direct delivery to an outsourced delivery environment including the development of contracts with the appropriate risk sharing, award procedures, and monitoring. Communication with industry stakeholders was a critical success factor during and after implementation. Most of the first generation of AMC contracts has now expired and the ministry will complete the renewal of the second generation of AMC Contracts in May 2005. The contracts continue to be refined as experience is gained generally with more comprehensive work and longer duration. As a result, a robust and experienced private sector industry has developed and is providing high quality routine maintenance work at competitive prices.