SINGAPORE - London-based Tower Transit has won an inaugural government bus contract, beating seven other firms including incumbents SMRT and SBS Transit.

The firm, which had submitted the third lowest bid, will operate the new Bulim Bus Depot - off Jurong West Avenue 2 - and 26 bus services from the Jurong East, Bukit Batok and Clementi bus interchanges progressively from the second quarter of 2016.

These services are currently run by SMRT and SBS Transit.

Tower Transit will get an estimated total fee of $556 million over the five-year contract period to run the services.

Announcing the results of the competitive tender on Friday, the Land Transport Authority said that commuters can expect higher service levels as all bus services will have scheduled headways of no more than 15 minutes in both directions during the morning and evening peaks.

Feeder services will run at shorter intervals of six to eight minutes.

The current fleet of 290 buses serving the zone will grow to about 380.

LTA's chief executive officer Chew Men Leong said the award of the first bus package "is a major milestone" for the bus industry.

"The restructuring of the public bus industry and the injection of more competition will bring about even higher bus service levels for commuters. With bus contracting, the Government will plan bus services and can thus be more responsive to changes in ridership and commuter needs."

Under the new regime, the Government owns the buses and other infrastructure, collects all the revenue from fares and pays transport firms to operate the routes.

In awarding the contract to Tower Transit, the LTA looked at the bid price but more emphasis was put on quality, Mr Chew said.

The firm has pledged to offer more than 400 bus captains who will be affected by the move of services, employment at current or better terms.

Senior Minister of State for Transport Josephine Teo said: "A key priority during the transition is the welfare and interests of bus captains, technicians and other bus workers. We look forward to the full support from both the incumbent and new operators during the transition, to minimise inconveniences to commuters and set the stage for higher service levels."