The Santa Clara Valley Transportation Authority (VTA), which provides public transportation to citizens of Santa Clara County, California, operates buses, light rail, and paratransit service. The VTA is currently installing automatic vehicle location (AVL) equipment on its bus fleet. This report presents the results of Phase 1 research, which examines the various performance and operational characteristics of the fixed-route bus system operated by the VTA. The purpose is to identify performance characteristics of the bus system that should and could be improved with and without utilizing AVL. Characteristics examined include: schedule adherence, transfer coordination, passenger waiting time, and passenger information need.  Possible control strategies for improving performance and operational characteristics of the bus system are identified. An evaluation framework for assessing the potential  benefits/costs of alternative strategies for  improving transit performance and operational characteristics is also developed. This research was based on empirical evidence collected through field observations, interviews with the VTA's transit personnel, VTA's records, a survey of bus riders, and a literature review.