School bus contractors oppose bids

April 25, 1995|By Howard Libit | Howard Libit,Sun Staff Writer

A cost-saving switch in the way the Howard County school system awards bus contracts has angered local contractors, who warn that the change will drive many of them out of business within 10 years.

The decision to require bus contractors to bid for individual routes -- rather than to continue paying them by a prearranged cost formula -- eventually could save the schools more than $1 million a year, said Glenn Johnson, the school system's pupil transportation director. The county schools are spending almost $12 million this year on transporting students.

The Howard County School Bus Contractors Association dismisses the notion of any short- or long-term savings. The group charges that larger, out-of-county companies will underbid small contractors in the short term and kill off competition that otherwise would keep bids low.

"Only the large contractors will be able to survive bidding, because if a small contractor loses a bid, he's stuck with a bus and nowhere else to go," said David Redmiles, vice president of the contractors group and operator of five buses.

"A large contractor can take that bus to another county," he said. "What I've heard most contractors saying is that there will only be three contractors left in the county within 10 years."

Of the nearly $12 million transportation bill this year, most is spent for school buses to take students back and forth to school each day. The 57 contractors hired by the school system operate 262 buses and employ about 480 drivers and assistants, Mr. Johnson said.

For 30 or 40 years, contractors have been paid based on a formula set by the school system, which includes the costs of the bus, the driver, maintenance and fuel. A contractor keeps the same route for up to 12 years -- the maximum number of years that a bus can be used in Howard County -- and 12-year contracts typically have been renewed by the system if contractors have done satisfactory jobs.

Under a new system endorsed by the school board and put into effect in June, the school system will ask for bids on routes as 12-year contracts expire. Last year's bids were for three years with two one-year renewal options, but future bids will be for five years with a one-year renewal option, Mr. Johnson said.

In the 1994-1995 school year, the 11 routes that were awarded in June after competitive bids cost a combined total of about $45,000 less than under the previous formula, Mr. Johnson said. Eight more routes are scheduled to be opened for bidding this spring after the school system's budget is approved.

"We have the second-highest reimbursement formula in the state," Mr. Johnson said. "We believe that there is something to save in the competitive bid process, and, as we all know, the budget is tight. Any money that can be saved is important."

The shorter contracts will not permit small contractors to recover the full purchase costs of their buses, because the same bus cannot be used for more than one contract in one school system, said Lee Wessel, president of the bus contractors group. Once a contractor has used a bus for five years, he will not have recovered its purchase price but will be prohibited from using it further in the Howard schools, Mr. Wessel said.

Mr. Johnson said contractors could sell their buses after five years to contractors in other school systems or use them for purposes other than transporting Howard students.

He also dismissed the contractors' fears that only large companies will be able to survive, noting that the county prohibits any contractor from operating more than 15 school buses for Howard schools.

The contractors group also said its members might have trouble finding drivers because, under the bidding system, the school system will end a voluntary subsidy provided to drivers and assistants to defray the cost of their health insurance.

Under the competitive bidding system, the contractors have to make their own arrangements to pay for health insurance for their employees, although they have the option of purchasing coverage through the school system's plan, Mr. Johnson said.

Nevertheless, Mr. Wessel said, contractors may not be able to afford to offer coverage for drivers and that "without that insurance, we may have a real driver shortage around here in a couple of years."

The contractors group wants to have meetings with the school board to make its case for staying with the current formula. But as of now, the school system will continue to award expired contracts by competitive bids, and all of the county's school bus routes are set to be under the new method in about 10 years, Mr. Johnson said.

Howard County is not the only school system trying to save money by switching to competitive bids. In Carroll County, school officials are trying to start a bidding system after an audit determined that doing so could slice $1.5 million from the district's $9.3 million annual transportation budget.

Part of the reason competitive bids would save money is that under the formula system of reimbursement, the contractors receive money based on mileage beginning the moment the buses leave their garages. Under the bidding system, payment would begin when students are picked up.

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