No competition for school bus contracts poses problem

By Susan Spencer
Telegram & Gazette Staff

Posted Dec 16, 2017 at 8:00 PM  

Updated Dec 16, 2017 at 11:26 PM

School transportation costs hit municipal budgets hard across the state, and several communities in Central Massachusetts have been grumbling about an underlying factor as their multiyear contracts for school buses are about to go out for bid. The problem: There’s no competition in the market.

Despite having a number of school bus companies operating nearby, district after district contacted by the Telegram & Gazette reported usually having just one vendor submit a bid.

Industry representatives say the problem stems from consolidation, with large bus companies buying out the mom-and-pops that used to provide local service.

And with regulatory requirements for 60 hours of training, paid earned sick time and health insurance assessments for what is a part-time job, “it’s a business that over the years has gotten more difficult to be in,” said David Strong, president of the School Transportation Association of Massachusetts and owner of a family-run bus company in Easthampton.

School bus drivers, who typically make around $20 an hour in suburban districts and $25 to $30 an hour in cities, according to Mr. Strong, are hard to find as the economy improves.

Some school districts have explored partnerships with others or are considering operating their own school bus service.

On Thursday, representatives from five area districts agreed to pursue joint procurement through the Central Massachusetts Regional Planning Commission, as a way of pooling their buying power and negotiating better rates.

The districts working to issue a joint request for bids, to be opened in early February, include Auburn, Dudley-Charlton, Leicester, Oxford and Webster.

A sixth district, Millbury, hopes to join the procurement group when its current three-year contract ends in 2020.

Richard G. Bedard Jr., business manager for Millbury Public Schools, said that only once in the last several contract cycles did the district receive more than one bid. That second bid came from a national company based in Illinois and carried a higher price.

Millbury has contracted with AA Transportation Co. of Shrewsbury since its previous vendor, Atlantic Express, declared bankruptcy in 2013, in the middle of the school year.

“We really try to cultivate anyone we think might be able to respond,” Mr. Bedard said.

In 2016, he sent bid packets to 13 firms, but again only AA responded.

The district spends more than $1 million a year for 11 buses, two 20-passenger shuttle buses and a three-passenger in-district wheelchair bus with a monitor. AA provides buses for athletics and field trips and after-school runs as part of the contract.

Several area vendors attended the bid opening last December for the contract but didn’t submit bids of their own.

AA’s prices in Millbury’s three-year contract increase around 3 percent a year. In the company’s previous contract, for school years ending in 2015 through 2017, annual increases approached 5 percent.

“On the one hand, I want to commend AA for coming to our support (when Atlantic Express quit),” Millbury Superintendent of Schools Gregory B. Myers said. “On the other hand, it showed that maybe the capacity had already been there.”


He said he’s pleased with the service from AA, although with so many neighboring towns contracting with the same vendor, the district sometimes gets into a scheduling crunch for field trips or after-school sports.

My issue is, it would be nice to have more than one bid to consider,” Mr. Myers said. “We can’t tell if we’re getting the most for our tax dollars.”

 Ron Ernenwein, president of AA Transportation, said in an email that he started the company in 1996 and it has grown from serving just one school district to serving 17, plus many programs and private schools.

“There are many factors that are considered when a company decides to participate in a bidding process,” Mr. Ernenwein wrote. “Due to the extremely competitive nature of the industry, I am unable to speak to our specific business plans or models.”

“It’s a huge issue. We don’t know what to do about it,” Brett M. Kustigian, superintendent of Quaboag Regional School District in Warren said.

The district, which serves three schools in Warren and West Brookfield, works with three different companies - one for its special education vans, one for school buses in West Brookfield and another for Warren.

Camie Lamica, assistant superintendent for business, said Quaboag went out to bid three times last year, to see if they could generate more interest in the school bus contracts.

The special education contract was awarded on the first bid.

The district added a gas escalation price adjustment in the contract and going to a five-year term from three years with two one-year extensions. At least six companies were sent bid packages.
“And we received nothing but one bid,” Ms. Lamica said.

To exacerbate the problem of transportation costs, which are higher in regional school districts because they typically serve a larger, less densely populated geographic area and are required to provide bus transportation to students in all grades, the state has never fully funded the bus reimbursement to regional districts that was mandated by law in 1949.

A recently issued report on regional school districts by state Auditor Suzanne M. Bump called for the state to fund its commitment to reimburse 100 percent of regional transportation expenses, offer stipends to encourage efficiencies to reduce transportation costs and allow the use of regional transportation authorities to provide school-district transportation.

Some school districts, such as Sutton, have tried to tackle the bus cost question by buying buses of their own. Eight years ago, the town purchased vans and small buses for its in-district special education transportation.

“There was just no competition,” said Town Administrator James A. Smith. “We still do need to contract out for some buses, but it’s much smaller exposure.”

The town set up a revolving account with fees charged for school bus service to students in Grade 7 or older. Sutton also provides special education transportation with its buses, for a fee, to neighboring towns.

“We use those revenues to maintain our fleet,” Superintendent of Schools Theodore F. Friend said. “It saves us a considerable amount of money.”

Mr. Friend added that it was valuable for the town to hire its own drivers for special education busing. “They’re our drivers, they know our kids,” he said.

Worcester is also leaning toward supplementing its contracted fleet with Durham School Services next year. The move to lease 13 buses for athletic events, after getting no bidders for the service, will serve as a trial run for the district’s possible absorption of all student busing.

Brian E. Allen, chief financial and operations officer for Worcester Public Schools, said the district usually receives two or three bids for its school bus contract. Worcester spends $15.3 million a year on total student transportation.

The main issue, according to Mr. Allen, is that Durham can’t provide enough drivers. Buses have had to double-up for regular school-to-home trips and travel to sports practices and games.

“There’s not a lot of competition out there for school bus contracts,” Mr. Allen said.

Shrewsbury Public Schools looked into going to bid with another district, but didn’t pursue it, according to Patrick C. Collins, assistant superintendent for finance and operations.

The district is in the final year of a five-year contract with AA Transportation. AA was the only bidder when the contract was awarded.

Mr. Collins said that while joint contracting would have benefits, it could also have drawbacks, including potentially driving smaller vendors out of the market with demands for larger fleets.
He said, “There’s barriers to entry into the marketplace” for bus companies, including large capital investment, maintenance costs, hiring and managing drivers, and meeting various district requirements such as garaging buses in the district.

“This is a nationwide problem,” he said.

Uxbridge Superintendent of Schools Kevin M. Carney said he also saw the sole-bidder scenario, which the district has experienced in its contract with Vendetti Motors of Franklin, but he couldn’t speculate why others in the area weren’t bidding.

“If a bus company has a solid reputation, others don’t put in for it,” Mr. Carney said. “I’m not necessarily overly concerned about it because we’re pleased with the service.”

“It’s not atypical,” said Oxford Public Schools interim Superintendent Kristine Nash at the CMRPC meeting last week.

Ms. Nash, who previously served as superintendent in districts in southeastern Massachusetts, said there were anecdotes of local vendors not bidding against each other for certain towns because of traditional relationships.

“It’s significant contracts and to only have one bidder... It’s interesting,” said Janet A. Pierce, CMRPC’s executive director.

Ms. Pierce said that regional planning agencies have handled joint procurement on a number of different products and services, including fuel oil, tax-title auctions and emergency medical supplies.
CMRPC is working with Quabbin Regional School District in Barre and Wachusett Regional School District in Holden to collaborate on special education transportation.

“They’re doing their due diligence and looking at cost savings,” Ms. Pierce said.

September Forbes, an Oxford School Committee member who joined the CMRPC discussion, said, “If it’s going to save us money and share best practices from all the districts’ contracts, school committees would go for it.”