No Competition For Hawaii School Bus Contracts
The cost of transporting Hawaii students to and from school has nearly doubled in the past five years. A major factor contributing to the increase is that there’s almost no competition among bus companies for contracts.
The 12 companies that provide bus services for the Department of Education typically do not compete with one another for new contracts, said Randy Moore, assistant superintendent of school facilities and support services. The companies range from small mom-and-pop operations servicing only a single island, to the ubiquitous .
The department spends more than $70 million to transport students to and from school each year, or about $1,000 per student passenger. It has roughly 800 bus routes that are divided among around 100 contracts, most of which last for six years. In a given year, about 15 of those contracts will end and come up for bid again.
But the department often only receives one bidder for each solicitation, Moore told members of the former Board of Education at their last year.
“When we put the bids out, we typically only get one bid back and it’s usually from the company that held the contract before,” Moore told Civil Beat. “There are two ways to look at it: Either there is a formal or informal agreement not to poach on each other’s property, or the other way to look at it is that there is a significant barrier to entry into this business.”
In theory, multiple bidders per contract helps keep prices down. It also means the department gets the best value for its money. But with a sole bidder per solicitation, the Department of Education is obligated to take whatever offer it gets.
Hawaii law to select contractors for goods and services through a competitive bidding process. Contracts are awarded based on a combination of how well the bids fit the criteria set out in the bid solicitation, including price.
In the case of school buses, companies aren’t competing to offer the lowest price for bus services, meaning the education department likely isn’t getting the biggest bang for taxpayers’ bucks.
As a result, the budget for the department’s Student Transportation Services Branch has nearly doubled in the last five years, from $36.5 million in 2006 to $70.5 million in 2011.
| Fiscal Year | Transportation Budget |
|---|---|
| 2006 | $36.5 million |
| 2007 | $43.8 million |
| 2008 | $48.1 million |
| 2009 | $48.9 million |
| 2010 | $40.8 million |
| 2011 | $70.5 million |
The Department of Education to rising fuel costs, ever more expensive contracts and increased ridership. And even though each student rider pays $225 per year for the service, the student bus fare proceeds amount to only about $2 million of the total $70 million cost.
Some in the Legislature are so concerned about the perpetually rising costs that they have threatened cutting the department’s transportation allocation by $20 million in 2013 if something doesn’t change soon.
“Even with continued requests from the Legislature to the department to address the exorbitant contract costs, the department has allowed the student transportation program to run at a significant deficit, simply utilizing funds from other sources rather than make concerted efforts to bring down costs,” legislators wrote in a report on the budget cuts.
At least one concerned lawmaker has promised to address the matter over the summer.
“I did tell the bus transportation operators that I would hold a meeting with them and the Department of Education to discuss what’s going on with these costs,” Sen. Jill Tokuda said. “We want to make sure we are looking critically at certain areas like school transportation.”
Board of Education Chairman Don Horner also said he has met with the department about the transportation issue on several occasions.
“It’s certainly very expensive, and there could probably be improvements on both sides. The department could do a better job of supporting that industry, and the industry could do a better job of getting us a better return on our money. It’s a work in process right now,” he said.
Busing costs warranted a mention in the Legislature’s conference committee , too: “Even with continued requests from the Legislature to the department to address the exorbitant contract costs, the department has allowed the student transportation program to run at a significant deficit, simply utilizing funds from other sources rather than make concerted efforts to bring down costs.”
