Projected Cost Savings Of Abandoning O-Os Are Not Adding Up

To the Editor:

A good result has come from bidding the school bus contract. We know once and for all that the cost for the independent owner-operator system is in the mainstream of costs that Newtown would be charged by out-of-town bus companies (1.5 percent more than the average of those bids and only 3.5 percent more than the average of all bids).

When the bids were opened, it was reported that only one company was more than 15 percent lower than the owner-operators bid. MTM, the local Newtown company that provides special education transportation for our schools, was 18.4 percent lower than the O-Os’ bid. This is not close to the 30 percent savings that was promoted by the school administration in their June 23 press release as a justification for killing the popular owner-operator system.

It is interesting to note that the school administration’s favored company, All-Star, was initially only $5,000 less than the O-Os and even after recalculation by the BOE director of business lowered their bid by $1.5 million (they were the only company that did not follow the bid addendum), they are still not the low bidder and represent a savings of only 12.7 percent from the O-Os’ bid. This “cost savings” does not take into account the property taxes paid to the town by the O-Os for their school buses, nor the benefits to the Newtown economy from the operation of 30+ Newtown small businesses.

Apparently, the “cost savings” does not include costs for a performance bond, which appears to be something of a “red herring.” I asked the director of business if costs for performance bonds were included in the reported bid totals. He responded, “No.” When asked who would pay for the bond, he indicated that the bus company would pay, but the Board of Ed would reimburse them. I argued that the cost should be added to the winning bidder’s cost to determine true “savings,” he said not necessarily because the BOE will decide how large a bond, “if any” will be required. The “if any” caught my attention!

We should require a performance bond for a company with whom we have no history, particularly, since some companies, including All-Star, have had strikes and other issues that resulted in higher costs and performance problems. A note of caution is that insurance company bonds can be very time-consuming and difficult to collect.

On the other hand, we should not require and bear the cost of a performance bond if we continue with the owner-operators with whom we have a long history of exemplary performance.

We can’t know what the results of future bidding will be after the owner-operators are gone (two companies were already higher). If you believe as I do that the figures thus far presented do not warrant ending the owner-operator system, please contact the Board of Education and let them know your feelings.

Sincerely,

Herb Rosenthal

70 Main Street, Newtown                                                June 29, 2011