There has been trouble in paradise since 2006, when school-busing costs began to soar, service levels dropped and complaints increased at every level. Into Hawaii’s “transportation nightmare” strode retired Marine Corps Col. Ray L’Heureux, who took the reins of the DOE’s Student Transportation Services Branch (STSB) five months ago. On Jan. 8 he presented a progress report to Hawaii’s Board of Education on the first steps to be taken toward goals laid out in a new school bus study.
Last fall, the STSB hired the Maryland-based Management Partnership Services Inc. (MPS) to conduct a thorough review of its transportation operations and provide recommendations. After two months, MPS found the student transportation services program to be in need of systemic change in areas that address costs, procurement, organizational structure and technological upgrades.
According to the 69-page report released last month, school bus contractor costs rose dramatically in the four fiscal years from 2006 to 2010, with the primary cause being increases in the rates paid to contractors.
“There has been a significant shift in rates to the point where the average daily rate for services essentially doubled since 2006, and that volume of services has essentially swung from an increase of 13 percent more buses on the road to a reduction in service between 2010 and 2012,” said MPS consultant Tim Ammon, who is also an STN contributor.
The study pointed to Hawaii’s unique geography and relatively closed market as additional constraints to the procurement system. L’Heureux said part of the problem is the state has no secondary market because it is cost prohibitive to ship school buses from the mainland.
“Typical contracts have lasted six to 10 years, which helps the vendor. There was no contract oversight from the former transportation branch manager,” he explained. “By applying contract discipline and rigor, we basically are going to buy buses based on our requirement and need.”
L’Heureux did not renew the existing school bus contracts back in June and is currently preparing a pilot program on the Big Island to test a new contracting method.
“In order for them to overcome inherent problems with geography, they need to focus on time frames and time lines in the contracting process,” Ammon said. “Many districts have gone from using the request for bid process to an RFP that allows them to take into consideration factors other than price in order to make an award. They have to redesign their bidding process, as currently it does not allow them to do that.”
A New Year, A New Way
L’ Heureux told STN that his department would be testing out new contracting methods and new technology during the 2013-2014 school year. This “lab work” will provide essential information as he continues to develop best practices.
He used the analogy of a shopping mall to explain the positioning of the 12 school bus contractors in Hawaii: Two are large “anchors” and the rest are the smaller mom-and-pop operations.
“Larger vendors think they’ll continue to do what they have done, but that’s not going to happen. One of the barriers to entry into this market has been dictated by the terms of contracts of the bigger vendors — another barrier was our own timelines,” he said, adding that he has invited all transportation vendors to a summit where they can discuss coming changes.
L’Heureux has met with representatives from Zonar Systems and Transfinder to discuss the latest GPS, routing and student tracking technology. MPS said it is “critical” for the STSB to utilize this type of software to improve efficiencies and rein in costs long-term. According to its report, the DOE-operated student transportation system is among the largest in the nation, with more than 35,000 students being transported daily by more than 700 route buses on five islands.
L’Heureux agrees that using this technology will help bring the DOE into the modern age. It is also his hope that routing efficiencies will lead to a restoration of service for the 2,000 students who lost bus service at the start of the school year.
“The areas affected would be my first priority to reinstate school bus service,” said L’Heureux. “This new technology will be extremely important to realizing cost savings down the road, not only with our contracts but also in terms of bundling routes, reducing idling, etc.”
He added that he plans to bring back the MPS consultants to act as advisors in the coming months.
Ammon said the officials who assisted him and Tom Platt during their review recognized the need to break from the current business model and provide cost-effective service for Hawaii’s schoolchildren.
“Everyone we interacted with recognizes there is a concern and something needs to be done about it,” he remarked. “With improved efficiency, they can expand service delivery. The desire is not efficiency for efficiency’s sake but efficiency to improve both access and service quality.”
