Competitive Bidding and Competitive Safety

A considerable percentage of motorcoach service is provided under contract, in response to requests for bids or proposals (RFPs). These services include field trips for schoolchildren (which represent 30 percent of all motorcoach trips), virtually all commuter/express service (provided under contract to transit agencies), selected charter services purchased by transit agencies (before they are allowed to provide it themselves), and many others – particularly where public agencies or private companies (including many casinos) pay for them.

To the detriment of the motorcoach industry, many of the requirements for these services are minimal. Many selections are made purely on the basis of low bid – effectively requiring the vehicles to have little more than tires, seats and fuel, and the drivers to do little more than breathe. But even when other requirements are added, bidders are often forced to compete by paying drivers as little as possible, and by paring their management to the bone.

Forces for Change

In the struggle to optimize safety and minimize exposure, one recent industry accomplishment was notable: The adoption of guidelines and recommendations for a school district’s selection motorcoach operators to provide field trips. These guidelines and recommendations were developed by several pupil transportation umbrella organizations (National Association of Pupil Transportation, National School Transportation Association, and National Association of State Directors of Pupil Transportation), with valuable input and cooperation from the United Motorcoach Association, American Bus Association and Federal Motor Carrier Safety Administration. One may access this document through the FMCSA’s website ( Of course, all school districts are not aware of this information, and/or do not avail themselves of it. Nor (with a few local exceptions) are they required to. But even these guidelines and recommendations fail to identify two of the most critical elements of a responsible request for bids: Minimum driver salaries and adequate levels of management.

Proposals and Prejudices

Where they are at least marginally enlightened, some public agencies (and occasionally private companies and organizations) integrate factors into their evaluation frameworks that lie beyond merely obtaining the lowest bid from a company in compliance with minimum standards. At one end of this spectrum, the evaluation may actually include some criteria related to safety. More typically, however, requirements simply contain rhetoric like, “The contractor must be compliant with all applicable Federal and State statutes and regulations.” To the sharks of the industry, such platitudes, in the absence of further clarification, trigger a feeding frenzy of errors, omissions and reckless disregard.

Somewhat more sophisticated lead agencies distinguish between “cost” and “non-cost” factors, and attribute a percentage of the total scoring to non-cost factors. Further, with the ability to reject any and all bids, many lead agencies devote most of the scoring to non-cost factors. Typical categories evaluated include vehicle and equipment age and condition (not simply seating and wheelchair capacity), work force characteristics, financial capabilities, experience of key management personnel, management plans and techniques, and “understanding-of-the-problem.” Surprisingly, many lead agencies have difficulty reconciling “cost” with “non-cost” scoring – of which sophisticated bidders take full advantage by padding both costs and capabilities (which they can afford via the padded costs, to the degree they actually provide such capabilities). In truth, these concepts can be reconciled with second grade arithmetic. But I digress.

Even where non-cost scoring is significant, ignorance still abounds. The most glaring and counterproductive error is the disproportionate weight often given to a concept referred to as “experience-of-the-firm.” Affording 20 to 30 percent of the total scoring to this illusion is not uncommon. In reality, where the individuals involved in a project encompass the firm’s entire staff throughout its entire history, this notion actually reflects the knowledge and experience the lead agency may receive. Otherwise, as a specific project matter, there is simply not such thing as “experience-of-the-firm.” Members of a firm or organization do not wire their brains together while they sleep. Nor do they confer with former organization members, much less séance with those of them who have passed away. In terms of “experience-of-the-firm,” what you get at the operating level is pretty much drivers and a dispatcher. Sometimes, other management may be tangentially involved.

In competitive bidding, experience-of-the-firm provides a significant, and often overbearing, advantage to the largest and oldest firms, which mop up in this scoring category. To compete with them in overall scoring, smaller firms must pare down their costs. Since fuel, facilities, vehicle acquisition and leasing, insurance and maintenance costs are largely the same (although large and mega firms enjoy some economies of scale even in these areas), this dynamic means that, in order to compete, smaller companies must reduce the quantify and quality of their management, and reduce their drivers’ salaries and/or benefits. More than perhaps any other single factor in the entire public transportation field, the illusion of experience-of-the-firm is responsible for the consolidation of service into a handful of mega companies, and the economic struggle which the lion’s share of other players are forced to endure in order to compete with them. While cutthroats and bandits abound in the motorcoach industry, few of them respond to bids. They may present problems. But they do not present this problem.

Archetypes and Antidotes

Among the most reprehensible of offenders involved in public contracting is the State of California. Two years ago, the State literally tried to eliminate competitive contracting altogether in many sectors of public transportation (particularly in the schoolbus and transit sectors). The public relations spin justifying this travesty of incompetence in “Ahnold’s Firld” was that contracting would effectively “balance the State’s budget on the backs of the drivers.” The notion of requiring that RFPs contain provisions for minimum salaries or “living wages” either never dawned on these dim bulbs, or more likely, they pretended the notion did not exist and hoped on one would notice.

In my recent preparation of a request-for-proposals for a small state’s 120-vehicle, consolidated paratransit service, I not only established minimum drivers’ salaries (constrained by some practicalities), but shoehorned in all kinds of points for higher salaries, fringes and other mechanisms to increase the quality and stability of the work force. Similarly, I laced the RFP with other potential points that bidders could earn for enhancing both the quality and quantity of management. Further heightening the emphasis on these factors, I eliminated the ignominy experience-of-the-firm altogether, replacing it instead with experience-of-the-project team. As it turned out, the transit agency serving as the lead agency (I served as its proxy in designing the bid process, and negotiating the operating contracts) actually won four of the six service contracts – largely because it paid drivers the highest salaries and gave them the best benefits. Private companies might have won more territory if they had paid attention to the RFP. In fairness, though, they may have been conditioned to low-balling their bids by previous experiences.

Proactivisim and Priorities

When I last checked, I could not find any statutory or regulatory provisions, at any level of government, that forbid paying drivers a decent wage, particularly when public funds are involved. In contrast, the growing movement toward paying employees a “living wage” – introduced even in some California communities, like Santa Monica – represents a conscious departure from the exaggerated exploitation that has gutted the U.S. transportation landscape, and exposed it to the leviathan of liability and the juggernaut of law suits. But when such exceptions do not exist, contractors must take control where and where they can.

Before and during a bid process, potential bidders can do much to discourage their exploitation. Five suggestions provide illustrations of what can be done and what one can achieve:

  1. Join Hands. Like many other public transportation sectors, the motorcoach community’s worst enemy is its isolation. How can we expect transit agencies and school districts to recognize the characteristics of safe motorcoach service if we do not work along side them in the public transportation arena? How can we expect them to care about us when we often treat them as the enemy? The UMA and ABA have made commendable strides in their recent collaboration with these sectors. But the far- more-important grunt work must be done at the local level. We must let fellow members of the transportation community know we are available to help them in a broad range of areas apart from simply providing trips. And we must learn to explain the difference between transportation value and transportation bargains.
  2. Provide Help and Insight. Transit districts, in particular, include and seek all manner of participation from firms, agencies and individuals within and outside the transportation community. The avenues for such involvement include boards, committees, advisory groups and sponsorships. Membership on many of these groups is often open to those willing to simply contribute their time and share their insights. If we want these folks to hear our voice, we must express it as colleagues, friends and supporters – not as detractors, advocates and competitors.
  3. Emote at Pre-Bid Conferences. Because the minutes of most pre-bid conferences are a matter of public record, and, in fact, are often distributed on demand (and occasionally published), attendees can use them as opportunities to recommend specific caveats in the RFPs – caveats that penalize low-ballers and reward honest and competent professionals. Advocate for minimum drivers’ salaries. Argue for sufficient management levels. Lobby for high standards. Support requirements that optimize safety. Lead agencies will not stumble upon these notions in the dark. You must suggest and push for them. Because pre-bid conferences are public, lead agencies are loathe to ignore suggestions that might expose them to both liability and public criticism, as long as these suggestions do not unrealistically stretch their budgets. Where costs are an issue, you must help educate these agencies about the difference between cost and productivity.
  4. Balance the Safety-Liability Scales. While all lead agencies require insurance coverage, I have never seen one award points to a contractor for having the best lawyers or the lowest damage awards. At the insurance industry level, few care about your safety record if you or the carrier’s attorneys do a good job mopping up the mess. Just the opposite is true of lead agencies, since you will usually be required to indemnify them and hold them harmless: Not only might they even care about accident records, but they generally award points for management characteristics that lead to enhanced safety. To win bids, you must pour money into efforts that prevent accidents, not just spend lavishly on crusades to minimize the costs of their failures.
  5. Protect their Backs. Lead agencies may give lip service to safety and, as noted, may award points for system characteristics that enhance it. But they care far more deeply about liability. In designing the services you offer, lace your system with safety characteristics likely to minimize lawsuits, particularly in areas which might draw lead agencies into them. Most important among these are those areas where the lead agencies do not enjoy immunity, as they often do, in contrast, with regard to policy-making, system design, route configuration and stop selection – essentially “planning” functions. In response, fortify your management, maintenance, hiring, retention, training, monitoring, evaluation, supervision, enforcement and vehicle operation – essentially “operating functions” – with the utmost safety. Let your lead agency know you understand these realities, and that their engagement of your company will cover their buttocks.

Soup and Density

In the world of contracting, you want to be able to compete on the basis of quality. And you want to afford the staff to keep your passengers out of hospitals, your management out of depositions, your company out of lawsuits, your insurance carriers out of excuses (about why your premiums are still so high), and your attorneys out of work. Instead, you want to fatten the pockets of your shareholders, your management and your drivers.

As most seasoned transportation professionals know, two things that should always be thick are soup and service area density. The more hours you can deploy your coaches (consistent with safe and legal driver assignment), and the more passengers you can stuff into their seats, the more revenue you will earn. The more revenue you earn, the safer you can afford to operate. The safer you manage to operate, the more of this revenue you will keep, and the longer you will remain in business.

Productivity and safety are two sides of the same life raft. If you can thicken your density with contracted services, you stand a better chance of staying afloat. But to reel in the bids, you will need a good raft.

Publications: National Bus Trader.