ASBO MD DC Spring Conference
May 2014
Contract Writing:
Key Considerations for Development of a Document
Effectively Supporting the Student Safety, Educational
Service and Efficiency Components of the
Transportation Service Delivery Mission
Winship Wheatley
AACPS TD (Retired!!)
443.758.6034
winshipwheatley@msn.com
Bus Service Contract Writing:
Key Considerations
• Or, Things to Consider and Address When Writing a
School Bus Contract!
– The Setting
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Personal Experience
Absence of Comprehensive Document
Price, Service and Equipment Specification “Negotiation”
Labor and Vendor Management
Vendor Leverage and Influence
Lack of Pricing Efficacy (Dated Mechanism)
The Taxpayer and the Transportation CZAR
Legal, Risk and Financial Exposure
79 “Independent” Vendors
System Ownership??
Bus Service Contract Writing:
Key Considerations
The Foundation Issue
• Whether the Existing
Contract Addressed the
– Contingencies
– Responsibilities
• Of Both Parties to the
Contract
• AND, Equally Important,
• Who was the greatest
beneficiary of a fixed price
negotiated contract.
Marginal Cost Concepts
The Concept:
Bus Service Contract Writing:
Key Considerations
Financial Responsibility
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AKA Insurance
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49 CFR 387.27
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MD Min 30 – 60 - 15
750 K 1985
1.62 M CPI
3.18 M Medical CPI
School Bus General Exemption
49 CFR 387.33
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2.5 M 5.0 M Passenger Carrier
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Sovereign Immunity & Social
Responsibility
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Impact on Contract Vendors:
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$5M, $20 M, $100M
Redundancy????
Marginal Cost Concepts
The Concept:
Bus Service Contract Writing:
Key Considerations
Drug Testing
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Specific Releases
Pool Co Mingle
Data Security
THC
An Employer
Responsibility
Marginal Cost Concepts
The Concept:
Bus Service Contract Writing:
Key Considerations
Data Retention Policy
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GPS Data
Video & Audio
Inspection Data
Pre and Post Trip
Fault Code
Others
Marginal Cost Concepts
The Concept:
Bus Service Contract Writing:
Key Considerations
Technology Considerations
• GPS Data
• Fuel Consumption
• Real Time Notice
– Fault Codes to
Passengers
• Medicaid
• Student Management
• Social & Taxpayer
Responsibility
Marginal Cost Concepts
The Concept:
Bus Service Contract Writing:
Key Considerations
The Economics
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Price
Scale
Term Certainty
Eligibility
Insurance & Bonding
Demographics & Location
Contract Rotation
Labor Services
Equipment
Supervision (Contract
Management)
Marginal Cost Concepts
The Concept:
Bus Service Contract Writing:
Key Considerations
Some Examples
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Payment Reliability
Payment Timing
Term of Years
Financial Condition
Price Certainty
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Annual Days
Minimum Hours and Miles
Fuel Price Indexing
Dead Head Certainty
Equipment Specifications
Personnel Requirements
Insurance & Indemnification
Inspection Expectations
SCALE of OPERATION
Legal Responsibilities
Marginal Cost Concepts
The Concept:
Bus Service Contract Writing:
Key Considerations
The Decision Made, Now What
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Labor Wage Protection
Equipment Minimum Standards Raised
General Liability Insurance
Inspection Expectation
Fines and Incentives
Vendor Responsibility
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Driver In Service
Driver Credentials
Driver Observations
Driver Discipline
Pay and Pay Assessment
Reconciliation of Standard “Boilerplate”
Language
AKA “Commodity Description”
Defaults and Remedies
Marginal Cost Concepts
The Concept:
Bus Service Contract Writing:
Key Considerations
Term and Pricing Models
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Evergreen (Negotiated)
Three Year Term (That’s It)
Three Year Term w Extension
RFP Models
3-6-9-12 Transition
12 Year Transition
Equipment Ownership
Service Only
Others
Marginal Cost Concepts
Match the Contract to the
Condition:
Bus Service Contract Writing:
Key Considerations
Pricing Terms
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Define The T&M Commencement Point
Fixed Fee
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Hourly Fees
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MD AAA Price Indexed
12 Year Rotational Contract
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Primary, Secondary and Minimum Per Day Per Year
COLA Index Defined
Fuel Fees
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Primary, Secondary and Minimum Per Day Per Year
COLA Index Defined
Mileage Fees
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Primary & Secondary
Capitalization, NO COLA Indexing
Expiration a Certainty Absent Default
Minimum and Maximum Element Pricing
Award Assessment Defined with Certainty
Payment Frequency
Payment Assessment
The Dead versus Live Nuance
Nine Detailed Pages Needed to Describe
Benchmark: Positive
Marginal Cost Concepts
The Science:
Bus Service Contract Writing:
Key Considerations
Creating & Maintaining
Competition
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Sorry, There Must Be Losers
Scale
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Impacts Pricing
Softens “Protection” Concern
Permits the Vendor to Take on SO MUCH
MORE
Barriers to Entry
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Examine & Eliminate Barriers to Entry
Develop Alternatives Methods to Address
Initial Concerns
Examples
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Residency
Location
Equipment Ownership
Corporations
Undoable Specifications
Borne and Bred
Cross District Operations
RFP Versus RFB
Revise, Revise, Revise
Marginal Cost Concepts
The ART:
Bus Service Contract Writing:
Key Considerations
Additional Issues to Consider
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Cooperative Agreements
Add On Clauses
Equipment and Personnel Certification
Among LEAs
Class D or C (Avoid the Floor)
Attendants
Fuel: Taxes
INSURANCE: Auto, PIP, Limits, General,
Bonding)
Training Enhancements
Liquidated Damages and Incentives
Executory Contract Status (An Offer)
Reconcile Boilerplate
And Finally: Exculpatory Language
Marginal Cost Concepts
The ART:
Bus Service Contract Writing:
Key Considerations
Results
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Money?
Equipment Enhanced
Change in Customer Identification
79 to 15 Vendors
Vendor Scale
Vendor Quality & Accountability
Service Expectation
Vendor Based System Preserved
Model Document Available
Duty to the Taxpayer
Marginal Cost Concepts
The Reality:
ASBO MD DC Spring Conference
May 2014
Contract Writing:
Key Considerations for Development of a Document
Effectively Supporting the Student Safety, Educational
Service and Efficiency Components of the
Transportation Service Delivery Mission
Winship Wheatley
AACPS TD (Still Retired!!)
443.758.6034
winshipwheatley@msn.com