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80-RE4
Top Member
USA
5700 Posts |
 Posted - 06/25/2007 : 12:42:14 PM
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Jun 25, 2007
Math lesson expensive for bus company
Clive McFarlane
cmcfarlane@telegram.com
Worcester, MA
I have heard of big-time athletes, feeling undervalued, opting out of their contract in order to make more money.
But I have never heard of a school-bus transportation company opting out of a contract because it feels it made a mistake by going too low on its bid.
That is apparently what First Student Inc., which provides special education services to the Worcester public schools, tried to do recently.
Two years into a five-year deal, the company notified school officials earlier this month that it would terminate the contract on June 30, because it was losing millions on the deal.
The company seemed to have had a change of mind since then, notifying Superintendent James A. Caradonio on Friday that it intended to provide services for special education students beginning July 2. The summer session for special education students begins on that date.
That is good news, since the Worcester public schools would have had to provide transportation for these students, whether or not First Student fulfilled its contractual obligation.
Each of the students has an individual education plan that calls for transportation to the student’s educational placement.
Given the sad shape of school finances this year, having to find that kind of dough could have led to people being pushed out of fourth-floor windows in their offices on Irving Street.
And, it is perhaps too early to say the system is out of the woods on this one.
Friday’s notification by First Student that bus service would continue was faxed to Mr. Caradonio and did not specify whether the company would continue to push for a renegotiation of the contract.
Efforts made to reach the company’s regional vice president, Jim Bastelli, and the company’s lawyer, Michael P. Angelini, were unsuccessful.
Worcester school officials would not comment on the issue, but public documents showed that First Student believes it was hoodwinked by the School Department in making a bid that, according to their lawyer, has resulted “in a $7,000,000 windfall to the city of Worcester at First Student’s expense.”
“First Student cannot continue to operate the contract in its current form,” Mr. Bastelli had written to school officials in March.
“The parties need to negotiate a rate increase or negotiate an early termination. Barring such negotiations, the alternative will be First Student’s unilateral termination of the contract at the end of June 2007.”
Among several allegations, Mr. Bastelli contended that the company was provided with “erroneous and misleading” information during the pre-bid period.
It appears, however, that the major issue of contention is First Student’s underestimation of the number of hours drivers and monitors would take to complete bus routes, when it agreed to a contract that would net the company about $18 million over five years.
The school system, according to the company’s lawyer, should have seen the mistake and righted it, instead of profiting from it.
In a letter to city officials, Mr. Angelini said First Student’s bid in major areas of the contract was some 30 percent lower than Laidlaw and AA Transportation Co., the other two bidders for the contract.
“Where one party to a contract knew or should have known that the other party entered into that contract based on a mistaken belief of fact, the contract is voidable based on that mistake,” Mr. Angelini wrote.
But the only thing “self-evident” in this case, according to Assistant City Solicitor John F. O’Day, is the company’s “after-the-fact rationalizations” to raise the cost of their service.
Moreover, Mr. O’Day said, the company’s threat to terminate the contract “less than one month before summer school transportation services are to begin for special education students, some of whom are wheelchair-bound and among the most fragile of our students … is an unfair and deceptive practice.”
I am not sure whether the company has given up on getting more money out of this contract, but it seems to me that a better move on its part would be to check on the credentials of the person doing its math.
http://www.telegram.com/article/20070625/COLUMN44/706250593/1008/NEWS02 |
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Bluebird62
Top Member
USA
530 Posts |
Posted - 06/25/2007 : 12:50:36 PM
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| First Student did the same thing in Pleasant Valley, IA so Durham is taking over that contract. I thought a contract was a legal agreement and never realized that they could be broken that easily. |
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JK
Top Member
USA
7307 Posts |
Posted - 06/25/2007 : 1:15:29 PM
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I would think that most contracts have a clause that establishes limits. Without that clause unscrupulous district officials could escalate contractor costs without restraint.
Some time ago in our region a Laidlaw contractor offered their services according to the bid involvement agreed to by both parties. A request outside the limits of the contract included a huge increase in cost. And there was always something that was requested outside the contract on an ongoing basis.
Laidlaw made out well under that contract. (jk)
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80-RE4
Top Member
USA
5700 Posts |
Posted - 06/25/2007 : 9:23:13 PM
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For some reason, I speculate that First Student knew exactly what they were doing to obtain this contract, now they are feeling the heat and are regretting it. First- This branch is the only First Student in the immediate area that pays its drivers a starting rate of $20.00/hr, offers full health insurance, full dental insurance and has to supply monitors for every bus. It is a unionized branch, represented by the same union that used to represent Laidlaw. It's also the same union that represents Durham (they cover the regular ed routes).
I know quite a few people who work at that yard, so hopefully for their sake, they aren't toyed around by FS. Had it not been a unionized branch, I think they'd be all set. Each driver would be making 10.00 dollars an hour with no benefits to make up for the costs. |
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MA - Math lesson expensive for bus company
