In a last ditch effort to save their livelihoods, South Australia’s school bus operators will picket state Parliament on Friday
By David Goeldner | July 19, 2011
At least another three school bus operators lost their contracts late last week as the latest batch of South Australia’s Department of Education and Children’s Services (DECS) ‘request for proposals’ results are released over coming days.
A pattern of ‘weeding out’ small operators from the state’s privately contracted school bus system through the much criticised ‘Request For Proposal’ (RFP) process now appears clear, prompting the Bus and Coach Association of South Australia (BCASA) to take protest action by picketing state Parliament this Friday.
BCASA Executive Director Sonia St Alban says the association’s members voted unanimously late last week to hold a protest rally at Parliament House this Friday.
“Our members have asked us to hold a rally to draw attention to the smaller operator that seems to be overlooked in school bus contracts,” St Alban says.
“The reason we are holding it this Friday is it’s the last day of school holidays and the intention is not to inconvenience parents by not having school services available.”
St Alban says there is no intention to disrupt the travelling public and that the rally will be held with a police permit.
“We need to make sure we get attention drawn to our issues,” she says.
St Alban says the Rann Government has overlooked smaller local operators.
“All we want is to be given a fair go in relation to school buses and also to tour and charter operators – they feel pretty isolated in this whole process as well,” she says.
St Alban says contact had been made with ‘various political entities’ in South Australia who have pledged support for the rally.
The protest rally will take place between 12pm and 2pm this Friday, July 22.
Leading up to the rally, buses will travel around the streets of Adelaide with billboards.
“What better way to have billboards than the buses, and we will have signs attached to draw attention to our issues,” St Alban says.
The BCASA and its members aim to draw attention to a tendering process administered by DECS which appears to be biased against smaller incumbent operators.
“We want to draw attention to the process and hope that DECS will look at a more open approach and give concessions to local operators that have been providing services for many years,” St Alban says.
“We always knew there would be winners and losers out of this process, but as long as it’s fair we don’t really have an issue.”
But St Alban’s view is that there have been too many losers in the smaller-sized school bus service category.
“At the moment there are so many losers and few winners and we want to try and balance that and make sure the small local operators also have a fair go at these contracts,” she says.
DECS DEFENDS DECISIONS
DECS Procurement and Contracting Assistant Director John Scalzi rejected BCASA’s suggestion that the process is unfair, defending the decisions which will likely see several operators leave the industry.
Scalzi is also aware of this Friday’s protest, saying he can’t understand why BCASA and school bus operators have taken this action.
“I don’t understand the basis for this rally,” he says.
“We’ve provided every assurance that the process is fair and reasonable to everyone and we have taken the added step of engaging a probity adviser to make sure that all the processes that have been approved are followed.”
Scalzi says DECS is ‘very comfortable’ with the process and the decisions that are being made.
“It’s an open and fair process, and in a competitive environment you are always going to have winners and losers – that’s competition,” he says.
“There are some who have lost their runs and they are not very happy about it, and are making a lot of noise, but there’s not very much we can do about that.”
Scalzi doesn’t know how many operators have lost contracts.
“Some operators have put in for multiple runs and whilst they may have missed out on some runs, they might have RFPs for others that they may potentially win.”
He says smaller operators could win runs in other areas in the near future.
Scalzi explains there was a two stage procurement process whereby last October expressions of interest on 280 privately operated school runs were called on the open market.
The expressions of interest closed in December and anyone who expressed interest in the runs received a Request for Proposal which enabled operators to put in a formal offer.
Those that put in the expressions of interest were given first priority for the second part of the process – the RFP.
Each operator who received an RFP is given four weeks to respond and then the evaluation process starts.
For the next two years there will be approximately 20 RFPs issued each month until all contracts are renewed.
The RFPs for February and March and have been evaluated and completed and some existing operators won their runs back and other haven’t.
“To allow this procurement process to go through we extended existing contracts until the end of the year for those that have expired or about to expire,” Scalzi says.
So far, 55 of 60 routes have been awarded contracts. DECS couldn’t establish an outcome for five routes, so they will be re-advertised in July.
Scalzi says 50 percent of the routes went back to the incumbents, and the other 50 percent went to existing DECS operators.
A big winner from the from the first ‘round’ was Australian Transit Enterprises, technically an incumbent operator with one pre-existing DECS contract, but increasing its runs to 20 through the RFP process.
Warrnambool Buslines had also tendered in the first round, but were not an incumbent operator, and didn’t win any of the available contracts.
But Scalzi says this didn’t preclude Warrnambool from placing a bid or being considered.
“Anyone in the market could receive RFPs providing they put in an expression of interest,” he says.
It also means that operators, such as Warrnambool, still have a chance of winning contracts in subsequent rounds.
According to Scalzi, not being an incumbent operator is not a barrier to winning a contract – it just happens that the incumbents won in the first round.
REALISTIC BENCHMARKING
The contentious element of the DECS process is the ranking of offers attached to each requested run based on the notion of ‘value for money’, which Scalzi says does not necessarily mean the cheapest bid.
The bids are assessed against DECS-prescribed operating costs benchmarks.
“The benchmarking is realistic and perhaps a little bit generous,” Scalzi says.
“We’ve indentified and tailored costs to every run.”
Scalzi says if an incumbent wants to put in a higher cost when they know they are competing with someone else, then that’s up to them.
“We can’t advise people what costs they should put in, they have to work that out themselves.”
However, Scalzi says cost benchmarking isn’t the only deciding factor.
“There are two components in awarding contracts, there’s a qualitative and a cost component, and together the two match up as ‘value for money’,” he says.
“The ‘qualitative’ component is the ability to delivery the services.”
Scalzi believes local operators have an edge because they know the schools, and are expected to approach the schools for references to furnish to DECS as part of the RFP qualitative assessment.
And after the decision is made it remains final.
“There’s no appeal process, and I don’t understand how there can be,” says Scalzi.
The process looks to be a long drawn out affair, running well into 2012 before all contracts are determined.
There will be about 20 offers a month made over the next two years, depending on the expiry dates of existing contracts.
St Alban says operators who had won contracts in the early stages of the RFP process were ‘lying low’.
“The people who have taken contracts are lying low because they know they have taken them from an incumbent operator.”
Scalzi says DECS had spent a great deal of time and resources to ensure that the process is fair.
“In any competitive environment you will get this sort of situation, and when you have contractors who have had bus runs for many years we understand the emotions that are associated with that,” he says.
“But there’s not much we can do about it and we’ve got to maintain that fairness to everyone.”
About 20 more RFPs are expected to be issued to bidders at the end of July.
DECS’ MESSAGE TO OPERATORS
Earlier this week, DECS issued a statement about the steps taken to inform the BCASA and incumbent school bus operators about the tender process:
“To date contracts have been awarded for 55 routes across the State. 50 per cent of contracts have been awarded to incumbent operators and the other 50 per cent have been awarded to other existing DECS bus contractors. This means that no contracts have been awarded to any company other than existing DECS bus contractors.
“The procurement process is open and fair, with existing operators receiving recognition for prior service at numerous levels. The decision to award contracts is based on qualitative and value-for-money factors.
“The winning contractors are required to provide new or near new buses that have seatbelts, air-conditioning, emission controls and other safety features. As part of the procurement process operators were asked how they would be supporting local businesses – for example employing local drivers, engaging local service providers and purchasing local consumables.
“The Department of Education and Children’s Services has taken numerous steps to ensure bus operators have been well informed about the bus procurement process.
The department has engaged the Bus and Coach Association (BCA) over many years through formal and informal communication, newsletters and attending and presenting at BCA conferences.
“As early as 1999, the BCA and current operators have been aware that at the expiration of the current 10 year contracts public tenders would be called to establish new contracts.
“Newsletters have been issued to incumbent operators to keep them informed of the process to establish new contracts and to provide opportunities to ask questions at any time.
“Industry briefings were conducted in six regional areas in September and October last year to provide details of the procurement process and questions and answers were posted on the TendersSA website and mailed to all contractors.
“The department will continue to work with the Bus and Coach Association.”