Op Ed City Budget

End de Blasio’s giveaway to bus companies

May 09, 2017
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Read the original publication here.

Last month, the de Blasio administration extended a city program that has been eroding savings gained through a competitive-bidding process and undermining the integrity of the city’s contracting system. The program was bad policy from the outset, but it was intended to last only one year. It’s now been extended for a third year. The City Council should defund it in the upcoming budget negotiations.

The de Blasio team conceived of the School Bus Grant Program as a one-year workaround to overcome its objections to competitively bid contracts awarded to school-bus transportation companies by the Bloomberg administration. Mayor de Blasio criticized his predecessor for driving too hard a bargain on behalf of taxpayers and, rather than wait to negotiate a new set of contracts, he chose to give the companies grants to increase employee wages and benefits.

The Bloomberg folks started a process in 2012 to re-bid school-bus transportation contracts that were costing the city more than $1 billion annually. The contracts had historically included employee protections for seniority and pay, but a 2011 legal decision ruled those protections illegal. Re-bidding the contracts without those provisions injected new competition into the process and saved the city more than $400 million.

The new contracts were not without controversy. In 2013, school-bus drivers went on strike for more than a month.

In 2014, upon being sworn into office, de Blasio agreed to work on a new strategy to protect senior employees of those companies. The Department of Small Business Services was authorized to provide grants to the school-bus companies over and above the terms of their contracts.

The grants effectively invalidated a competitive-bidding process that awards contracts to the lowest responsible bidder. They also increased city costs without any additional benefit to taxpayers. In addition, the program set a troublesome precedent for other vendors that provide services to the city and might seek similar enhancements to their already agreed-upon contracts.

After a failed attempt to pass state legislation reinstating employee protections, the de Blasio regime has now extended the program for a third year at a projected cost of more than $30 million. This reinforces the status of this supplemental funding as a permanent entitlement, not a temporary bridge to new, more cost-effective, bus contracts.

The School Bus Grant Program is bad policy. The city should abide by contracts that it has fairly and competitively awarded.

If one administration does not like the contracts awarded by another, it should seek to renegotiate them at the appropriate time. It should not award grants to increase payments to for-profit companies that have already sought to provide a service for the previously specified amount.

The taxpayers are paying the bill. They should not be required to pay more than is necessary.

The City Council should now step in, on behalf of taxpayers, and step on the brakes to bring the School Bus Grant Program to a stop.