ASBO MD DC Spring Conference May 2014

1. ASBO MD DC Spring ConferenceMay 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

2. Bus Service Contract Writing: Key Considerations • Or, Things to Consider and Address When Writing a School Bus Contract! • The Setting • 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??

3. Bus Service Contract Writing: Key Considerations The Foundation Issue Marginal Cost Concepts The Concept: • 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.

4. Bus Service Contract Writing: Key Considerations Financial Responsibility Marginal Cost Concepts The Concept: • AKA Insurance • MD Min 30 – 60 - 15 • 750 K 1985 • 1.62 M CPI • 3.18 M Medical CPI • 49 CFR 387.27 • School Bus General Exemption • 49 CFR 387.33 • 2.5 M 5.0 M Passenger Carrier • Sovereign Immunity & Social Responsibility • Impact on Contract Vendors: • $5M, $20 M, $100M • Redundancy????

5. Bus Service Contract Writing: Key Considerations Drug Testing Marginal Cost Concepts The Concept: • Specific Releases • Pool Co Mingle • Data Security • THC • An Employer Responsibility

6. Bus Service Contract Writing: Key Considerations Data Retention Policy Marginal Cost Concepts The Concept: • GPS Data • Video & Audio • Inspection Data • Pre and Post Trip • Fault Code • Others

7. Bus Service Contract Writing: Key Considerations Technology Considerations Marginal Cost Concepts The Concept: • GPS Data • Fuel Consumption • Real Time Notice • Fault Codes to Passengers • Medicaid • Student Management • Social & Taxpayer Responsibility

8. Bus Service Contract Writing: Key Considerations The Economics Marginal Cost Concepts The Concept: • Applies TO: • Price • Scale • Term Certainty • Eligibility • Insurance & Bonding • Demographics & Location • Contract Rotation • Labor Services • Equipment • Supervision (Contract Management)

9. Bus Service Contract Writing: Key Considerations Some Examples Marginal Cost Concepts The Concept: • Payment Reliability • Payment Timing • Term of Years • Financial Condition • Price Certainty • 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

10. Bus Service Contract Writing: Key Considerations The Decision Made, Now What Marginal Cost Concepts The Concept: • Labor Wage Protection • Equipment Minimum Standards Raised • General Liability Insurance • Inspection Expectation • Fines and Incentives • Vendor Responsibility • Driver In Service • Driver Credentials • Driver Observations • Driver Discipline • Pay and Pay Assessment • Reconciliation of Standard “Boilerplate” Language • AKA “Commodity Description” • Defaults and Remedies

11. Bus Service Contract Writing: Key Considerations Term and Pricing Models Marginal Cost Concepts Match the Contract to the Condition: • 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

12. Bus Service Contract Writing: Key Considerations Pricing Terms Marginal Cost Concepts The Science: • Define The T&M Commencement Point • Fixed Fee • Primary & Secondary • Capitalization, NO COLA Indexing • Hourly Fees • Primary, Secondary and Minimum Per Day Per Year • COLA Index Defined • Mileage Fees • Primary, Secondary and Minimum Per Day Per Year • COLA Index Defined • Fuel Fees • MD AAA Price Indexed • 12 Year Rotational Contract • 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

13. Bus Service Contract Writing: Key Considerations Creating & Maintaining Competition Marginal Cost Concepts The ART: • Sorry, There Must Be Losers • Scale • Impacts Pricing • Softens “Protection” Concern • Permits the Vendor to Take on SO MUCH MORE • Barriers to Entry • Examine & Eliminate Barriers to Entry • Develop Alternatives Methods to Address Initial Concerns • Examples • Residency • Location • Equipment Ownership • Corporations • Undoable Specifications • Borne and Bred • Cross District Operations • RFP Versus RFB • Revise, Revise, Revise

14. Bus Service Contract Writing: Key Considerations Additional Issues to Consider Marginal Cost Concepts The ART: • 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

15. Bus Service Contract Writing: Key Considerations Results Marginal Cost Concepts The Reality: • 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

16. ASBO MD DC Spring ConferenceMay 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