Rival to First Student exposes Seattle Schools’ fumbled bidding war

May 13, 2022, 10:52 AM | Updated: May 17, 2022, 7:37 am
People greet a school bus as it delivers meals to children and their families on May 6, 2020 in Seattle, Washington (Getty Images)
(Getty Images)

With Seattle Public Schools potentially days away from confirming First Student with a three-year contract as the district’s primary school bus provider, their competition has accused the district of “arbitrarily and improperly” awarding the contract to First Student.

First Student has serviced Seattle Public School’s bus routes for over 30 years. In October, the company eliminated 142 routes citing a “nationwide shortage of bus drivers.” In recent weeks, those cuts have prompted SPS to consider staggering its start times for the 2022-23 school year, moving to a three-bell schedule. First Student has also been penalized for safety violations: The transportation provider was recently slapped with $396,000 in penalties by the Washington State Utilities and Transportation Commission, settled for $196,000 in April.

The only other company vying for the contract, Zum Services — a California-based transportation startup worth $930 million — holds similar contracts in San Francisco and Oakland.

Kim Raney, Executive Director of Transportation and Logistics at Oakland Unified School District, described the services they provide as analogous to rideshares in that the company offers real-time status updates to passengers: “They’re basically the Uber of school buses,” Raney told MyNorthwest.

Raney decided to “take a chance” on Zum as the district’s primary transportation provider last year after the company had formerly provided car services to Oakland United for five years prior.

Zum won that bid against three other potential contractors, one of which was First Student.

Raney has experience with both companies and understands how they draft their proposals. They submit ambulatory rates associated with the cost of operating individual buses, which can differ considerably depending on vehicle type: buses that accommodate wheelchairs are more expensive to operate, for example.

Zum alleges, according to the company’s attorney Daniel Suvor, that Seattle Public Schools made a series of accounting mistakes as they evaluated proposals submitted by both First Student and Zum. Suvor offers the idea that the district “failed to differentiate between [types of buses] required for service of the contract, and were offered by both vendors at different prices.” That culminated in the district miscalculating Zum’s final offer bid price, according to Suvor.

The scoring metric that Seattle Public Schools used to evaluate the two companies lists five criteria: qualifications and experience, vendor approach, references, required staff, and willingness to accept terms and conditions. First Student ultimately edged out Zum by five points along that scale, according to the latest bid-score sheet, obtained by MyNorthwest.

That scoring represents the culmination of a series of bids dating back to Oct. 28 of 2021 when SPS released its initial request. Both companies submitted their best and final offers by February. The district awarded the contract to First Student, at which point Zum filed their first protest, alleging that the district simply did not factor in their final bid into their analysis, instead using a dated offer.

Days later, The Washington Transportation Commission released their finding that First Student violated a number of safety regulations, 634 in total. The UTC would later settle with First Student to the tune of $198,000.

“A significant portion [of the violations] were really related to random alcohol and controlled substance testing, not just conducting them but how the company was conducting them,” Emily Brown, with the Washington Utilities and Transportation Commission, told MyNorthwest.

Seattle Public Schools then withdrew their bid request, re-releasing a request for proposal in March after First Student had settled with the UTC. Zum contents that SPS did not provide a rationale for its decision to withdraw the request for proposal.

Zum now had less than six months to fulfill their contract were they nominated by SPS and approved by the board. Raney claims that a year is a standard, reasonable time for districts to offer a bid with the expectation that providers secure the infrastructure and buses to accommodate a district’s needs, although six months would still be manageable.

Zum then submitted a second proposal, but SPS nominated First Student on April 28. Subsequently, Zum filed a second bid protest with the allegation that the district did not consider differences among bus types, resulting in an inaccurate appraisal of their offer.

Zum contends that they provide cheaper wheelchair accessible buses than First Student, and had that been considered in their score with the district, they would rate higher in SPS’ evaluation as their proposal would factor out to approximately $7 million cheaper, according to a spokesperson with Zum.

Mary Ellen Russell, Chair of the City of Seattle School Traffic Safety Committee and former Seattle Schools PTA member, echoed that allegation in an interview with MyNorthwest, saying, “wheelchair buses were excluded in the bid, which Zum Services has much cheaper wheelchair buses than First Student. This made First Student appear to be the cheaper option during the bidding process.”

The use of a scoring matrix to evaluate a bid is standard procedure for a district with an open request for proposal. Raney elaborated on how Oakland United leverages the aggregation of scores to avoid biases in the selection process, particularly relevant when new bidders are pitted against a company with an established relationship with a district. In Oakland, those scores represent the input of a diverse panel of district authorities: operations personnel, transportation experts, attornies, et al.

Seattle Public School has declined to offer supplemental information on how the district arrived at the score that was, ultimately, pointed to as the rationale for its selection of First Student: “The selection was made through a competitive RFP process, which drew proposals from First Student and Zum Services,” Tim Robinson, spokesperson with Seattle Schools, wrote to MyNorthwest in late April.

“The proposals were evaluated and scored on multiple points by an interdepartmental SPS team including Operations, Transportation, and Finance. The scores were close and resulted with First Student receiving the highest score.”

MyNorthwest contacted the Office of Public Instruction and the Utilities and Transportation Commission to determine if and how the RFP process is overseen by a third party. Neither traditionally has a hand in this kind of process, according to spokespersons with both agencies. MyNorthwest was ultimately referred to the state auditor’s office, which declined to comment on whether an investigation into SPS is ongoing.

Raney notes that in Oakland, the RFP process is internal and districts throughout California have internal discretion in how they evaluate potential contractors.

According to the auditor’s office, there is the potential that SPS has declined to release further details of the bidding process to respect bidding law which helps to maintain the integrity of a competitive RFP.

Zum Services conducted its own analysis of the RFP. Their argument tracks SPS’ scores across the two bids: the original best and final offer submitted in February, and that scored in April.

According to the February proposal, Zum Services originally bested First Student across variables other than price: relevant experience, vendor’s approach, references, qualified personnel, and willingness to accept terms and conditions. As an aggregate, they scored 23 points higher than First Student, but their bid of $33.9 million was bested by First Student’s $30.2 million.

April’s proposal has Zum offering a more competitive $30.2 million against First Student’s $30.3 million. However, First Student had improved among the aforementioned non-financial variables over February.

At that point, the California transportation company contends that because the two companies’ aggregate scores are close, a cost analysis that reflects their cheaper wheelchair buses would adjust the matrix in Zum’s favor.

An attorney with the law firm which represents First Student, Davis Wright Tremaine, has called the accusation “entirely without merit,” citing “a misunderstanding of procurement guidelines and the discretion afforded SPS by the terms of the [request for qualifications],” correspondence with SPS’s chief financial officer notes.

Seattle Public Schools has signaled its interest in disclosing the details of how their rating of the two companies was determined “once the contract has been approved by the board,” Robinson wrote to MyNorthwest. Repeated requests for comment from SPS on Zum’s allegations of “arbitrarily and improperly” handling of the bidding process were declined.

Russell contends that the district has failed to adequately communicate with parents and students the viability of an alternative option to First Student, saying, “Many parents had issues with First Student but knew they were the only bus system in the region. This is the first time in years a new bus system is available.”

First Student has contracted with SPS for more than 30 years, and past renewals of their contract, as recently as 2017, have gone uncontested.

The SPS Board was previously scheduled to consider First Student’s nomination on May 4 but was delayed, and the agenda item has yet to be re-scheduled, according to Robinson.

Individual members of the SPS board declined to comment on the RFP process and whether they had concerns about how the district conducted its selection of First Student.

MyNorthwest reporter Frank Sumrall contributed to this report

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Rival to First Student exposes Seattle Schools’ fumbled bidding war