Competitive-Sourcing:

How Nevada's Biggest School District Can Save Millions in Transportation Costs

By Robert C. Tauber
  • Saturday, September 1, 2001

Executive summary

The Clark County School District should conduct a competitive sourcing comparison of current and alternative student bus transportation services. This most likely would reduce operational costs by at least 10 percent, or some $4 million a year, totaling at least $20 million over the subsequent five years.

The competition would compare services provided by the incumbent school district transportation department against those provided by commercial bidders. The district department would be permitted to re-engineer its business operations in any fashion desired in order to put forward its most effective and competitive bid. The district contract would then go to the competitor whose proposal offers the school district the best overall value.

The school district would begin the competition by requesting busing service proposals from both the commercial bidders and the transportation department. The district's requirements would be set forth in performance-based service contract (PBSC) terms. This methodology encourages service providers — whether school system or commercial — to find new ways to deliver higher quality services.

Commercial proposals would be evaluated by reference to a "best overall value" criterion — not a "lowest bidder" standard — to select a single contractor. The bid of that contractor would then be compared to that of the incumbent transportation department service.

Should the commercial bidder win the final competition, an incentive fee contract is recommended — not a fixed-price arrangement. Incentive fee contracts induce contractors to not only achieve performance goals, but also meet or even reduce budgeted costs.

Given today's escalating demands on limited school district finances, competitive sourcing initiatives provide a powerful tool for hard-pressed school district trustees.

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