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Decision No. 12,685

Appeal of NATIONAL SCHOOL BUS SERVICE, INC. from action of the Board of Education of the Auburn Enlarged City School District, Hollis A. Palmer as Superintendent of Schools of said school district, and Birnie Bus Service, Inc., regarding the award of a contract.

Decision No. 12,685

(April 14, 1992)

Phillips, Lytle, Hitchcock, Blaine & Huber, attorneys for petitioner, Kenneth W. Gordon, Esq., of counsel

Cuddy, Durgala and Timian, attorneys for respondent Board of Education and Superintendent of Schools, Milan M. Durgala, Esq., of counsel

O'Shea, McDonald, Lascurettes and Stevens, attorney for respondent Birnie Bus Service, Inc., Timothy Brian O'Shea, Esq., of counsel

SOBOL, Commissioner.--Petitioner National School Bus Service, Inc. ("National") appeals from a determination of the Board of Education of the Auburn Enlarged City School District ("Auburn") to award a transportation contract to Birnie Bus Service, Inc. ("Birnie"). Petitioner requests that I set aside the contract award to Birnie and that I award the contract to National. Petitioner requested a stay of the contract award to Birnie and that request was denied on August 13, 1991. The appeal must now be dismissed.

During the 1990-91 school year, and for a number of prior years, National had provided all transportation services for students enrolled in the Auburn Enlarged City School District which were not otherwise provided by the district itself. In June 1991, after studying its transportation arrangements, respondent Auburn decided to bid all school transportation services, including those formerly provided by the district. In mid-June, respondent Auburn sent out specifications to the bidders. The specifications called for a bid on daily school transportation and related services and bids on alternate separate contracts, including a vehicle maintenance contract. Petitioner submitted a bid for $967,100 for the main contract work, as well as bids on the alternates. Respondent Birnie also submitted a bid on the main contract in the amount of $897,180.20. Birnie's bids were also lower than those submitted by National on the separate contract specifications for special education pupils and maintenance. After the bids were opened on July 10, 1991, petitioner submitted an offer to respondent Auburn on the main transportation contract in which it asserted that it would extend its existing contract and would include all transportation required under the bid specifications, including transportation previously provided by the district, at a total cost which was $3,680.20 less than the low bid submitted by respondent Birnie.

On July 22, 1991 respondent Auburn considered the bid submissions by the various parties, and also reviewed the later offer of petitioner allegedly to extend its existing contract. Respondent Auburn, together with the superintendent and board counsel, considered and reviewed all the bids. Respondent superintendent recommended that Auburn accept the low bid offer submitted by Birnie and explained his reasons for doing so. Briefly, the superintendent explained to the board that as low bidder, Birnie had a right to an award of the contract, and he questioned whether it was legally permissible for the board to consider the later offer submitted by petitioner since petitioner, in offering transportation services which were in addition to those provided under its existing contract, had effectively offered to amend the existing contract. The superintendent stated that in his estimation, the later offer by National was not the type of extension which the board could legally accept under the provisions of Education Law "305(14). The board consulted its counsel, and also listened to presentations made by a representative from petitioner and a representative from the driver's association who worked for petitioner. After discussion, respondent Auburn voted to award the primary bid for basic transportation, and the vehicle maintenance and special transportation contracts to respondent Birnie. This appeal followed.

Petitioner contends that respondent Auburn improperly premised its bid award to respondent Birnie upon impermissible factors. In particular, petitioner contends that respondent Auburn based its award to Birnie on its conclusion that the combination of the primary transportation contract and the maintenance contract constituted a savings to the district, and the possibility that respondent Birnie, if not awarded the contracts, would institute litigation against the district. Respondent Auburn argues that it awarded the contract to Birnie because it was the lowest responsible bidder, and because it believed that petitioner's attempt to offer an extension of its existing transportation contract was not legally acceptable since it contained a modification to the existing contract. Respondent Auburn contends that while it did consider the legal implications of its actions, it did not award any of the bids to respondent Birnie based upon the possibility that Birnie would institute litigation if the awards were not made. Respondent Birnie contends that its bid complied with the bid specifications, that it was the lowest responsible bidder, and therefore was entitled to the award of the contract. Respondent Birnie further contends that petitioner has failed to demonstrate that the board of education abused its discretion in awarding the contract to Birnie. Birnie lastly contends that petitioner's attempt to extend the existing contract was improper since the new contract offered was at variance from the existing contract, and therefore was not a contract extension as contemplated by Education Law "305(14).

In making its offer to extend its pre-existing contract, petitioner agreed to provide transportation services which it had not previously provided under its contract with respondent for the 1990-91 school year. To fulfill its obligations under the offer of an extension, petitioner would be transporting certain noontime kindergarten students which the school district itself had transported during the 1990-91 school year. Therefore, based upon the record before me, I do not find that it was unreasonable for respondent Auburn to conclude that the inclusion of this additional transportation rendered the so-called contract extension offer made by petitioner unacceptable under Education Law "305(14).

Furthermore, in Baumann & Sons Buses v. Board of Education, Northport-East Northport Union Free School District, 46 NY2d 1061, 416 NYS2d 788, the Court of Appeals held that a board of education had discretion to choose whether or not it would provide transportation services by extension of an existing contract or by awarding a contract following competitive bidding (Baumann, supra, at page 1063). In that case, which was similar in many respects to the present appeal, the Court decided that a board was not compelled to extend its existing contract for transportation with the contractor which had previously been providing transportation even when the contractor submitted an offer to extend its existing contract at a price lower than the lowest bid received in the bidding process. In a decision issued subsequent to the Court of Appeals decision, the Commissioner followed the rationale in Baumann, supra, stating:

A district may accept the low bid even though the previous contractor offers to renew the contract at a lower rate. To permit the previous contractor to assess its competitors' bids and then compel the renewal of the contract by submitting a lower price would destroy the competitive bidding process and would give existing contractors a virtual monopoly on future business. (Matter of Baumann & Sons Buses, Inc. v. Board of Ed., 46 NY2d 1061, 416 NYS2d 788 [1979]).

(Appeal of Camp Baumann Buses, Inc., 19 Ed Dept Rep 369).

Finally, I do not find, based upon the record before me, that respondent board based its bid award determination on any of the grounds which petitioner alleges to be impermissible.

Therefore, I find no basis to set aside respondent Auburn's award of the transportation contract to respondent Birnie.