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Council asks why bus operation pact does not go out to bid

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City Council members raised questions Thursday about what some called the city’s "complex" and "convoluted" relationship with the nonprofit firm that has run TheBus for more than two decades — and why other such companies can’t competitively bid to manage the public bus system.

Those questions came after Councilwoman Ann Koba­ya­shi proposed recently that the city let other groups compete with Oahu Transit Services to run the bus fleet, which serves nearly 230,000 riders on Oahu each day.

The contract with OTS "has no end, no start — it goes on and on. … It was a strange contract to me," Koba­ya­shi said Thursday at a Council Transportation Committee meeting discussing her competitive-bid proposal, Bill 9.

"The whole point of this is to bring openness to city government," she said.

Kobayashi asked for an explanation of what benefit OTS provides if the city pays for its buses and drivers and handles bus route scheduling. The city anticipates spending nearly $232 million on bus and Handi-Van services in the 2014 fiscal year.

OTS manages those transportation services for the city with its 1,850 employees — most of whom are Teamsters, OTS President and General Manager Roger Morton said Thursday.

However, the contract calls for the city to pay OTS only $448,000, to cover the salaries of Morton and one other top OTS manager, Morton said. The relationship between the city and OTS confused several Council members. "It’s very difficult and convoluted. I acknowledge that," Morton said.

OTS serves as a necessary "buffer" between the city and the Teamsters, said Ed Hirata, an OTS board member who served as director for the state Department of Transportation and later for the city Department of Transportation Services.

Without OTS all of its Teamsters employees "would have to transfer to one of the 13 (state-recognized public employee) union contractors. That was the main purpose for the contract," Hirata said Thursday. Morton said that interpretation was based on state and federal laws.

The previous bus operator for the city, MTL Inc., was formed in 1970 to negotiate with the Teamsters, Department of Transportation Services Director Michael Formby said Thursday. OTS was launched in 1991 as a successor to MTL after MTL faced several high-profile corruption cases in the mid-1980s.

Morton and Formby stressed the benefits of keeping OTS as the bus contractor and warned of potential consequences of going with another entity.

Formby told Council members that selecting another firm might jeopardize more than $21 million in annual federal subsidies for Hono­lulu transportation, if federal officials found a new contractor did not meet federal requirements.

After the meeting, Formby said the city would lose Morton’s decades of local transportation experience and get relatively little savings in return if the city switched to another company.

Still, Kobayashi asked Formby to provide her with a follow-up letter outlining the benefits the city gets from contracting with OTS. The Transportation Committee did not vote on Bill 9, opting to wait for more information on potential labor and funding issues.

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