A new vendor Wednesday began handling all police-initiated vehicle tows on Oahu, and today marks the first rush-hour period in which illegally parked cars will be hauled away under the new contract.

All Island Automotive Towing took over duties for all police-ordered accident, parking violation, stolen-vehicle and other tows under an arrangement that city officials say features the use of GPS tracking devices in all tow trucks.

The devices will enhance the system’s efficiency, reduce response times for removing traffic hazards and create electronic records to minimize billing disputes, city officials say.

The city’s previous contract with Leeward Auto Wreckers represented the first time the city used a single vendor to oversee tows for the entire island. But that initial arrangement was fraught with problems, including customer overcharges and disputes over the accuracy of handwritten invoices.

Those problems contributed to the city’s decision last year to solicit bids for a new, substantially revised agreement. All Island beat out four other bidders to win the contract, which took effect Wednesday.

Under the new deal, basic tow charges to motorists will be slightly higher, with All Island charging a hook-up rate of $65 and a per mile rate of $7.50. Both rates are the maximum allowed under state law.

Under the old contract, Leeward Auto agreed to charge a hookup fee of $60 and a per-mile rate of $7 — reduced amounts that helped in winning the contract award.

But during the initial weeks of that agreement, Leeward Auto charged customers the higher $65 and $7.50 rates — something the city didn’t realize until the Honolulu Star-Advertiser raised questions about the overcharging.

The city eventually ordered the company to issue refunds for the overcharging and stepped up monitoring of the contract. The city said it will closely monitor the new agreement.

All Island will use about 16 subcontractors to help cover the police-initiated tows, transporting the vehicles to the nearest of six storage lots, according to Randy Leong, deputy director of the city’s Department of Customer Services.

With the use of a GPS system, which will enable a dispatcher to tell immediately which truck is closest to the tow job, response times will be reduced. Also, with six storage lots around the island, the customer won’t have too far to go to pick up a car, Leong said.

In addition, the electronic record will provide data that can help resolve billing disputes that may arise, he added. "This particular use of technology will allow verification" of the miles reported by the tow-truck driver, Leong said.

The city used to divide Oahu into zones and awarded exclusive towing contracts for each one. Because the city dealt with multiple vendors, it had a difficult time maintaining consistent levels of customer service, leading to many consumer complaints.

When the city switched to the single-vendor system in November 2012, however, some of the unsuccessful bidders for that contract questioned the $60,000 monthly premium the city charged Leeward Auto, which also agreed to set a cap of $165 for all tow charges excluding storage.

The premium, they said, was too high — something Leeward and the city eventually acknowledged.

"The last go-around, there was a good plan in place, but there never was good implementation," said Paul Perry, owner of All Island Automotive.

Under the new three-year agreement, All Island will pay the city $10,000 monthly. After the initial three years, the company has two options to extend the contract for 12 months each.

The company has agreed to set a towing-charge cap of $210, excluding storage fees, and a storage-fee cap of $435.

While the city won’t collect as much revenue as it did under the old agreement, the aim was to create a system that was more customer friendly with better response times, city officials said.

Perry said the new system should succeed on those counts. "It kind of balances out, giving a little better service to the public," he said.

The four unsuccessful bidders for the new contract were Leeward Auto, Stone­ridge Recoveries, Kuni’s Automotive and Tropical Towing, according to the city.