This week's lesson in macroeconomics

...if there is a perception of no competition for something, the supplier will demand more money for it.

This brings us neatly to the single bid from Durham Bus Services for Worcester Public Schools transporation received Friday; Durham perceives that they have little to no competition for Worcester's contract, and so they bid a sizable increase.

If Worcester opted to hire Durham for all three years, it would be taking on a significant cost increase over what it currently pays the company, which is going into the final year of its five-year deal with the district. Next school year, for instance, the school department would be paying Durham $444 per big bus, according to the recently approved fiscal 2020 budget; the average over the following three years, based on the company’s bid, would be $525 per big bus – an 18 percent hike.
That increase would continue a trend of climbing transportation costs for the district, which has seen its five-year contracts with Durham go from $52.7 million in 2005 to $62 million in 2015.

In fact, if you run the numbers compared to the current contract (see page 218 of the FY20 budget)...

...the increase for FY21, when it would begin, is an eyepopping 16.5% over FY20. It is a $2M increase in a single year!

Recall, as well, that this the same transporation company has had issues all year long in Worcester, in what seems clear are management, not driver, issues. The lack of competition plus the lack of appropriate service has pushed the district further towards considering running its own bus service, a report which the School Committee voted to request, as well, in voting to approve the subcommittee report requesting a cost-benefit analysis.

It seems this will be before the Finance and Operations subcommittee on August 13. If you have opinions about service or cost, it would be well to let the committee know.