Media statement
For immediate release
2 October 2009

Report into bus tender shows Ministry set out to favour big bus operators

Small bus operators across New Zealand now have proof that the Ministry of Education set out to disadvantage them, Don Richards of Waipawa Buses claimed today.

“The report by the Office of the Auditor-General, issued yesterday, makes it clear that the way the tender was constructed was deliberately designed to advantage the large bus operators who ended up with the bulk of the routes (para 36),” said Mr Richards.

“We entered this tender in good faith and the Ministry let us down. The report states the tender structure gave a ‘strong competitive advantage to larger bus operators over small bus operators.’

“The report goes on to say the Ministry should have explained the possible consequences of this to operators right from the start.

“We thought we had a reasonable chance of competing. Clearly, the Ministry had pre-determined the outcome and didn’t want small bus operators to get a fair look in regardless of their safety and quality ratings and their connection to the local communities that they had served so well for so long.

“We have no objection to a competitive tendering process – but when the tender is so slanted against the small operators that smacks of unfairness and an agenda. There never was a level playing field.

“If we had known this, many operators would have seen the writing on the wall and sold up to the big operators while they could have got a good price. That is not possible now and many operators are facing hardship having lost their runs and are still holding on to expensive assets they can no longer sell at a good price.

“Before this tender round the Ministry of Education was encouraging operators to invest in their fleet because they were seeking good operators with more modern buses. Many buses were bought on this advice and some were brand new buses that barely hit the road before the operator learnt they were not required. Clearly this investment would not have been made by so many if it was revealed that the Ministry had a bias towards larger operators.

“The report also makes it clear that the Ministry failed to communicate several significant changes to the tender process. The Auditor-General reviewed a sample of 10 tenders and found that had the expected process been followed, the outcome would have been different for two operators.

“That should have rung alarm bells about problems with the whole tender. The Auditor-General seems to think these are minor issues. However, we are talking about hard working operators and the livelihoods of their staff.

“The report trivialises the impact of the Ministry’s poor tender process on operators. It is disappointing and I urge the Minister of Education to take note of our concerns.”

ENDS

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