Contract Surety

How to Contract Student Bus Services in New Jersey


Nearly every New Jersey school needs to provide some sort of transportation to get students to and from school. But what are the requirements of contracting student bus and transportation services in New Jersey? And how can you guarantee the performance of the services you’ve contracted?

New Jersey Bus Services Contracting Requirements

School boards of education have the option each year of annually bidding all student transportation contracts or simply awarding annual extensions of the previous year’s contract. However, no contract can be made where when the amount to be paid exceeds the state governor’s established bid threshold, unless the board has first publicly advertised for bids. For nonpublic, vocational, and special education school students, boards of education can make a determination regarding transportation by a Coordinated Transportation Services Agency.

The board is to designate an official to prepare specifications for each route or contract for which proposals are sought. The bidding itself is designed to be open and competitive while preventing fraud or favoritism in order to most fully safeguard the taxpayers. For example, bulk bidding is not allowed as it would not encourage free and competitive bidding.

Transportation specifications should include route descriptions, language reserving the right for the board to change the route, trip descriptions, language reserving the right for the board to change student activities related transportation contracts, statements pledging to comply with all applicable New Jersey state laws, needs for specialized equipment, provisions for emergency school closings, limits on insurance, and the term of the contract, among many other qualifications.

But how do you guarantee the integrity of the bid? And beyond that, how do you guarantee the performance of the winning bidder?

That’s where the bonding requirements come in!

A bid guarantee is required in the form of a bid bond, cashier’s check, or certified check for a minimum of 5% of the annual cost of the contract, not to exceed $50,000. That bond functions as a guarantee of the integrity and trustworthiness of the bid. If the bid fails, there is now an avenue for the board to recoup any damages resulting from that failure. Having defaulted previously on a bid bond can be used as a prior negative experience sufficient to disqualify a bidder.

But that’s not all that needs to be bonded. Even if the bid itself comes through on the contract, what if the winning bidder fails to perform their obligations under the contract? The performance bond guarantees that that obligation will be performed. The performance surety bond has to equal at least the amount of one year of the contract for transportation to and from school. For contracts with a term of longer than one year, the board shall determine such an amount larger than the proportionate annual amount. Contracts awarded on a per diem basis are bonded in the per annum amount based on the actual number of transportation days required, at the discretion of the board. Additionally, in order for a contract to be transferred, a performance bond is required for the assignment to be effective.

Renewal contracts have the same bidding requirements as original bid contracts while quoted contracts under the bid threshold may require performance bonds at the board’s discretion.

When an addendum is added to a contract increasing its cost, increased bonding will be required as well. However, additional bond coverage will not be required when the prorated cost of the original contract plus the additional addendum cost doesn’t exceed the amount of the original bond.

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