Company losing money from city maintenance contract looking to rework deal with city

A newly purchased city bus sits on display in Memorial Square in this file photo taken in January 2018. -- Peter Lozinski/Daily Herald

The City of Prince Albert may consider taking over maintenance of seven city buses because the company who won the service contract claims they are losing money following an unusually high number of breakdowns.

First Student Canada was awarded a tender to perform maintenance on all seven city buses purchased from Grand West in 2018. At the time, the company estimated it would cost roughly $2,000 per bus annually for repairs, a total that should have worked out to around $14,000 last year.

However, First Student area general manager Matt Wiebe said the actual cost has ballooned to more than $100,000 in the last year. Wiebe was at Monday’s executive committee meeting to update council on the situation, to ask them for some financial relief. If the city doesn’t come up with more money, Wiebe said they may have use the contract’s 12-month termination clause.

“All we’re looking for is a fair deal between First Student and the city,” Wiebe told reporters following his presentation. “I think we both have the best interests in mind, and that’s to provide safe and reliable and efficient transportation to the citizens of Prince Albert. That’s our ultimate goal. We’re just hoping that the city will work with us on that.”

Wiebe acknowledged that the First Student’s estimate of $2,000 per bus may have been on the low side. City councillors peppered him with questions about why they made such a low bid in the first place, but Wiebe couldn’t answer because he was not the First Student employee who drew up and approved the bid. Although Wiebe has been with the company for 10 years, he just started his current role in the last year, and had no input on First Student’s tender. The employee who made the bid has since left the company, and Wiebe said it had nothing to do with this contract.

Wiebe also acknowledged that going back to council and asking to renegotiate the contract was unusual, and not something they wanted to do, but added they had few options.

“It’s got to happen soon,” Wiebe said when asked about what kind of timetable First Student was working on. “I broke off union negotiations with my drivers because I can’t offer them any increase. We’re losing money right now.”

The seven buses purchased from Grand West have developed a number of problems over the past year. Items that have had to be replaced include tires, batteries, brakes and a few radiators.

The company thought most items that broke in the first two years would either be inexpensive, or covered by warranty. However, things haven’t turned out that way.

For example, in the last 12 months alone, mechanics have had to replace 36 tires on those seven buses. They’ve also replaced numerous batteries with backups from Grand West, which Wiebe says failed almost immediately. Once the company began buying batteries locally, the issue began to improve.

“The problems are somewhat subsiding, but it’s after substantial costs and time and struggle with Grand West,” Wiebe said.

Grand West did not make a presentation at Monday’s meeting, however Mayor Greg Dionne said the company had been invited to attend a future meeting and give their side of the story.

During Monday’s presentation, Wiebe said company mechanics had “come to the conclusion that these are just lemons.”

“We’re hoping that’s not the case, but we’re doing everything we can,” he told council.

Wiebe added that staffing wasn’t the problem. Company policy is to hire one mechanic for every 25 vehicles. Student First currently has three mechanics working in the area, even though they have less than 50 vehicles to maintain. The length of time for repairs depends entirely on whether the company needs to order parts.

“It’s not a manpower issue,” he said. “It’s just a rate of them breaking down at a rate that we’ve never seen.”

Wiebe said the company did not want to use the contract’s termination clause, although the possibility was being discussed.

Keri Sapsford, the transit manager for the City of Prince Albert, backed up those claims, although she also said First Student likely underestimated the cost of keeping the buses on the road.

“We realize we’ve got issues on both sides here,” she said during an interview on Tuesday. “First Student probably didn’t budget enough for maintenance. Grand West has provided us with a bus that’s not as great as we though it was going to be, and we’re working on both ends to kind of make sure that we have great service.”

Sapsford added that feedback from drivers and riders about the buses has been very positive. However, she said there’s no doubt the breakdowns are going to keep causing problems. So far, the breakdowns haven’t forced the city to cancel any routes, although it did mean they had to bring old shuttle buses back into service.

“It hasn’t really been affecting service,” she said. “It’s just been an ongoing headache on our end and on First Student’s end.”

Dionne says city may take maintenance into its own hands

The city’s elected officials didn’t pull punches during Monday’s question and answer session. Some, like Ward 5 Coun. Dennis Ogrodnick said it was First Student’s responsibility to do their homework before making a bid. Others, like Mayor Greg Dionne, suggested that talking about terminating the contract was just a “strategy.” He added that the city would “absolutely not” pay any additional costs.

“That’s just a strategy,” Dionne said when asked about First Student terminating the contract. “We might terminate the contract. He (Wiebe) has opened our eyes. Maybe it’s time that we now look at going to the federal government, getting some funding, building our own bus policy and taking them under (our wing) like other cities do.”

Dionne added that he thought Student First was “out to lunch” with their assessment that the buses were falling apart. Instead, he said First Student had stretched themselves too thin by bidding so low, and he wished the employee who made the original bid was around to answer questions.

“Who are we dealing with? A guy that’s been there 11 months, not the guy that we want to grill (and ask) ‘how did you bid that?’” Dionne said. “But think about it. They bid for maintenance of a bus $2,000 a year? God, I spend that on my truck.”

Wiebe strongly disagreed with the suggestion that this was just a ploy to get more money. He said he was frustrated with the suggestion, whether intentional or not, that the company made a low bid with an eye on coming back a year later and asking for more money.

“That’s not how we do business,” he said. “We’ve never done this. I look after Manitoba, Northwestern Ontario and Saskatchewan. I’ve been with First Student for 10 years. I’ve never gone to a city council and told them we need to relook at the financial arrangements of the contract. It’s never happened. It’s not something we do. I believe firmly that if we bid on something, (then) a contract is a contract and you move on. There is a termination clause in the contract and we have every right to exercise that, as does the city, but me coming here, the intention was to try to come to a resolution without having to do that.”

First Student provides municipal transit services for three cities in Ontario, although all are smaller than Prince Albert, which is their only municipal operation in Saskatchewan.

@kerr_jas • jason.kerr@paherald.sk.ca