Performance Surety Bonds for Contracted School Bus Transportation Services

In order to save money, many school districts and school boards across the United States have opted to contract out their student transportation services. The transportation services may be referred to as school bus transportation, transportation services, student transportation or school transportation services providers. The transporters must be available to cover school routes to and from school and may include services for extra-curricular activities such as team sports, band competitions, etc., must carry liability insurance, and have reliable buses and staff to cover the scope of work.

Obligee and Bond Conditions:

The Obligee is the entity (may be either a school district or school board) that may require either or both a bid bond and a performance bond or collateral. The bid process is a means to determine if the transportation provider has the financial capacity to operate the business, experience in the industry, and the staff and resources (owned or leased) to provide the services outlined in the scope of work. In addition to the scope of work, the transportation service provider must also meet all state and federal statutes and regulations, have specified equipment and level of maintenance, and drivers that meet health and driving standards.

When putting together a bid offer, the package will most likely include the bid prices and bid proposal certification. The bid offer is considered a certification of compliance as agreement of the bid specifications. The bid offer package may also have a requirement that includes a bid guarantee such as a bid bond, or a cashier’s or certified check in a specified amount or a percent and a letter of bondability obtained from a surety company.

Most of the school districts utilize an invitation to bid or request for proposal process, in which the transportation providers would submit a bid in a sealed envelope on a prescribed date mentioned in the invitation to bid. In most cases the bids will be unsealed and publicly opened and read in which one of the bidders will be awarded the contract. If the school district has determined there will be a performance bond requirement, the awarded bidder has a set amount of time to obtain the bond and submit it along with the executed contract. The bond amount is generally 100% of the contract price.

Surety Bond Requirements:

Transportation service providers should establish their company with a surety prior to submitting a bid. This includes completing an application, providing business financial statements, owner financial statements, owner resumes, lists of equipment, a business plan, etc.

• The underwriter will review the documents and may either request more information, decline to write the bond, or approve the bid bond. The surety may also provide a letter of bondability if it is required.
• If awarded the bid, the underwriter will need a copy of the contract and a copy of the bid spread to quote the premium. Depending on the length of the contract, any possible extensions to the contract, terms of the contract, and the information previously gathered, the underwriter will make a determination either to approve the bond or decline the bond. If the performance surety bond is approved, a premium amount will be quoted.

How Much Will This Bond Cost?

The premium that you pay for a School Bus Transportation Contract Performance Surety Bond is dependent on the amount of the contract, contract terms and conditions, financial capacity of the company, and other factors.

Did You Know?

You must provide the original surety bond to the obligee (often more than one original copy may be required).

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