Editor’s note: This article is part of a series on Hawaii’s runaway school bus costs. Read other articles in the series.

Lack of competition among Hawaii school bus contractors had been put forward as a theory to explain runaway transportation costs.

But neither the Hawaii Department of Education nor the State Auditor’s Office had nailed that down, even though no regular school bus contract had received more than one bid for the past four years.

The problem has caught the attention of federal authorities, however. The FBI is looking into possible collusion in setting prices.

It took a Civil Beat investigation, published this week, to confim that the theory was correct. Civil Beat’s analysis of 11 years of bids revealed that competition among school bus companies dropped to zero suddenly in 2008, and that school bus contract prices have risen sharply since then, from $47 million per year to $72 million per year.

The lack of competition among Hawaii school bus contractors wouldn’t show up in annual audits of the Department of Education, state Auditor Marion Higa told Civil Beat.

Asked why the annual financial audits and numerous occasional audits performed on the department never brought the situation to light, Higa said it would have required a special audit to find the problem.

“I don’t think that would be something that would show up in the audits,” she said. “The things that you’re asking about would have to be part of a management and performance audit.”

The last time the education department underwent a comprehensive performance and management audit was 1973 — a fact that former Republican gubernatorial candidate James “Duke” Aiona said he wanted to change, but that then-candidate Neil Abercrombie criticized.

Abercrombie’s newly appointed Board of Education Chairman Don Horner picked up the audit tune when he took office in April, even creating an audit committee on the new appointed board. That committee, Horner told Civil Beat this week, is working with the department to find solutions to lower school bus costs.

The department knew it had a problem, but didn’t specify how serious it was.

“When we put the bids out, we typically only get one bid back and it’s usually from the company that held the contract before,” Randy Moore, assistant superintendent for facilities and support services, told Civil Beat recently.

While the task of auditing the entire department is daunting, Higa said the state auditor can do management audits of any of the offices or programs within the department without having to undertake them all at once.

“That might be something to think about,” she said, adding that her audit priorities are influenced by the Legislature.

“If it’s a legislative request that comes as part of a concurrent resolution or a proviso in the budget bill, those are requests that we must fill,” Higa said. “After that, if we have the time and staff to do it, we can initiate projects ourselves.”

For self-initiated projects, Higa said the audit office usually explores soft spots from previous audit work, or focuses on high-dollar areas that haven’t been examined in a long time.

“Sometimes flags can show up for several years in a program before we get around to it,” Higa said.

Lawmakers did include a mandate in the state budget bill this year requiring the Department of Education to provide its own detailed report on the school transportation program.

“If there is a need for a management audit,” House Speaker Calvin Say told Civil Beat, “it could be that the DOE could say yes or no that an audit is needed.” Other lawmakers did not return calls and emails asking whether they ever considered requesting a management and performance audit of school transportation.

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