Executive Summary: Government agencies, particularly at the county level, are facing increasing risks associated with subcontractor mismanagement in public service sectors such as school transportation. A lack of rigorous oversight and reliance on self-reporting by contractors has led to unchecked employment fraud, inflated billing, and threats to public safety. This report identifies systemic gaps, explores recent high-profile issues, and proposes strategic measures for risk mitigation.
1. Background and Context Subcontracting has become a standard practice in government service delivery to streamline operations and reduce internal labor demands. In school transportation, counties often contract third-party vendors for daily operations. However, when these contractors are trusted to manage employment verification, background checks, and billing without consistent audits, the system becomes vulnerable to abuse.
Employment fraud detection is critically important in government agencies, especially when subcontracting is involved. There are significant systemic gaps in oversight when contractor companies are tasked with managing their own employment verification and background checks. Government entities often rely solely on the contractor’s documentation without conducting a second layer of verification. This reliance may stem from trust, limited staff resources, and time constraints, but it opens the door to serious risks.
2. Key Issues Identified
- Lack of Employment Verification Oversight: Contractors often submit employee records to the agency without secondary verification by the County. This leads to scenarios where drivers or staff with incomplete or falsified credentials remain undetected.
- Understaffed Compliance Units: Many government agencies lack the manpower to review and audit every contractor employee or submitted document.
- Inflated Billing and Cost Abuse: While local cab services charge less than $300 per ride (under 10 miles, inclusive of gas and service), school transportation contractors often bill the county over $310 for the same ride—raising serious concerns of price inflation and taxpayer exploitation.
The problem is exacerbated when contractors are not frequently evaluated. They are expected to handle all compliance checks, yet some manipulate records or deliver falsified documentation that goes unchecked by the agency. This has become a particular concern in departments such as the Department of Transportation (DOT), where contractors responsible for school transportation services have recently received multi-million-dollar, 5-year contract extensions.
3. Real-World Example and Impact For example, local cab companies operate with limited daily earnings, typically making very low and under $300 per vehicle after deducting fuel and service costs, with no assurance of consistent payments or benefits. In contrast, County-approved contractor companies receive guaranteed payments—often billing over $310 for a single student ride in approximately 6 miles in radius. While this may appear routine, it becomes concerning when the contractor manages a fleet of 60+ vehicles, with billing practices that do not require specific vehicle-route traceability. These vehicles are included in monthly invoices, often without any formal record of which vehicle performed which trip. This opens the door to inflated billing—sometimes reaching over $180,000 per month—without a solid audit trail or standard operating procedures in place.
Each morning, routes are generated by the County’s transportation routing system and automatically sent to contractor companies. Drivers are positioned near vehicles, ready to follow these planned routes in a “park-and-ride” format. A single driver may complete several routes throughout the day, even switching vehicles if necessary. Yet the County’s invoicing system does not mandate matching individual drivers to specific vehicles or students. As a result, contractors may bill for all vehicle usage without any proof of how those vehicles were utilized or which routes they served, leaving room for manipulation and overbilling.
Concerns about the accuracy and integrity of contractor invoicing have been raised internally, but there is little evidence that the County has taken decisive steps to fully audit or revise its invoicing methodology. The absence of cross-verified logs between driver, vehicle, and student pickup/drop-off points has made the entire billing system vulnerable. Without a transparent invoicing framework or technology-backed tracking, the County continues to rely on contractor-submitted summaries—many of which lack the granularity needed for accountability.
Recent incidents, including allegations of child abuse and harassment during transit, have intensified public scrutiny. In response, school boards and County officials have begun reexamining inspection protocols and audit strategies. These developments highlight the critical need for reform, including thorough performance audits, enhanced route tracking systems, and clear driver-to-vehicle-to-student mapping. Strengthening oversight is now not only a matter of fiscal responsibility but a necessary step to safeguard student welfare and rebuild community trust.
4. Root Causes
- Excessive trust in contractor-submitted information
- Absence of recurring audits or performance evaluations
- Delayed responsiveness to public complaints
- Lack of real-time data analytics on transportation billing and performance
5. Recommendations
- Implement Bi-Annual Contractor Audits: Independent audits should be mandated every 6 months to verify employee credentials, compliance with safety regulations, and billing accuracy.
- Adopt Digital Tracking and Verification Systems: GPS tracking, ride logging, and biometric sign-ins can be leveraged to validate ride distance and personnel on duty.
- Create a Contractor Performance Dashboard: Counties should maintain a real-time dashboard accessible to both internal teams and oversight boards, listing contractor compliance status and red flags.
- Strengthen Contract Language: Include clauses requiring contractors to submit to surprise inspections and detailed reporting.
- Whistleblower Support and Public Reporting Channels: Empower families, school administrators, and drivers to report suspicious or fraudulent behavior anonymously.
6. Conclusion Contractor fraud in school transportation poses a dual threat: compromising student safety and misusing taxpayer funds. Without systemic reform, these issues will persist. It is imperative that counties enhance their oversight mechanisms, invest in compliance technologies, and hold contractors accountable through stringent performance evaluations.
