A Battle on the Shuttle

According to onetime UT Shuttle bus driver and former Amalgamated Transit Union Local 1549 President Cordie Ray, the basis for the ongoing and fractious labor dispute between the shuttle drivers and Capital Metro subcontractor ATC/Vancom can be summed up in one short phrase: lowball bid. "It's a whole 'let them eat cake' thing," he said.

The UT Shuttle drivers' demands for fair wages and benefits have led to the current conflagration between the nearly 200-driver workforce and its employer, ATC/Vancom, which has been the transit authority's subcontractor for shuttle service since 1999. The UT Shuttle drivers have been working under an expired contract for more than two years (for a variety of reasons). During that time, union officials have brought two proposals to the table, but the union membership has rejected each of ATC/Vancom's five contract proposals, says ATC/Vancom General Manager Chadwick Reese. Union members say those offers have done nothing to improve drivers' substandard healthcare coverage or lack of other benefits – and they haven't included a large enough pay raise to make up the difference.

To Ray and others, the root cause of the seemingly intractable labor dispute is simple. Back in 1998, they allege, ATC/Vancom won the UT Shuttle contract by submitting an irresponsibly low bid to cost-conscious Capital Metro. As a result, the company has had to cut corners to keep the service running and to maintain a profit – primarily, say union leaders, by balancing its books on the backs of the drivers. "The relationship [between ATC and the drivers] could be okay," said 12-year veteran driver and former union president Glenn Gaven, "but ATC is trying to extract their underbid from the employees."

Reese admits that ATC/Vancom's 1998 bid was too low, but denies that the shuttle drivers are now paying the price. "That's not true," he said. "We underbid it, but we haven't tried to take it out on the employees."

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Cap Met Watches Its Wallet

In January 1999, the Cap Metro board approved a four-year contract (with a one-year extension option) worth more than $27 million with ATC/Vancom. The company beat out the only other qualified bidder, Laidlaw Transit Services Inc., which had been operating the UT Shuttle service off and on for years, initially under contracts directly with the university, then with the transit authority when it took over operating the shuttle in 1988.

Laidlaw saw it coming. On Jan. 19, six days before the Cap Metro board would seal the ATC/Vancom deal, Laidlaw's then manager Robert Mowat penned a memo to all employees, updating them on the bidding process. "This afternoon, the [Cap Metro] staff made its recommendation public at the [Cap Metro] board of directors' agenda review meeting. The staff's recommendation is obtain the services of ATC/Vancom," he wrote. "During the staff's presentation, it was made clear that the reason for such a determination was the overall proposed cost differential between ATC and Laidlaw. ATC's total cost averaged $1.2 million a year cheaper than Laidlaw's price," he continued. "During the presentation, staff was unable [to] clearly determine where ATC's costs savings would be generated." Still, he assured his employees, the "cost factor is important to know, because [Cap Metro's] staff recommendation was not an assault on you the employee or the high standards of quality you have achieved."

Actually, Laidlaw had during the 1990s racked up its own litany of complaints from both ATU Local 1549 and UT activists, and its losing the contract was seen at the time by both drivers and students as at least a minor victory – although nobody really knew what to expect on the labor-relations front from ATC/Vancom (a subsidiary of a British firm spun off from the UK's semiprivatized national railway). Cordie Ray says many of the drivers feared that their existing problems were destined to get worse. "Cap Metro [wants] to keep their costs down," he said, "and one way to do that is to use the low bid. The reason they're doing it is because it works for Cap Metro and there's no system in place to protest it."

At the time, Capital Metro was still fighting to rebuild public trust and political support after the Legislature in 1997 dramatically reorganized the "dysfunctional" transit authority. As part of its efforts, the Lege asked state Comptroller John Sharp's Texas Performance Review to do an audit of the agency, which proved unflattering. One of the TPR's demands was that Capital Metro seek a cheaper subcontractor for the UT Shuttle; at the time, the agency paid $6.3 million annually to Laidlaw, but received $4.3 million (in student fee revenues) from the university. The auditors – hinting at "irregularities in the bidding process" that produced the Laidlaw contract – recommended "that Capital Metro ensure that its next contract solicitation for these services ... selects the best vendor at the lowest cost possible." ATC/Vancom was happy to oblige.

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A Second-Class Shuttle?

Having the UT Shuttle system under its control is a boon for Capital Metro. It's the largest university transit system in the country; in a 1999 study done by the Texas Public Policy Foundation, the right-wing (and anti-transit) think tank ranked the UT Shuttle as No. 10 in the world in volume of riders per vehicle mile, outpacing New York City, let alone Capital Metro's citywide "fixed route" service. According to the transit authority's 2004 budget, the UT Shuttle System accounts for roughly 2.3 million passenger miles per year and carries about 8.1 million riders; the transit authority's fixed-route service accounts for just over 13.1 million passenger miles per year, carrying nearly 25.7 million riders.

Despite the implied premises of the TPR (and TPPF), the UT Shuttle still is far from a break-even proposition for Capital Metro, which budgets roughly $12 million per year to run the service – about $7 million from its own grant and general revenues (adding up to ATC/Vancom's $27 million four-year contract), plus $5 million from UT student fees. (The bulk of the transit authority's general revenues come from its one-cent sales tax, which UT students, of course, also pay along with their fees.) But adding the UT Shuttle numbers to its package not only increases Capital Metro's overall ridership, but increases its allotment of U.S. Department of Transportation grant money – nearly $10 million in fiscal 2004.

Considering the number of routes each system travels – fewer than 20 in the UT Shuttle System, compared to the 71 regular Cap Metro routes – it's easy to see that the shuttle drivers handle a comparable workload, but for less money (and fewer, and less attractive, benefits) than their peers working for StarTran, the quasi-independent company that officially employs Capital Metro drivers (see chart). It is a situation that Ray calls Capital Metro's "have your cake and eat it too" arrangement.

Under state law, public employees (except for police and firefighters covered by civil-service law) are typically not allowed to unionize and engage in collective bargaining, but Capital Metro, like other transit authorities, is required by federal law to allow its employees to organize as a condition of receiving federal funds. Hence StarTran, which employs the fixed-route drivers and bargains with Cap Metro, and thus satisfies the competing legal requirements. But when Cap Metro took over management of the UT Shuttle, it chose to subcontract the service and keep the system separate from the regular fixed-route operations and StarTran. "They don't give a damn about UT, [Cap Metro] just want[s] the numbers," said Ray. "Doing anything over and above [what they have to do to keep the UT service] is considered a waste of money. So they keep giving it to a private company. That keeps costs down and if there are any problems, they can say, 'Take it up with the subcontractor.'"

Capital Metro spokeswoman Libba Letton disagrees with that characterization. The decision to subcontract the shuttle, and specifically to subcontract to ATC/Vancom, was based on more than just the bottom line. "I do know that with that contract, as with most other things we do here, price is not the biggest factor," she said. "The thing to look at with a contract as big as the UT contract is certainly not all about the price." Other factors are as important, if not more, she said, like if a vendor has adequate facilities and equipment and can provide a consistent service. "All of those things are factors."

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The Feds Are Watching

Either way, shuttle drivers say, the only way that ATC/Vancom has made its low-bid contract work for the past four years is by taking its profit out of workers' pockets. Under the terms of their current labor contract, which expired in 2001, shuttle bus drivers are paid on a step scale starting at $9.45/hour and capping at $13/hour, compared to StarTran employees who currently start at $13/hour and cap at $18. Additionally, StarTran employees get paid sick leave and vacation (after one year of employment) and can participate in an employer-matching retirement fund – lucrative benefits not afforded to ATC/Vancom employees. Moreover, Ray alleges that ATC/Vancom has consistently shortchanged drivers on the few benefits provided in their contract. For example, he says, the contract allows drivers to earn paid personal days, but the company refuses to include the personal day when calculating subsequent personal-day eligibility.

In 2002, Ray filed a formal complaint with the U.S. Department of Labor, claiming ATC/Vancom had created downtime between driver shifts as a way to avoid paying a portion of drivers' hourly wage, in violation of the federal Fair Labor Standards Act. On April 23, 2002, Alex Salaiz, regional director of enforcement for the DOL's Wage and Hour Division, wrote letters to a number of affected employees. "A recent investigation of ATC/Vancom of Texas Ltd., under the [FLSA] indicates that you were not paid as required by that law," Salaiz wrote. "The firm was requested to pay the back wages but did not agree to do so."

Ray said ATU Local 1549 contacted labor lawyer Rick Levy (also counsel for the Texas AFL-CIO) to sue for the back wages, but in the end the union didn't have the money to pursue the case. But, Ray suggests, the documented infraction may provide the leverage shuttle drivers need to convince Capital Metro to yank ATC/Vancom's contract, by hitting the transit authority where it's bound to hurt: right in the federal piggy bank.

The contract Cap Metro has with ATC/Vancom requires the subcontractor to follow federal law: "[T]his contract is subject to a financial assistance contract between Capital Metro and the Federal Transit Administration of the United States Department of Transportation," reads the Cap Metro-ATC/Vancom contract. "The contract to be let, therefore, is subject to the terms of the contract between Capital Metro and the DOT." Thus, the contract explains, ATC/Vancom "is required to comply with the conditions required by applicable federal regulations," such as federal wage and hour requirements, which Ray alleges ATC/Vancom violated, in part by refusing to pay workers for the manufactured downtime. That violation, he suggests, means that Cap Metro is ultimately liable for the unpaid wages.

Ray said he sent the 2002 DOL letter to Capital Metro President and CEO Fred Gilliam and to Austin City Council Member Daryl Slusher, who has served on the Capital Metro board since 1997, but never got any response. "The real enemy is Metro," Ray says. "This is unseemly opportunism. Crime; stealing – which they've been able to do for so long that they haven't seen any [need] to change."

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Students Take a Stand

Of course, whether Capital Metro really would be liable for any ATC/Vancom labor-law infractions, and whether such infractions would violate the transit authority's agreement with DOT or the ATC/Vancom contract, are questions for the lawyers. At press time, Letton had not responded to inquiries about Cap Metro's potential fiduciary responsibility to the shuttle drivers, or the potential impact of the DOL's findings on the transit authority's relationship with the federal government.

But Reese says that ATC/Vancom officially disputed the DOL's findings and that the Feds exonerated the company. According to Reese, the FLSA's so-called "portal-to-portal" downtime compensation rule requires that an employee be paid only when that employee is under "direction" of the company during that downtime. And in the shuttle drivers' case, they were not under ATC/Vancom's control during any downtime, he said. "We disputed [the DOL findings] based on the same law, the FLSA, because [the employees] also have to be at the company's disposal" during downtime to qualify for compensation, Reese said. "We don't control that time and the employees are not at the company's direction. After we countered with our legal precedent," he continued, "the [DOL] said that it was an issue that needed to be addressed in contract negotiations."

The UT Shuttle drivers' quest for parity has gained steam since a new generation of UT students – whose activism has aimed to influence shuttle operations for decades – have joined the current fight, forming Students for a Safe and Fair Shuttle. "We're trying to appeal to what Cap Metro does as an organization," said SSFS's Frank Edwards. "They took on management of a service that has the highest ridership rate of any of their services. They get a whole lot of money because of that ridership, and they get better efficiency ratings because of that ridership. At the same time they're denying any responsibility for the problems, when they let the contract to the lowest bidder."

In short, Edwards says, it just isn't fair. SSFS intends to keep the pressure on Capital Metro, and is beginning to apply additional pressure on UT administrators. On May 7, Edwards and SSFS presented UT President Larry Faulkner with a 2,500-signature petition signed by students calling for equitable treatment of the shuttle drivers. In the end, many agree, the best outcome would be for Cap Metro to end its contractual relationship with ATC/Vancom, run the shuttle on its own, and shift the shuttle employees to StarTran – or, alternatively, to have UT go back to subcontracting the service on its own. UT and Capital Metro voted last month to extend their contract until 2005.

While Letton says that Capital Metro can't intervene in contract negotiations between ATC/Vancom and ATU Local 1549, Edwards says he believes putting pressure on the board is working – in part because Capital Metro is still responsible for the actions of its subcontractor and can end its relationship with little notice and without cause. As well, ATC/Vancom's own contract is about to expire, and Capital Metro is working on a request for proposals to run the UT Shuttle that is slated for release in June. Two shuttle drivers – Gaven and union VP James Frank – were accused of causing a "work stoppage" and fired from their jobs after attending an SSFS rally earlier this year, but got their jobs back last week, Edwards said, because of SSFS's organized efforts. "The lesson we've learned from that is that [Capital Metro] is susceptible to pressure," he said. "Pressure against Cap Metro is going to go a long way."