Court hearing into school bus service

The Supreme Court will hear initial exchanges tomorrow in a US-based organisation’s challenge to Bus Éireann’s exclusive right to run the €150 million-a-year school bus service.

Student Transport Scheme (STS) last year unsuccessfully argued in the High Court that the Department of Education should offer the school bus service out to tender in line with EU law. The High Court ruled that the arrangement was not a contract for the purposes of EU public procurement rules.

Key

One of the key elements in the ruling was the department’s contention that Bus Éireann does not make a profit from the service, and is paid on a cost-recovery basis.

STS is appealing the ruling and an initial hearing, dealing with security for costs and some other issues, is due to take place tomorrow.

A recent European court ruling in an Italian case suggests that an agreement does not have to be profitable for the parties involved to qualify as a public procurement contract.

State-owned Bus Éireann has provided the school bus service to the department under an agreement dating back to 1975. The company contracts out individual routes to private operators.

Last week, at the Committee of Public Accounts, Department of Transport secretary general Tom O’Mahony said he understood the department pays the company’s costs plus an administrative fee, which was capped at €16.7 million in 2011.

Profit

This led a number of committee members to suggest that in fact Bus Éireann is making a profit providing the service.

Both the company and the Department of Education have consistently said this is not the case. Lawyers for the department told the High Court last year that Bus Éireann does not make a profit on the service.