NJ Transit awards $81 million contract to bus company accused of fraud

By Larry Higgs | nj.com (TNS)

NJ Transit board members approved an $81 million contract with Academy bus to operate local bus service in Passaic county four years after after the bus company settled a fraud case with the state and agreed to pay a $20 million fine.

The offer from Academy Express LLC of Hoboken was the sole bid received by NJ Transit to operate local bus service in Passaic County, according to NJ Transit procurement records.

The board unanimously approved the five-year contract.

This contract comes with specific monitoring of Academy’s performance which were terms of a February 2022 settlement between the state Attorney General’s Office and the bus company.

This is the first NJ Transit commuter bus contract awarded to Academy since the 2022 settlement.

“The Attorney General’s Office has confirmed that Academy has thus far satisfied the payment terms of the settlement agreement,” said Jim Smith, an NJ Transit spokesperson. “NJ Transit has confirmed that Academy has thus far satisfied the compliance terms of the settlement agreement, including Academy’s retention of an Integrity Oversight Monitor.”

This is the first contract awarded to Academy since the 2022 settlement, said Kevin Corbett, NJ Transit CEO.

“Trust, but verify,” he said in response to a reporter’s question. “There is a very limited pool of private carriers left. It’s a tough market.”

Few private bus companies are operating that want to, or are equipped to, bid on commuter service, he said.

In November 2020, the state Attorney General filed a suit against Hoboken-based Academy, charging it with defrauding NJ Transit out of $15 million between April 2012 and December 2018 by underreporting the number of trips it missed and charging for others it never ran on the seven routes it was contracted to handle in Hudson County.

The suit charged the company kept two sets of books, one that recorded trips actually made and the other set altered to placate NJ Transit.

The suit accused the company of underreporting missed bus trips and by over-billing New Jersey Transit for hours and miles driven in what authorities described as an“extensive multi-year, multi-million-dollar fraud.”

Academy also billed NJ Transit for miles and hours driven for buses that had not actually run, often shifting drivers to its more profitable charter bus routes.

In February 2022, Academy and the state reached a settlement where it paid pay $20.5 million to settle a lawsuit and agreed to be overseen by an independent monitor, implement new policies and add more training for employees to ensure Academy accurately log trips it fails to complete.

Academy has made payments owed in February 2022, February 2023 and February 2024, said Michael Symons, an Attorney General’s Office spokesperson. The final $966,000 is due in or around February 2025, under the terms of the agreement, he said.

The settlement did not bar the company and NJ Transit from doing business, but set specific conditions and oversight.

In March 2022, NJ Transit’s board balked on awarding a $48 million contract with Academy for Hudson County bus service even though it had the lower bid because controls and oversight procedures required under the agreement with the state Attorney General’s Office were not in place

“The ink on that settlement is barely dry and it is barely 30 days old. There have to be controls in place,” said then Transportation Commissioner Diane Gutierrez-Scaccetti, who was also chairperson of NJ Transit’s board.

NJ Transit officials said that has changed, in addition to safeguards the agency has taken

“NJ Transit has implemented a robust technology driven process to ensure accurate accounting and auditing of missed trips,” Smith said.

Academy, similar to other contractors will be using NJ Transit buses, Corbett said and they will be equipped with the latest “Clever Devices” tracking equipment on buses, which allows identification of missed trips automatically.

The three-year-clock for a monitor to start overseeing bus company operations begins after Academy is awarded a contract with NJ Transit, according to the settlement.

That monitor will be in place for three years the ensure riders get the bus service that NJ Transit is paying for, under the settlement.

Required policies and procedures under the settlement include training Academy employees on “accurate reporting, records and database maintenance and document retention.”

Academy also has to develop written procedures for its road supervisors to “ensure conformity to contracted bus service rules and regulations.”

Academy also has to create “comprehensive written policies” to train bus drivers on the proper use of monitoring equipment NJ Transit provides, including use of “Clever Devices” tracking equipment on buses.

They include more frequent checks and new technology to identify missed trips automatically from the Clever Device system, officials said.

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Larry Higgs may be reached at [email protected]. Follow him on X @CommutingLarry

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