***MD Office of Legislative Audits Substantiates Parents' Coalition Allegation of Overpayment in Bus Camera Contract.***

October 2022:
School Bus Safety Cameras [Pages 26 - 30 of Report]

As allowed by State and County law, MCPS contracted for the use of school bus safety cameras to monitor drivers who illegally pass a stopped school bus. In May 2016, the Board approved a five-year contract (with five one-year renewal 

options) with a vendor to install and operate cameras that would be owned and maintained by the vendor on MCPS’ school buses. The contract also provided for cameras to monitor the conduct of drivers and students inside the bus along with global positioning units to track the buses. Prior to this contract, MCPS was 

purchasing buses with cameras inside the bus and global positioning units, which 

were replaced with the vendor’s equipment. In June 2016, MCPS entered into a 

memorandum of understanding (MOU) with Montgomery County since the 

Montgomery County Police Department (MCPD) was responsible for the 

issuance of citations processed by the camera system. 

The vendor is responsible for operating the system and processing citation 

payments. The vendor’s cameras take images of vehicles (including a specific 

image of the vehicle license plate) passing a bus that is operating its alternating 

flashing red lights. The registered owner(s) of the vehicles are identified by 

vendor employees using access provided to Maryland Motor Vehicle 

Administration (MVA) databases, through the MCPD MOU. After MCPD 

verifies the image of the event constitutes a violation, a vendor employee prints 

and mails the citation to the registered owner. 

Citations can be paid in-person at the Montgomery County Finance Office, online 

by credit card, electronically through the internet, by phone through an interactive 

voice response system, or by mailing a check. The County Finance Office 

processes citation payments paid in-person through the vendor’s system. The 

vendor’s system stores the images of each check payment, remittance stub, 

associated correspondence, envelope and certified mail receipt. All forms of 

citation payments are deposited into a County bank account and the County 

transfers all revenue to a MCPS bank account. MCPS is responsible for 

distributing revenue to the vendor. The vendor is also required to operate a 

customer service center with a toll-free number and respond to inquiries from the 

public. 

In July 2019, the Montgomery County Office of the Inspector General (OIG) 

issued a report regarding the County’s MOU with MCPS for the School Bus 

Safety Camera program. According to the report, the OIG initiated the review in 

August 2018 after the County was made aware of concerns regarding the vendor’s 

history of prior convictions involving fraud and bribery in another state where it 

operated a similar program. Although the report disclosed that employees of the 

County or MCPS did not violate a rule, law, or procedure, or had any 

inappropriate relationship with the vendor, the report identified the following two 

findings related to the County: 

1. The business case for this program was built around the desired use of a 

predetermined vendor rather than an objective analysis to design an 

effective and economical method to achieve an identified outcome. 

2. County officials relied, at least in part, on information provided by a 

criminal conspirator in vetting the vendor and they continued to rely on 

vendor supplied information when considering the future of the program.

 

Additionally, the report disclosed there was no revenue sharing agreement with 

the vendor and it was unclear as to when, or even if, the County would recover its 

investment in the program. Furthermore, the report disclosed the contract terms 

appeared to be ambiguously, and generously, tilted toward profitability for the 

vendor. Finally, as of the date of the OIG report, the County had paid more than 

$750,000 for administrative and personnel expenses related to this program and 

over $10 million in ticket revenue had been transferred to the vendor.

👉👉👉In addition to the concerns addressed by the aforementioned OIG report related to the County, we received an allegation on our fraud, waste, and abuse hotline that 

MCPS had entered into a contract to place monitoring cameras on school buses 

that diverts fines to a private entity when they should be paid to the County. 

Based on our review, we were able to substantiate the allegation as the contract 

provided that all funds were to go to the vendor until the vendor recovered its cost 

of investment. As noted below, as of August 31, 2019 MCPS had paid the vendor 

$20.9 million, which exceeded the vendor’s initial $19 million estimated cost of 

investment by $1.9 million. We also found certain deficiencies with the 

procurement of the agreement, its terms, and how it was monitored; although, we 

did not identify any issues that warranted a referral to the Office of the Attorney 

General – Criminal Division. 

Finding 10 

MCPS contracted with a vendor for a school bus camera system without a competitive procurement process or a fixed total cost to be paid. In addition, the contract lacked sufficient details to enable effective monitoring of the 

amounts invoiced and paid to the vendor. 

Analysis 

MCPS entered into a contract for the use of a vendor’s school bus camera system 

without a competitive process or a fixed total cost to be paid. In addition, the 

contract lacked sufficient details to enable effective monitoring of the amounts 

invoiced and paid to the vendor. 

Lack of a Competitive Procurement 

MCPS did not conduct a competitive procurement for the camera system contract. 

Rather, a vendor approached the County and MCPS to install and operate a school 

bus camera system, including interior cameras and global positioning units that 

MCPS was already purchasing for each bus. Although MCPS prepared a 

schedule comparing four companies based on various factors (such as number of 

interior cameras, but not including a financial or cost consideration), it did not 

have supporting documentation or an indication of how the information was 

obtained. MCPS management advised us that the contract with the vendor was 

awarded under an Intergovernmental Cooperative Purchasing Agreement (ICPA) 

from another state’s school system. However, our review of the ICPA noted the 

following conditions (several of which were previously noted in finding 1 in this 

audit report): 

•  Only a single bidder was evaluated by the other school system in awarding the ICPA.

• The ICPA awarded by the other school system was for a 30 bus fleet, while MCPS had a fleet of approximately 1,300 buses. 

• MCPS did not prepare a written assessment of the benefits for using the ICPA as required by State law and it did not research or compare other available ICPAs. 

• MCPS did not use any of the key terms and conditions of the existing ICPA. Instead, it negotiated its own terms and conditions with the contractor (see comments below). 

As a result, we concluded that with the exception of the general service provided, 

MCPA procured its own unique contract with the vendor without a competitive 

procurement process and assurance that it obtained the best value for the school 

bus cameras program. MCPS ultimately awarded the contract to the company 

that approached them after visiting another state using the vendor’s camera 

system and conducting a limited pilot program. A similar condition regarding 

documentation of best value when procuring contracts was noted in our preceding 

audit report. 

Lack of Sufficient Financial Terms 

The school bus camera contract did not specify the total amount to be paid to the 

vendor. The contract provided that the vendor would receive all funds collected 

from citations issued from the cameras (initially $125 per violation and 

subsequently increased to $250 per violation) until the vendor recovered its initial 

and on-going cost of investment which included the equipment, system 

installation and operational expenses. At the time of the contract, these costs 

were estimated by the vendor to be approximately $19 million. In addition, there 

was no provision for the independent verification of the vendor’s cost of 

investment. Further, the contract did not specify the payment terms once the 

vendor’s cost of investment was recovered. Instead, the parties agreed to 

negotiate, at a later date, a revenue sharing plan that would become effective upon 

the recovery of investment costs (see below). 

Monitoring of Vendor’s Recovery of Investment Costs 

Although MCPS was monitoring the amount of citation payments made to the 

vendor, MCPS was not monitoring the vendor’s investment costs. MCPS advised 

us that the vendor did not periodically report its total actual investment costs 

(including changes), and MCPS did not ask for documentation supporting the 

investment costs since the contract did not specifically require the vendor to 

provide this documentation. As a result, MCPS was unaware if the vendor had 

been fully reimbursed for its cost of investment. As of August 31, 2019 MCPS 

had paid the vendor $20.9 million, which exceeded the vendor’s initial $19 

million estimated cost of investment by $1.9 million. 

Due to the lack of specific financial terms and the lack of documentation for the 

vendor’s investment costs, in June 2019, Montgomery County engaged a 

consulting firm to conduct a financial compliance review of the bus camera 

vendor for transactions occurring from July 1, 2016 to August 31, 2019. The 

consultant was able to verify that citation revenue totaling $20.9 million was paid 

to the vendor, but it was unable to definitively determine the amount of the 

vendor’s investment. The consultant offered four options for determining the 

investment amount which ranged from $13 million to $20 million. In response to 

the consultant’s report, the vendor offered an alternative calculation that increased 

its investment cost from its initial estimate of $19 million to $26 million. 

Effective October 2019, MCPS executed a contract amendment to address the 

vendor’s compensation and resolve all disputes concerning the vendor’s cost of 

investment. The amendment acknowledged the vendor had recovered its cost of 

investment without specifying an amount, and stipulated that going forward the 

vendor would not be required to provide any records concerning the cost to 

install, operate, or maintain the bus camera system. The amendment also 

provided that the County would receive an invoice credit of $1.6 million for 

certain costs incurred for processing citations. 

Finally, the amendment established citation revenue sharing whereby the vendor 

would receive 60 percent of the citation revenue going forward for additional 

future vendor costs. The remaining 40 percent was to be received by the County 

for its citation processing costs. MCPS could not provide us with documentation 

to support how the revenue sharing percentage was determined or its justification. 

As of June 30, 2021, MCPS had paid the vendor citation revenue totaling $21.9 

million and the County had received $4.8 million since the inception of the 

contract. 

Recommendation 10 

We recommend that, in the future, MCPS 

a. adhere to statutory requirements for competitive bidding, where appropriate (repeat); 

b. ensure contracts include adequate and properly defined financial terms, such as total amounts to be paid, and how costs are to be independently verified; and 

c. document the basis and reasoning for revenue sharing percentages. 

 

 

2022 Maryland Financial Man... by Parents' Coalition of Montg...