This report outlines the process and events related to the implementation of a new student bus transportation contract system for New York City schools and presents data on numbers of vehicles used, number of students transported, and costs. The revised system, which sought to attract new companies to the school bus transportation business, is briefly described. Events leading to implementation of the system, including labor problems that threatened to leave New York City school children without transportation, are reviewed. The number of vehicles awarded to Varsity (the contractor that formerly operated 65 percent of all buses) and other major contractors is compared for fiscal years 1979 and 1980. Also discussed in the report are the fiscal impact of and quality of service provided by the transportation system for handicapped and other students. A number of proposed cost control and service improvement measures are outlined. (GC)