Manitoba Telephone System was awarded a $2,199,047 contract yesterday to install a two-way radio system in 520 city buses.

Three bids, ranging from $2,571,742 to $4,771,917, were submitted on the project.

International Aeradio Ltd. was the lowest bidder, but could not meet tender specifications and the transit system's functional requirements in several respects. The high bidder was Motorola Corp.

The MTS tender was $2,699,982, but the transit department deleted certain features to bring the cost down.

In addition to the contract, the city will assume $544,364 in costs on items such as engineering, in-house prepatory work on buses and interim financing.

Total cost of the project will be $2,743,411 — 6.2 per cent or $160,000 over budget.

The MTS schedule calls for supply, delivery, installation and testing of radios in 50 buses by next April, with completion of work by June, 1982.