No public option for Mass. commuter rail

When the rail contract expires, it will go up for bid among private contractors; will not be commandeered by the MBTA

January 12, 2012

Massachusetts’s commuter rail will stay in private control when the current contract between the Massachusetts Bay Transportation Authority (MBTA or the T) and the contractor holder expires next year, according to the Boston Globe.

The MBTA declined the opportunity to directly manage the rail line when the Massachusetts Bay Commuter Rail Co. (MCBR)’s contract expires in June 2013. The MBTA has outsourced the contact to MBCR, a private company, since 2003, and MCBR, as well as other companies, will be able to bid for the contract next year.

Jonathan R. Davis, the T’s acting general manager, announced at the agency’s general meeting this week that the so-called “public option’’ –– the often-parlayed idea of the T taking direct control of the commuter rail ­­­­­–– is, in fact, no longer an option.

“In order to achieve our objectives of better service quality and cost efficiency, the preferred option is to continue to outsource both operations and maintenance of the commuter rail system,’’ Davis wrote in a memo to the Massachusetts Department of Transportation and MBTA board.

He wrote that he had asked for two reports on the pros and cons of an in-house commuter rail system: One from KPMG Corporate Finance, the MBTA’s financial adviser, and another from the MBTA’s internal legal counsel.

Both groups concluded that outsourcing is still the best option.

While representatives from both the MBTA and MBCR declined to comment to the Globe yesterday, Davis wrote in his memo that he believed the public option would ultimately cost taxpayers more than outsourcing.

There were other factors in keeping the contract privately owned. Davis pointed out that the time it would take to cobble together legislation to establish a public entity, as well as hire staff to manage the commuter rail system in-house, would all but require that the existing commuter rail contract be extended past its June 2013 expiration date.

And while consolidating the MBTA and the commuter rail might allow for lower administrative costs, non-managerial employees would likely request wages on par with their MBTA peers.

And one notable advantage of having private contractors is that financial penalties can be imposed. Translation: motivation to do a better job.

“One advantage of outsourcing is that the contract can establish significant penalties if the contractor does not achieve certain performance measures,’’ Davis wrote. “Admittedly, the current contract may not have gone far enough in this area, but it is something that can and would be fixed going forward.’’

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