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MBTA looks to alter rail pact

Could take over commuter trains; bonuses, decline in service cited

By Sean P. Murphy
Globe Staff / May 17, 2011

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State transportation officials said yesterday that they were scrutinizing possible changes to the MBTA’s contract with the company that runs the commuter rail system — or perhaps a takeover of the railroad’s operation — following revelations that the Massachusetts Bay Commuter Railroad was being paid bonuses for “on-time performance’’ even when service had sunk to an all-time low.

“I think we need to seriously consider bringing those operations in-house,’’ said Ferdinand Alvaro, an MBTA board member reappointed to the board by Governor Deval Patrick in 2009. “I’m pushing the T management, if it’s sensible and feasible.’’

State Transportation Secretary Jeffrey B. Mullan said the Massachusetts Bay Transportation Authority is trying to determine whether it would be prudent to take over the commuter rail service. But if the contract goes out to bid again, he added, there will be plenty of competition and it will result in a “tighter and better’’ contract.

“I think, like a lot of things, we can do better,’’ he said.

The Globe reported Sunday that, in a series of changes that were never discussed at MBTA board meetings, the T eliminated or altered penalty provisions that would have cost the commuter railroad an estimated $32.6 million for late trains and bad customer service from 2003 to the present.

In that period, the private company, founded by a former general manager of the T, presided over a significant decrease in the percentage of trains that arrived on-time, particularly in the harsh winter of 2010-11.

The five-member MBTA board cannot change the contract until 2013, but bidding for the new contract begins next year, and the commuter railroad has already said it would like to renew the contract that now pays it more than $250 million a year to manage the system.

In an interview, Mullan declined to comment on the Globe’s specific findings, but said he would have a conversation with MBTA General Manager Richard A. Davey “to ask some questions and then evaluate the answers’’ before making any decision on the next contract.

“We are considering the situation, and we are reviewing it while we set a new course for the next contract,’’ he said.

In 2002, the T contacted 16 companies around the world about operating the commuter rail service and received three bids, one of which was disqualified on technical grounds. The Massachusetts Bay Commuter Railroad was awarded a $1 billion contract, one of the largest in the T’s history.

The original contract, signed by the commuter railroad in 2003, called for the company to pay a $500 penalty for each train at least five minutes late and $2,000 for trains late 30 minutes or longer during peak hours, among other penalties. Those penalties were amended by the T’s general manager, Michael Mulhern, in 2004 and 2005, without board action, despite T rules requiring matters of $500,000 or more in value going to the board. Among the changes was reduction of the $500 penalties to $100 and the $2,000 penalties to $250.

When the contact was renewed for three more years in 2008, incentives were added for on-time performance, and incentives have far exceeded penalties since then, providing $5 million in extra payments to the commuter railroad while service has deteriorated.

Liz Levin, who was appointed to the board in 2009, said the current contract, subject to a complex set of penalty caps, allotments, and contingencies, should be made simple enough for everyone to understand it.

“The contract is quite complicated and hard to know how it works, unless you are a lawyer or a mathematician,’’ said Levin, appointed by Patrick in 2009. “I like contracts that are easy to understand and can be shared for everyone to understand.’’

Representative David Linsky, Democrat of Natick, said he was surprised to learn of amendments to the contract made with scant public input.

“The board represents taxpayers and riders,’’ he said. “The board needs to exercise its oversight role. Let’s take a look at it.’’

James O’Leary, the former T general manager who now heads the commuter railroad, wrote in a letter to the editor to the Globe yesterday that its contract “is considered one of the toughest in the passenger railroad industry.’’

He said “commuter rail service in Eastern Massachusetts stands among the most challenging transportation operations in the United States,’’ citing aging tracks and congested rail lines.

“We will continue to do everything possible to provide customers with safe, reliable, and cost-effective service,’’ he said.

When asked about the contract, Governor Deval Patrick said it “goes back before our time.’’

“We’ve made some changes in it,’’ he said. “We’ve imposed some fines. But I’m looking forward to the rebidding of the contract starting in January.’’

Later, Patrick’s office released a statement saying, “The governor fully expects an open and transparent bidding process when the contract is put out to bid in January and expects all options to be on the table to ensure that the contract is accountable and responsive to the needs of the customers.’’

Sean Murphy can be reached at smurphy@globe.com.