Credit: Adam E. Moreira

When It Comes To Privatization, The MBTA Spends Money To Save Money

October 19, 2016

Under the leadership of acting General Manager Brian Shortsleeve, the MBTA has been pinching every penny and aggressively seeking out ways to cut costs to keep the financially cursed agency from falling deeper into the red. Then, and only then, the thinking goes, can the T really go about the business of fixing and expanding the aging system.

Still, Shortsleeve and company managed to find nearly $1 million last month to hire a consultant to target areas of the T's operation that could be streamlined and outsourced, even if it means shedding some core transit service jobs currently on the public sector payroll.

The MBTA's Fiscal Management and Control Board, a panel charged with righting the T's operations and handpicked by Gov. Charlie Baker, is considering outsourcing everything from maintenance part warehousing operations to some bus drivers and core vehicle maintenance roles.

The MBTA's been pretty transparent about the contracts and vendors it's using to help turn the T's finances around, but not this time. The Boston Globe and Boston Herald reported Wednesday that the T quietly contracted with management strategy outfit McKinsey & Co. to the tune of $936,000 to find more areas to cut costs.

MBTA management says they don't have the level of experience in-house to determine the best ways to cut costs, so it needs to rely on outside consultants like McKinsey to perform an audit to identify jobs that could be done by cheaper outside companies. 

The MBTA faces a $100 million budget deficit this year. Savings from balancing the budget would feed a fund dedicated to the daunting $7 billion backlog of maintenance projects. 

A spokesman for the MBTA writes that "thanks in part to outside experts, the T has already closed last year’s operating deficit from $170 million to $82 million, with significant savings expected in this year’s budget."

MBTA officials say the T is using McKinsey's expertise to achieve three goals: to best take advantage of the three-year exemption from anti-privatization rules that Beacon Hill leaders granted the T (with the intention of pursuing just this kind of thing), take stock of the agency's internal productivity, and improve operational capabilities, all in the hopes of knocking down that bloated budget deficit.

"The MBTA has proven to lack internal expertise in some areas and has already seen improvements by engaging third party vendors for issues like critical security lapses in cash management, a sub-par warehouse operation, and outdated policies that resulted in thousands of dropped bus trips and millions of dollars in additional operating expenses," MBTA spokesman Joe Pesaturo told WGBH News.

The T's explanation will do little to comfort the coalition of labor unions and their Democratic allies gearing up to combat Baker's plans to privatize portions of the transit system. That point will be driven home Thursday when the T's biggest union, the Boston Carmen’s Union Local 589, rallies outside Baker's office window at the State House to urge Baker not to exercise the outsourcing authority Democrats in the Legislature signed off on last year.

In a statement Wednesday, Carmen's Union president James O'Brien accused Shortsleeve and Transportation Secretary Stephanie Pollack of funneling the proceeds from the recent 9.3 percent fare increase to the pockets of privatization consultants.

"The fact is that instead of investing fare and tax revenue on buses, trains, trolleys and tracks, Shortsleeve and Pollack are spending it on high-priced management consultants to help them outsource the T," O'Brien said.

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