MBTA cutting millions in costs
SHNS
From unused cellphones to marked-up screwdrivers and bank accounts deemed extraneous, the MBTA is in the midst of an aggressive effort to shear costs that offer no benefits as it seeks to shore up its bottom line.
About 580 active wireless devices the MBTA paid for laid completely unused before the T disconnected or suspended most of those accounts, authority officials said on Monday.
"They could have been thrown in a drawer. People come; people go. And a lot of them are old. They could have been sitting there a long time," MBTA Chief Procurement Officer Gerard Polcari told the News Service. "We don't know. That's the problem."
Tightening up its cell phone plans is one facet of an MBTA effort to reduce and better align the $261 million spent annually contracting out for materials and services.
Those expenditures represent a little over 10 percent of the MBTA's budget, which is hampered by a deficit of about $110 million this year - with state budget dollars filling the gap.
"Let's not pay for phones, if we're not using them," said MBTA Acting General Manager Brian Shortsleeve, who is also the T's chief administrator.
T officials have adjusted how they handle some goods and services, highlighting the changes and expected savings for the News Service on Monday. The agency plans a wholesale shift in purchasing this fall.
Shortsleeve said a review turned up 72 different bank accounts used by the MBTA and spread through a "wide range of often small, local" banks.
"I can't speak to why that was done but we've never been in the blame game around here. We're moving the organization forward," Shortsleeve said of the array of bank accounts. As a quasi-independent government agency, the T manages its own money, Shortsleeve said.
By eliminating 23 of those accounts and consolidating the cash, the T expects to receive an additional roughly $500,000 in annual interest payments. MBTA spokesman Joe Pesaturo said the T closed accounts at Cathay Bank, Eastern Bank, Fidelity, J.P. Morgan, and expects to close an account at Toronto Dominion next month.
Recent steps to wring savings out of existing contracts - including custodial work at MBTA stations - is expected to generate $10.9 million in savings in fiscal 2017 and 2018, according to the T.
On the custodial contracts alone, the T expects to save $8.2 million over two years.
Custodians and their union representatives at SEIU 32BJ have vocally opposed the T entering into a performance-based agreement with custodial vendors ABM and S.J. Services, arguing it will cost jobs and leave subway stations dirtier.
"We're going to hold those contractors accountable," Shortsleeve said. He said both companies are "confident" they can meet the performance standards.
While janitorial work has long been outsourced by the T, moves to outsource cash-handling, warehouse operations and vending-maintenance work has drawn concern from the workers who perform those jobs, a major flashpoint in the roughly year-long reform project at the MBTA.
"Despite the tireless efforts of MBTA janitors, the MBTA stations are certainly not spotlessly clean and could use more, not less, investment in their cleaning and maintenance," Sens. Patricia Jehlen and Sal DiDomenico - two top lawmakers on the Senate Committee on Ways and Means - wrote to Gov. Charlie Baker last week. The letter signed by 20 Senate Democrats, including Tom McGee, co-chairman of the Transportation Committee, said, "Visitors come to Massachusetts from all over the world and a filthy public transit system will reflect poorly on the entire Commonwealth."
The money-saving efforts with existing vendors are a prelude to a second phase, with the goal of an October launch, that will move the MBTA's purchasing system into CommBuys, which is used by the Massachusetts Department of Transportation and other executive branch agencies. MBTA officials said they would be able to garner better deals with vendors.
Among the MBTA's 150 biggest vendors, 63 offer goods or services covered by existing state contracts and the T now uses 25 percent of those statewide contracts for its own purchases, according to the T. By using the state's contract to buy police uniforms, the T could save 20 to 30 percent, according to Shortsleeve's presentation.
A particular Phillips-head screwdriver sold by Grainger costs the T $13.28 each, which is more than some retail prices for screwdrivers, and more than twice as expensive as the $5.08 charged the state for the same tool, according to the T.
The T learned from its vendor that it had purchased 30 of the screwdrivers in a year.
"We actually had to get these numbers from the vendor, because we didn't have it ourselves," said William Stemberg, deputy director of financial strategy.
"When you live in a paper-based system, it's very hard to do a lot of the spend-analysis," Shortsleeve said. He said, "We have teams; they have teams, that are passing paper back and forth."
Once the MBTA switches to CommBuys, workers at repair shops will be able to order up new tools by computer, rather than routing requests via the paper-intensive process, Polcari said.
The current system generates 300,000 paper invoices a year, enough to fill a Red Line car to waist height, according to Shortsleeve. Automating the system will result in more accurate, trackable data and could help the agency meet its goal of reducing staff in administrative positions, Shortsleeve said.
More than a year into its new management, with oversight by the Fiscal and Management Control Board, officials at the agency continue to crack open new avenues of potential reform and questionable practices. Historically bad winter weather early in Baker's tenure exposed vulnerabilities in the aged system of trolleys, trains and buses, and launched T reform to near the top of the governor's agenda.
Shortsleeve, a former executive at the business consultancy Bain and Company, said pushing vendors for better deals is a routine business practice in the private sector.
"There was no evidence that we could find internally of any existing strategy, contract-by-contract, vendor-by-vendor, to reduce cost," Shortsleeve said. "In the business world, businesses are always out actively interacting with their suppliers to drive their costs down and we are bringing that ethos here to the T."
Shortsleeve said the T has worked with vendors to lower prices by offering early payments, conducting diesel fuel deliveries at night, and moving to online ordering at its stationary supplier, W.B. Mason, something major private-sector buyers started doing 30 years ago.
After discovering that the 580 wireless devices had been unused for a year, the T disconnected or suspended most of them. Among devices in use by employees, the agency axed add-on services, such as global calling and caller name ID, saving roughly $650,000 over two years, according to Shortsleeve.
Polcari said it "doesn't hurt" his bargaining position that the T's dire financial position is well known, and obtaining good deals for the T will require "a lot of persistence," describing it as a "constant effort."
"No one's ever happy about getting paid less money," Shortsleeve said, describing the T as a "marquee customer." He said, "In many cases we've done business for years without ever really pushing vendors hard to get their best price, so I think generally there's been a good deal of cooperation."
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