MBTA parking contract said to be in disarray

THE MBTA’s DIRECTOR OF PARKING resigned last week after distributing a 30-page statement detailing how the agency’s parking contractor is not living up to the terms of its contract and how T management is refusing to step in to correct the problems.

David Friend said in his statement that he submitted his involuntary resignation after being told by Evan Rowe, the T’s director of revenue, that it would be in “our mutual interest” and “in the best interest of the authority” if he resigned. His resignation became effective December 1.

Friend, who could not be reached for comment, was hired in October 2016 primarily to oversee the private contractor operating the T’s parking garages and lots. LAZ Parking was the contractor initially, but the T severed ties with that company amid reports of employee theft that ultimately resulted in a $4.5 million legal settlement. LAZ was replaced by Republic Parking System of Chattanooga, Tennessee, on April 1.

“The selection of Republic was intended to put the memories of the employee theft and lack of customer focus associated with the previous parking operator in the past, and introduce a more efficient contracting approach based on performance and results,” Friend wrote in his statement. “Instead, the contracting relationship between the MBTA and Republic has become another example of the MBTA’s failure to realize the promise of outsourcing – in this case with the MBTA system-wide parking contract – because of mistakes in decision-making and implementation.”

MBTA spokesman Joe Pesaturo issued a statement saying the agency is committed to the effective management and compliance of all its contracts and, under the leadership of General Manager Luis Ramirez, is monitoring performance to identify room for further improvement with all vendors. “The MBTA is confident in the revenue department and its director and looks forward to naming a new director of parking to properly administer and further improve the new parking contract, which has seen a 3.3 percent increase in revenues from last fiscal year to this fiscal year,” he said.

Friend gave Republic a grade of “F+” and said the company’s management team “has over the past eight months displayed an inability to produce and perform up to the minimal standards that the MBTA staff had established.” He placed some of the blame on Rowe, who he said negotiated the contract with Republic (Friend said he did not participate in the contracting process) and has been reluctant to crack down on the company.

Friend said he and his staff urged Rowe to notify Republic that it was in noncompliance with many of the terms of its contract, but Rowe refused to do so. On September 19, Friend said, Rowe finally did send a letter to Republic saying he intended to start imposing daily fines unless the company completed a set of standard operating procedures by October 13. The deadline passed and no fines were imposed, Friend said.

In his statement, Friend said Rowe ignored warnings from him and his staff about Republic’s shortcomings. Friend said Rowe usurped many of his duties, and required him and his staff to perform tasks assigned to Republic in the parking management agreement.

Friend said “Rowe will attempt to ‘muddy the waters’ in the months ahead by seeking Fiscal and Management Control Board approval of increases in daily parking fees (long overdue) and focusing on the year-over-year increase in parking revenues they would generate for the authority.” He acknowledged mismanagement is often in the eye of the beholder, but said Republic’s problems cannot be explained away so easily.

“Mr. Rowe cannot ‘gaslight’ Republic’s mismanagement and shortcomings by stating over and over that they are ‘fixable’ (many are permanent and long-term), and he will not make them go away by asking for my resignation,” Friend said in his statement. “It is ‘in the best interest of the authority’ that this information be known. I deserved better – and so do the taxpayers of the Commonwealth.”

Friend’s statement goes into great detail on the problems he sees with Republic. For those who want to read the entire statement, click here. What follows is a small sampling of some of the issues he raised:

Staffing

Friend said Republic’s fiscal 2018 operating budget was $9.8 million, about $700,000 higher than LAZ’s budget for the prior year. Payroll accounted for most of the difference, with Friend alleging that Republic hired virtually all of LAZ’s staff and paid them 10 to 15 percent more. The company, according to Friend, had said it could operate the parking facilities with half the staff that LAZ used, but the number of employees actually went up slightly.

The pay rates were also uniform, with no accounting for experience or skills. Every parking attendant and cashier was paid $14 an hour, every parking enforcement officer was paid $16 an hour, and every supervisor was paid $18 an hour, Friend said.   “I have never witnessed such a reckless practice in my professional life,” he said.

Poor cost controls

According to presentations to the Fiscal and Management Control Board, Republic’s five-year contract with the T is structured very differently from the contract with LAZ. The performance-based contract pays Republic $360,000 a year, well below the $9.4 million a year paid to LAZ, but the agreement requires the T to reimburse Republic on a monthly basis for staffing, maintenance, and other operating expenses.

Friend offered several examples in his statement of how Republic sought improper reimbursements, and often made purchases greater than $500 without first obtaining prior approval. He noted several examples of bills submitted for payment that related to Republic operations in other cities, including Medford, Springfield, and Bangor, Maine.

Friend said Republic also submitted two invoices for staff clothing in the amounts of $1,695 and $2,250. He said the shipping costs associated with the two deliveries were $677 and $1,009, respectively. “It is an irresponsible abuse of client or taxpayer monies for any parking operator to authorize shipments of clothing – a noncritical item for which there was no emergency need in this case – that were tied to such enormous shipping charges,” Friend said.

He also cited abuse of mileage reimbursements for supervisors traveling between garages. One supervisor, he said, was reimbursed $1,112 for traveling more than 2,000 miles in a month.

Republic also incurred excessive time charges from Brinks when an armored vehicle showed up to collect receipts at garages and had to wait because the money wasn’t ready for pickup. The excessive time charges during one month exceeded the $1,200 basic monthly charge for pickups at the Wonderland and Braintree lots, Friend said.

Inefficient use of equipment

At most MBTA surface parking lots, there are no cashiers or pay stations. Instead, customers make payments using their license plate number and a pay-by-phone provider. LAZ identified scofflaws during daily sweeps of the lots by inputting data on parked vehicles into hand-held devices and then using that information to verify the owner had paid. Republic wanted to speed up the enforcement process, so the T spent $846,448 buying 10 Toyota RAV4s equipped with technology capable of photographing license plates on parked cars as the vehicle passed through the parking lot.

Republic said it would offset the cost of the vehicles by cutting down on staff time and increasing the number of parking citations issued. But, according to Friend, none of the savings have been realized. Staff time devoted to enforcement is down 3 percent, while citation revenue is down between 2 percent and 3 percent.

Friend said the MBTA, at the request of Republic, purchased six Ford F-250 trucks and plows at a total cost of about $250,000 so Republic could remove snow from the roofs of nine T garages. But Friend said the trucks are too big to maneuver through the garages up to the roofs. He said Republic’s staff has also not been trained how to operate the plows. As a result, Friend said, the T will probably have to hire a special subcontractor to do the work at an estimated cost of $450,000.

Friend said the T, again at Republic’s request, spent about $107,000 on two scrubber-sweepers to help clean garages and another $5,400 for trailers to carry the devices from one job to the next. Friend said the trailers weren’t strong enough to transport the sweepers, so they had to be retrofitted at a cost of $3,900. Even with that improvement, Friend said, the scrubber-sweepers have never been used at their home garages at Quincy Adams and Wonderland and have never been transported to other garages.

Paperwork

According to Friend, Republic is required to develop parking plans and budgets outlining how it will meet the objectives of the T contract. “After eight full months of operation, Republic has failed to fully comply with any of the primary contract requirements or calendar deadlines,” Friend said.