MBTA board gives $15m lift to Keolis

THE MBTA’S OVERSIGHT BOARD on Monday approved a series of maintenance, repair, and scheduling changes for commuter rail service that are expected to improve on-time performance and boost the income of the cash-strapped private contractor, Keolis Commuter Services, by about $15 million a year.

Transportation Secretary Stephanie Pollack said the proposals grew out of discussions between the MBTA and Keolis on how to improve the on-time performance of commuter rail trains, which she characterized as improving but inconsistent.

Pollack said commuter rail trains over the last 12 months averaged an on-time rate of 90 percent, meaning they arrived at their destination within five minutes of the scheduled arrival time nine out of 10 times. The secretary, in a briefing with reporters, said mechanical issues remain a problem, with 61 percent of all train cancellations and 30 percent of delays caused by equipment malfunctions. She said on-time performance has also been hampered by unrealistic running times for 46 of the 511 weekday trains.

T and Keolis officials proposed extending the running time for 31 weekday trains by 5 minutes or less and by 6 to 10 minutes for the remaining 15 trains. Pollack said the new running times would be incorporated into fall schedule adjustments. Keolis pays financial penalties to the T based on its ability to meet performance metrics.

To address the repair and maintenance issues, the T and Keolis proposed increasing the number of locomotives and coaches that Keolis will maintain and have ready for daily service. The current contract calls for Keolis to have 81 locomotives and 408 coaches available for use every day; under the proposal, those numbers would be increased to 90 and 420.

The goal is to ensure that the 67 locomotives needed for daily service (64 trains plus three in reserve) are available every day and to add 1,200 extra coach seats. Officials said Keolis needs a large cushion of extra trains because the system’s older trains and coaches frequently break down and are taken out of service or are pulled aside for federal inspections.

The MBTA’s Fiscal Management and Oversight Board also approved a pilot program to increase maintenance and refurbishing of the commuter rail’s older locomotives and coaches, a change in the Keolis contract to accommodate higher-than-expected maintenance costs for the system’s 40 new locomotives, and a boost in payments to Keolis for adding 10 new trains as part of a series of service changes unveiled in May.

The $4.3 million, one-year pilot maintenance program for older locomotives and coaches will be paid out of the T’s capital funds. The other initiatives – putting more locomotives under Keolis maintenance programs and paying Kelois more for maintaining the system’s 40 new locomotives and implementing the May service changes  – will come out of the T’s operating budget and give the private contractor an additional $11 million a year, or $66 million over the next six years.

The T also approved an extension of a $5 million program that uses financial penalties incurred by Keolis for poor performance to pay for 30 assistant conductors and the operation of a passenger information center.

Keolis is a joint venture of Keolis Rail Services America and the French national rail company SNCF. The T awarded the company a contract in early 2014 to run commuter rail service for eight years with an option for a four-year extension. The total value of the contract, if extended the full 12 years, was $4.258 billion.

Keolis began running the commuter rail service on July 1, 2014, and so far hasn’t made a profit. It reported net losses of $9.97 million in 2014 and $30.48 million in 2015. The company said in its most recent financial statements that it expects to report another loss in 2016. Keolis is expected to be paid a total of $327 million in the third year of its contract.

John Englander, the legal counsel for the T, said all of the approved changes require Keolis to provide services beyond the scope of the contract, and thus required the MBTA to pay out additional funds. While the T is agreeing to pay Keolis more, Englander said, the transit agency is also going to impose new penalties each time the contractor fails to meet its maintenance targets. For example, each time Keolis fails to have 67 locomotives available at the start of a day it will pay a fine of $3,120.

Keolis in 2014 edged out its lone rival for the commuter rail contract, the Massachusetts Bay Commuter Rail Co., by submitting a bid that was nearly $254 million less over the 12-year life of the contract. Officials with Massachusetts Bay Commuter Rail predicted Keolis would not be able to do the job for the amount of money it bid. So far, Keolis has not been able to the job without racking up large losses.

The top brass of Keolis, including General Manager Gerald Francis, was at the meeting of the Fiscal Management and Oversight Board. Franck Dubourdieu, deputy general manager of Keolis, said after the meeting that the company is making progress. “We are still in the red, but we are absolutely dedicated to turning this business around,” he said.

Pollack told reporters that the contract changes approved on Monday had nothing to do with Keolis’s financial situation. “This is not about Keolis losing money. This is only about investments that we think are needed for our passengers,” she said. “We have learned during the first two years of the contract that the amount that we were paying Keolis, particularly to maintain and take care of our locomotives and coaches, was not producing the performance that we wanted.”

James O’Brien, president of the Boston Carmen’s Union, is leading the fight against efforts at the T to privatize agency operations. O’Brien told members of the Fiscal Management and Control Board that Keolis is the perfect example why transportation services shouldn’t be privatized. “Thirteen years after we outsourced the operation, privatization has clearly not delivered the improvements we were all promised,” he said. “Keolis is a glaring example of privatization gone wrong.”

The Fiscal Management and Oversight Board also approved at its meeting an amendment to the Keolis contract requiring the creation of a transition plan if the commuter rail operator and the T part ways before the end of the contract.