MBTA signs two big contracts

GM says deals ‘changing the narrative of the T’

MBTA OFFICIALS TOOK SOMETHING of a victory lap on Monday as they approved two major contracts with the potential to reshape the transit authority for years to come.

The board voted unanimously to approve a $1.08 billion contract for a consortium of four companies to build a Green Line extension into Somerville and Medford and a $723 million contract for two firms to design and operate a new fare collection system for the T. The Green Line project will expand the T’s service area and the new fare collection system is expected to speed up service, cut down on fare evasion, and provide invaluable data on how customers are riding the T’s buses and subways.

MBTA General Manager Luis Ramirezr said the two contracts are not just about fixing the T. “This is also about changing the narrative of the T,” he said. “Today the MBTA starts showing customers that it can make major progress on customer-facing initiatives.”

The Green Line contract is a milestone for the beleaguered transit agency because the project nearly collapsed two years ago when costs spiraled from roughly $2 billion to $3 billion. Top state transportation officials and the relatively new Fiscal and Management Control Board stepped in and, with the help of a slew of consultants, figured out what went wrong. They then resized the project, lowering the overall cost to about $2.3 billion, and secured $75 million in additional funding through precedent-setting agreements with Somerville and Cambridge.

The T also lured John Dalton away from the Chicago Transit Authority to ride herd on the project. In the end, he constructed a competitive contracting process that yielded a winning bid that came in $237 million below what the T had stated was its “affordability limit.” The winning bidder even agreed to pay for six initiatives that had been pulled out of the project in a bid to reduce costs.

The new fare collection system will affect even more of the T’s customers, allowing them to pay for rides with new Charley cards, contactless credit cards, and their smartphones. Customers will tap in and out as they use T services and be able to board Green Line trains and buses at all doors, which should speed up boarding times dramatically. The fare collection system will also be used on the commuter rail, ferries, and potentially other non-transportation services.

Stephanie Pollack, the state secretary of transportation, reassured the public that cash will still be accepted at the T, just not on board subways, trains, and buses. She said cash will still be accepted to purchase rides at fare-vending machines that will be available at many more locations and even sold at retail vendors.

The fare collection contract was negotiated as a public private partnership, where the private vendor will upfront all the costs of design and installation during the three-year buildout and then operate the system for the next 10 years, with an option for two, five-year renewals. The vendor will start collecting payments only once the system is up and running satisfactorily.

David Block-Schachter, the MBTA’s chief technology officer, said some critics have noted the T’s costs for the new fare collection system are greater than the cost of similar projects in New York City, Chicago, and Philadelphia. But he said the critics are not comparing apples to apples, noting the T’s project includes a lot more equipment and many more bells and whistles.

Block-Schachter also said more than half of the $763 million project cost (or $366 million) will go for operating expenses through fiscal year 2031. He said the tab for operating expenses is lower than what the T is paying now for its antiquated fare collection system. He estimated the T will save $65 million over the life of the contract compared to what it would have spent if it tried to put the project out to bid.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Brian Shortsleeve, a member of the Fiscal and Management Control Board and the former chief administrator and general manager of the T, said both contracts are a wake-up call for the transit authority about the benefits of doing business in new ways. “Hopefully, we can bring some of these ideas to other parts of the organization,” he said.

Stephanie Pollack, the secretary of transportation, said the fare collection contract was revolutionary for the transit authority, demonstrating that cooperation with the private sector could yield significant benefits for customers while allowing existing T managers to use their available bandwidth on other projects. “This is sort of a bandwidth expansion,” she said.