Pioneer, the Pacheco law, and the revenge of the Blue Mass Group nerds

The MBTA is an easy target for critics. The Greater Boston transit system seems to be the only state agency operating with a permanent bulls-eye on it. The Pioneer Institute has been on a jihad against the hapless agency, particularly when it comes to the Pacheco law, which sets a high standard for state agencies that want to outsource services.

The conservative think tank has long advocated for privatization of certain state services. In the case of the MBTA, Pioneer has been an outspoken advocate of a temporary suspension of the Pacheco law. State lawmakers passed such a measure as part of the fiscal 2016 spending plan that imposed a fiscal and management control board on the agency.

Pioneer recently published a study that found that the MBTA could have saved $450 million on bus operations and maintenance if it had pursued a 1997 privatization plan involving the Charlestown/Fellsway and Quincy garages. The MBTA proposed outsourcing nearly 40 percent of those operations. But former state auditor Joe DeNucci was not convinced. He invoked the Pacheco law and nixed the proposal.

Using the MBTA’s actual costs from 1998-2002, Greg Sullivan, the institute’s research director, argued that the agency could have saved $80 million during that period and $450 million through 2015.

Yet extrapolating from contracts that a state agency never entered into is a highly speculative exercise. Pioneer’s analysis does not account for possible change orders during the life of the contract, nor does it take into consideration changes in the terms of subsequent contracts. If a private contractor’s costs had been lower than anticipated during the initial contract, the next bid could have been lower to stave off potential new competitors. If the contractor lost money over the first five years, the next bid could have been higher.

And so, some Blue Mass Groupies pounced on Sullivan’s findings. In a post entitled, The Pioneer Institute does acrobatic logical twists re the Pacheco Law, David Kassel, communications director of the Massachusetts Coalition of Families and Advocates, poked a few large holes in the Pioneer report, including raising questions about the dubious premise of the MBTA missing out on nearly half a billion dollars in savings.

Kassel, who has taught public budgeting, statistics, and program evaluation at local colleges and universities, had this to say about the 1997 contracts: “Contracting out for public services can prove to be much more expensive in actuality than it appeared in the plans or bids…the Pioneer’s entire calculation of a $450 million in foregone savings in rejecting the MBTA vendor contracts is suspect.”

Sullivan responded to the BMG post, noting that the actual costs that the MBTA incurred immediately afterwards “did not beat the cost of the two contractors or come remotely close to doing so.”

Yet the Pioneer report also fails to note that DeNucci’s concern was that the MBTA could not adequately document cost savings- which is why the contracts were deep-sixed in the first place.

A 1997 letter from DeNucci to Patrick Moynihan, the MBTA general manager, underlined the MBTA’s unwillingness to describe how the agency achieved cost savings of nearly $24 million at the Charlestown garage and nearly $7 million at the Quincy facility.  Moreover, DeNucci noted that he had examined other MBTA documents that contradicted those savings figures. The agency, DeNucci said, continually failed to respond to certain questions about how the agency arrived at its numbers.

Two weeks before the Pioneer Institute published its report, Suzanne Bump, the current state auditor, took to the pages of Governing magazine to offer an assessment of the Pacheco law dispute and echo DeNucci’s original assessment.

In a conversation with CommonWealth, Sullivan said that he wanted to provide a real world estimate of what the savings would have been if the Pacheco law had not been passed. “The big picture is that the Pacheco law review ended up concluding that there would not be savings  generated by this contract, but the actual historical record shows that that was incorrect,” said Sullivan.

GABRIELLE GURLEY

 

BEACON HILL

An outside section of the state budget would give Somerset up to $3 million for the third year in a row from a regional carbon tax to offset declining tax revenues. (CommonWealth)

The Lottery reported a record $5 billion in sales during the last fiscal year. (WBUR)

Several bills would increase the penalties for those who block highways. (Masslive) Somerville Mayor Joseph Curtatone thinks stiffer penalties are the wrong way to go. (CommonWealth)

MUNICIPAL MATTERS

A private caterer contracted with the Massachusetts Emergency Management Agency charged Brockton $12 a case for water during the city’s recent water emergency, which is two to three times the retail price but was negotiated down from the original $52 per case the company billed. (The Enterprise)

Family homelessness jumps 25 percent in Boston. (WBUR)

The Lowell City Council votes to establish an ordinance requiring a certain percentage of city residents be hired on major development projects. (Lowell Sun)

OLYMPICS

The Globe’s Shirley Leung may be getting ahead of herself. She says the fix isn’t in for the master developer at Widett Circle, the proposed site of the Olympic stadium.

WASHINGTON/NATIONAL/INTERNATIONAL

The US and five other world powers struck an agreement with Iran to curb its ability to build nuclear weapons in exchange for a lifting of economic sanctions. (Boston Globe) A Herald editorial deplores the Iranian nuclear enrichment deal. The Globe calls it “far from perfect,” but better than no deal at all.

President Obama outlines a roadmap for criminal justice reform during a speech to the NAACP. (Time)

A military exercise is set to begin today in Texas amid fears inflamed by conservative bloggers that it is a precursor to martial law by the Obama administration and a move to take away citizens’ firearms. (New York Times)

Ovide Lamontagne, the staunchly conservative New Hampshire Republican who unsuccessfully ran twice for governor and once for US senator, claims an undercover operation by his anti-abortion group has found that Planned Parenthood harvests and sells organs from aborted fetuses. (National Review)

The National Oceanic and Atmospheric Administration appears to be sending fewer observers out on lobster boats after the boat owners complained. (Gloucester Times)

ELECTIONS

A USA Today/Suffolk University poll indicates Donald Trump is leading the Republican pack. (Time)

Gov. Charlie Baker and Boston Mayor Marty Walsh are taking good advantage of the new campaign contribution limits. (Boston Magazine)

Rep. Michael Brady of Brockton and City Councilor Robert Sullivan, who faced off in the 2008 primary for the House seat, have announced they will run in the special election to fill the Senate seat of the late Sen. Thomas Kennedy, who died earlier this month. (The Enterprise)

BUSINESS/ECONOMY

A New Bedford woman filed a class action suit against Walmart claiming discrimination because the company refused health coverage to same-sex couples until 2014. Jacqueline Cote says her wife has been in treatment for ovarian cancer since 2012. (Standard-Times)

Braintree’s Licensing Board has suspended its order to ban ride-sharing services such as Uber and Lyft while it crafts new regulations for a town ordinance. (Patriot Ledger)

Amazon and other retailers are dialing up special summer discount days to boost sales. (Boston Globe)

A bipartisan group of US senators is pushing legislation to allow loans and other financial services for legal marijuana-related businesses. (Boston Herald)

A slender 20-story, 19-unit condo building would rise along Boston Common, according to plans filed with the Boston Redevelopment Authority. (Boston Herald)

EDUCATION

Salem State University and Montserrat College of Art shelve their proposed merger. (Salem News)

With the Lowell public schools, Middlesex Community College, and UMass Lowell all under new leadership, John Schneider says the city should promise any child who graduates from high school the financial support necessary to attend college. (The Sun)

Boston school superintendent Tommy Chang will lay out his 100-day plan for the system today to the School Committee. (Boston Globe) He says he wants to open to more minority students the system’s advanced work classes that often provide a pathway to Boston Latin School and the city’s other exam high schools. (Boston Herald) Chang covered a wide range of topics, including the achievement gap, testing, the plight of troubled Madison Park Technical Vocational High School, the PARCC test, and the role of charter schools in this in-depth interview with CommonWealth.

School nurses in Easton will begin to carry the overdose-reversing drug Narcan. (The Enterprise)

The Sun says Chelmsford was snookered on schools superintendent Frank Tiano’s $140,000 wet kiss.

HEALTH CARE

More than half of Massachusetts nursing homes that advertise care for dementia patients appear to be bypassing rules designed to ensure they are not making false claims regarding services they provide. (Boston Globe)

The World Health Organization says the lack of mental health resources is a global crisis. (U.S. News & World Report)

ENERGY/ENVIRONMENT

George Bachrach and Vincent DeVito say Gov. Charlie Baker’s “combo platter” on energy shouldn’t include new gas pipelines. (CommonWealth)

Taylor Armerding says utilities are losing money because of the push for solar power. (Salem News)

CRIMINAL JUSTICE

The Supreme Judicial Court upholds a 2010 murder conviction that relied on a text message from the victim indicating her husband was threatening to kill her. (Eagle-Tribune)

A Western Massachusetts man who is the son of a Boston police captain is ordered held without bail on charges related to an alleged plot to attack a local campus in the name of the Islamic State. (Boston Globe)

A former Uber driver who faces charges of raping a passenger last December has been connected via DNA and witness accounts to five other sexual assaults between 2006 and 2010, law enforcement officials announced. (Boston Globe)

MEDIA

The Andover Planning Board conducts a site walk at the St. Francis Seminary and bars an Eagle-Tribune reporter and photographer from attending.