THE MBTA EXPECTS TO SAVE more than $400 million in operating and avoided capital expenses over the next 10 years because of privatization initiatives engineered under a waiver from the so-called Pacheco Law, according to an agency report issued Friday.
The report didn’t document precisely where the savings will come from, but it said “one of the most effective tools for bringing real and lasting improvement to the T has proven to be the three-year exemption granted to the MBTA from the requirements of what is commonly known as the Pacheco Law.”
The Pacheco Law requires state agencies to document privatization savings and to gain the approval of the state auditor before proceeding. Critics say all the red tape associated with the Pacheco Law thwarts privatization efforts, but Auditor Suzanne Bump says the financial justification for privatization would have to be done by the agency anyway.
The transit authority is now in the third and final year of the Pacheco Law waiver. Despite claims that the waiver has been a huge success, Baker administration officials have no plans to seek an extension of the waiver from the Legislature.
The MBTA report identified five completed privatization initiatives – hiring a third party administrator to manage overtime expenses and absenteeism, contracting out cash processing operations, outsourcing warehouse and logistics work, and retaining firms to operate a customer service call center and provide customer service agents in stations.
The report said three initiatives are underway to privatize police dispatch services, to implement automated fare collection, and to perform bus maintenance at three garages.
The T said its privatization work had three other benefits. The agency said the mere existence of privatization forced the Carmen’s Union to the table to negotiate changes in workplace rules and wage concessions. The agency also said privatization had forced the agency to begin reviewing its operations looking for efficiencies. “Just the process of developing an RFP requires the T to comprehensively review the entire business process in question from beginning to end, something that in many instances had not been done at the T,” the report said.
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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.
The MBTA said the waiver process has also prompted a “new level of engagement” with its unions. For example, the T report said unions have typically argued that outsourcing efforts could violate section 13c of the Urban Mass Transit Act, and could jeopardize federal funding of the transit authority. When the T moved to privatize the operations of its cash processing operations, the Carmen’s Union took the matter to arbitration and lost.
“This is a significant precedent that should reduce union efforts to interfere with MBTA outsourcing efforts,” the MBTA report said.
