T privatizes warehouse operations

Under Mancon, service to improve; firm’s workers paid 42% less

THE MBTA’S OVERSIGHT BOARD on Monday approved a $7.1 million contract with a Virginia-based company to privatize the warehouse and logistics operations of the transit authority.

Officials said the contract with Mancon is expected to cut T operating costs between $1 million and $5 million a year while reducing parts delivery times from 68 hours to 10 hours, avoiding $38.8 million in capital expenditures that would have been required to upgrade existing warehouse facilities, and improving the speed of bus and train repair work. Over five years, T officials estimate the contract will save the agency a total of $64.2 million.

Three companies bid on the contract and the Fiscal Management and Control Board voted 4-0 to select the second-highest bidder. Mancon, of Virginia Beach, Virginia, won the contract even though its $7.1 million bid was $1.1 million more than the proposal of Banneker, a company whose clients include Raytheon and CVS.

T officials said they opted for Mancon because of its broader experience and the fact that its client list includes a number of government rail and transportation agencies, including the Ohio and Virginia transportation departments as well as Irish Rail and the Rochester Transit Authority.

The contract calls for Mancon to begin working out of existing T warehouse space in Everett for six months before transitioning to a new leased facility. The company will utilize its own facilities, labor, vehicles, and equipment in procuring parts and delivering them to T facilities. The contract runs for five years with two, two-year options.

T officials said the existing warehouse operation costs $8 million a year to run, with just over half of that total in salaries and overtime. The officials said the total cost of the existing operation rises to $12.1 million if additional retiree healthcare and pension costs are included, as well as the estimated cost of mechanics spending 17 minutes a day looking for parts.

Rick Clarke, the president of Mancon, said the firm pays its workers $18 to $20 an hour.  The T’s existing warehouse workers, all members of the Carmen’s Union, are paid $30 to $35 an hour, union officials said. The T’s existing warehouse operation once had about 35 workers, but through buyouts that number has been reduced to 20. Those T workers will continue working in warehouse operations for 20 months before retiring or transitioning to other jobs at the agency.

James O’Brien, president of the Carmen’s Union, opposes privatization efforts at the T. But he did not object at Monday’s meeting because the union had essentially agreed to privatization of the warehouse operations as part of an agreement to provide wage concessions to the T in return for job protection for workers.

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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.

O’Brien, who attended the T meeting, told reporters the inefficiencies uncovered in the warehouse operations were not the fault of workers but of management. As one example, he noted T officials had existing employees working eight-hour days, while Mancon will be running an around-the-clock operation.

Brian Shortsleeve, the T’s chief administration and acting general manager, said it made sense to privatize the warehouse services because they were not part of the agency’s core business. “The T is in the business of moving people, not parts,” he said.

  • Chris

    When I hear that the T is running with a deficit, why is it that this administration wants to privatize everything? Why isn’t it about removing the Big Dig debt from their books. That’s a quarter of the T budget, more than enough to help fix the the things that need fixing.