MA: MBTA Officials Debate Who Will Run the Rails

State transportation officials are closing in on a decision whether to have the MBTA - or another state agency - take over the state's commuter rail service.

Another option would be to seek a private company to take over operation of the commuter trains.

The Finance Committee of the state Department of Transportation board of directors yesterday heard details of plans by transportation officials to make a recommendation to the committee sometime in December.

While the current five-year extension contract with Massachusetts Bay Commuter Rail Company expires in June 2013, committee members said they need to have a state takeover or new contract for private operation in place by the end of 2012. The current contract covers commuter rail lines between Boston and Worcester, Gloucester, Haverhill, Fitchburg, Franklin, Kingston and Providence.

Finance Committee Chairman Ferdinand Alvaro Jr., made it clear that he is very dissatisfied with the current contract, even questioningwhy the MBTA would use the same legal and financial advisers for a new contract, when the last one was flawed.

"Given that we did such a horrible job last time around, why are we using most of the same development team as we did last time in terms of external advisers?" Alvaro asked MBTA financial planning director Eric R. Waaramaa.

"It was a bad contract. We managed the contract badly. The operator performed badly and the operator wasn't held accountable because you gave away the store on penalties. So why would you have the same negotiating team at the table?"

At the same time, Alvaro discounted consideration of a state takeover of the commuter operations.

"I've talked to enough people to know there isn't a lot of supportfor bringing this thing in-house and there are some reasons for not bringing it in-house," he said.

Waaramaa said the financial adviser recommended for the project, KPMG, was not involved in the last contract, while the legal adviser Goulston and Storrs, the engineering advisers Vanasse Hangen and Brustlin Inc, contract support firm KKO & Associates and mechanical and fleet advisers STV Inc., all helped develop the last contract.

"We are currently analyzing an in-house option and contractor option simultaneously," he said. "If we go the contracting option we haveto have a contract in place by January 2013. If we decide to go on the in-house management route we would need to make sure everything weneed to put together for an internal team is put together by then aswell."

If they decide to seek private operators, Mr. Waaramaa said, the board will have to decide whether to use a shorter term operations contract for five or 10 years, or a longer term 20-year contract.

Committee member Elizabeth Levin said she wants to see a private contract option that would allow the state to hire multiple contractors for different parts of the service, like having different companiesoperate different commuter rail lines.

She said that would prevent reliance on a single company, and allow the state in the future to favor firms that perform better.

The discussion arose as MBTA officials prepare to send out lettersof interest to potential bidders later this week.

Levin questioned that plan.

"I can't imagine how we are prepared to send out a letter of interest, when we haven't defined yet what we are interested in," she said.

She and other members also were concerned that potential industry bidders for the operations contract would not get involved in biddingif it appeared the state was planning to simply renew the current contract or have the state take over the operations.

"I don't want to wind up in a situation where we have one bidder and that bidder is the same company that mucked this up with the last contract," Alvaro said.

"We want to have a real competition this time."

Committee member John R. Jenkins said he is concerned that the state get serious attention of bidders from around the country and make sure they understand it is an open contract and not conclude the state is only going to take the operations in-house or renew the current operator's contract.

He also urged planners to find out what other cities and states are doing and consider a mix of in-house and private contractor operations. Alvaro also said the schedule being considered to solicit and consider bids is too tight. "The timeline you provided essentially favors the incumbent who is in the best position to put in a bid and disadvantages people who are coming in and have a learning curve for this system," he said.

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