MA: MBCR Asks Court to Halt Award of $4.2 Billion MBTA Commuter Rail Contract

March 6, 2014
Request for injunction alleges that more than a dozen deficiencies — including $428 million understatement of commuter rail costs — violate state bidding laws.

The Massachusetts Bay Commuter Railroad Co. (MBCR), operator of the MBTA’s commuter rail system for the past decade, on March 6 asked a Suffolk County Superior Court judge to halt the award of a $4.2 billion commuter rail contract to a new entity controlled by Société Nationale des Chemins de fer Français (SNCF), the French national railroad agency, and invalidate the new contract.

In its court filing, MBCR cited irreparable harm created by the MBTA’s decision to move forward with transition to a new operator while refusing to review MBCR’s formal protest in a timely manner.

MBCR’s request for an injunction follows discovery of multiple, serious deficiencies and errors found in commuter rail procurement documents made public by the MBTA following public records requests. These mistakes include a $428 million understatement of actual commuter rail costs in the MBTA’s Independent Cost Estimate (ICE), which omitted costs such as guaranteed annual wage benefits worth nearly $5,000 per employee and $10 million in existing costs for parts and materials that are required to maintain trains. When compared with an accurate ICE, the fixed-cost bid price falls more than $500 million below the realistic price of operating the system. Additionally, SNCF/Keolis failed to provide a detailed security plan as required by the Request for Proposals and instead offered a promise to prepare one sometime in the future.

Records provided by the MBTA also show the MBTA’s deputy general counsel responsible for the integrity of the procurement assisted SNCF/Keolis in an apparent attempt to conceal documentation of significant noncompliance in the SNCF/Keolis proposal. A series of emails between the MBTA and SNCF/Keolis officials — exchanged after a legally binding deadline had passed — show the attorney advised SNCF/Keolis to withdraw an inquiry from the official record that would have required public disclosure of noncompliance.

“The holes in the MBTA’s procurement process are big enough to drive a locomotive through,” said Alan Moldawer, an attorney for MBCR. “Every bid for a government contract must adhere to a strict, legally proscribed process, but the MBTA ignored its fundamental responsibility to provide a level playing field to both bidders and overlooked obvious deficiencies that allowed SNCF/Keolis to stay in the bid process.”

Among more than a dozen deficiencies identified in the commuter rail procurement, documents obtained from the MBTA reveal that:

  • SNCF/Keolis submitted misleading information and misrepresentations regarding SNCF’s subpar commuter rail performance, where public records reveal system On Time Performance (OTP) at 88%, not 95%, and did not disclose data from other commuter operations in France that are widely criticized for widespread delays and poor service
  • SNCF/Keolis gave employees of its parent company in France as references instead of representatives of agencies it serves and the MBTA did not check references
  • SNCF/Keolis claimed it could not provide accident statistics or a detailed accounting of its past safety performance as required by the procurement because its operations in Europe were ‘too big’ while rail services provided by its American subsidiary were ‘too small’
  • SNCF/Keolis’ proposed key management team includes three high-ranking officials who now willnot fill the positions as set forth in the SNCF/Keolis bid – a “bait and switch” technique long considered unacceptable.
  • MBTA disregarded stated financial covenants that required bidders to achieve minimum profit margins that would ensure long-term financial stability and availability of funds to pay for up to $12 million in potential fines and penalties. SNCF/Keolis’ bid presented a “zero dollar” profit margin in “Year 1” and profit margins for the entire contract that breach the bid requirements set forth by the MBTA
  • SNCF/Keolis failed to meet the minimal “acceptable standard” for Disadvantaged Business Enterprise (DBE) participation. In January, the MBTA publicly reported that SNCF/Keolis’ DBE plan was satisfactory but internal MBTA documents show the plan was not “acceptable.” The MBTA has since directed KCS to develop an “acceptable” DBE plan prior to assuming control of the commuter rail system
  • SNCF/Keolis ignored the MBTA’s bid requirement to submit detailed security and emergency preparedness plans. Rather than develop plans or show an understanding of the system needs as required by procurement rules, KCS promised to develop plans after award of a contract

A globally recognized safety expert warns that SNCF/Keolis failure to provide security and emergency preparedness plans, as required by the procurement, contradicts the basic standards of public transit safety in the United States after 9/11.

“SNCF/Keolis’ promise to prepare plans at some point in the future is no substitute for the essential requirement of detailed security, emergency preparedness and emergency response plans that illustrate a clear, thorough understanding of the risks associated with the commuter rail system in Boston and Massachusetts,” said Robert Stephan, the former U.S. assistant secretary for Homeland Security, who reviewed SNCF/Keolis’ bid. “There is no excuse for failing to prepare these essential plans or the MBTA’s decision to ignore the omission. These plans are the foundation that tens of thousands of commuters rely upon to safeguard their well-being and security, every day.”