Management & Operations

Contract Negotiations Threatened Loss Of Funding For MBTA

Posted on June 30, 2000

The Massachusetts Bay Transportation Authority (MBTA) was recently forced to extend its maintenance contract with Amtrak or give up crucial federal funding. The transportation authority originally awarded the contract to Bay State Transit Services Inc., which underbid Amtrak by $116 million for five years of service. Bay State sought to hire entirely from within the Transport Workers Union but was unsuccessful in recruiting personnel, said Michael Mulhern, deputy general manager of the MBTA. "The employees union and Bay State were never able to agree on how they were going to conduct business," Mulhern said. Also involved in the process was the U.S. Department of Labor (DOL), which invoked 13(c) to prevent Bay State from trimming the maintenance workforce, an integral part of the company's bid. What Mulhern characterized as "a very expansive view of federal labor protection laws" was backed by the threat of withdrawal of $200 million of federal funds annually that support MBTA's capital program. Mulhern said the contract that the DOL and the union sought would have constituted "a change in letterhead," but no change in business practices. MBTA's contract with Bay State was further complicated by the prospect of a service interruption before the situation could be resolved. "Amtrak gave every indication that they would not maintain service on July 1 without a new contract," Mulhern said. The case attracted the attention of Senator Phil Gramm (R-Texas), chairman of the Senate Banking Committee, who requested review of any contract that the MBTA might sign with Amtrak. Christi Harlan, communications director for the committee, said Gramm "hoped to bring it to the MBTA's attention that it would be in the best interest of commuters and taxpayers all across the country if they followed true competitive bidding practices and went with the lowest cost, highest quality bidder." Despite the MBTA's position that it was legally justified in pursuing its contract with Bay State, it chose to extend its relationship with Amtrak rather than risk an interruption in service or the loss of federal funding. That decision resulted in a lawsuit by Bay State over the obligations of the transportation authority to the company. The MBTA is very disappointed with the outcome, said Mulhern. "The amount of pressure that was brought to bear on the commonwealth was absolutely tremendous," he said.

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