Those who subscribe to the antique notion that state government should provide necessary services in a reasonably efficient manner have long objected to the Pacheco Law, which effectively prevents state agencies and authorities from contracting with private companies for work currently done by public employees.
That law, passed in 1993 at the behest of the public-sector unions, shields inefficient bureaucracies from the competitive forces that spur efficiency, creativity, and savings in the private sector. But the antiprivatization law has become a sacred cow for the state’s labor movement; on their secret endorsement questionnaires, unions regularly prod candidates to pledge their support for keeping — and sometimes even expanding — that ill-considered statute. Deval Patrick made just such a commitment when he first ran for governor in 2006.
Protecting state government from the salutary effects of competition comes at a cost. The latest evidence is an eye-opening new report from the Pioneer Institute about the MBTA’s bus maintenance costs. That study, done by former Massachusetts Inspector General Gregory Sullivan, says that for the last four years for which data are available, the MBTA’s bus-maintenance costs per mile were the fourth highest of 379 US bus-transit agencies. In 2011, the MBTA’s per-mile maintenance cost was 93 percent higher than the average of all bus-transit agencies running more than 100 vehicles.
In one instructive comparison, the MBTA spent twice as much over five years for maintenance-per-bus-miles traveled than the Minneapolis-St. Paul Metro Transit, which runs a fleet similar to ours in a northern climate.
In another, the T’s maintenance costs per vehicle mile for its trackless trolley buses — those that run on rubber tires and draw their power from overhead lines — were more than three times the next most expensive trolley system.
Sullivan, who is now Pioneer’s research director, says that the T could save $250 million over six years if its maintenance costs were in line with the average of the 20 bus-transit systems with similar maintenance-quality records.
For its part, the T says it needs time to study the Pioneer report, but notes that its maintenance-per-mile costs are lower than those of the New York City’s Metropolitan Transit Authority.
Gregory Sullivan says the T could save $250 million over six years in maintenance costs.
Talk of cold comfort.
Now, in fairness, state Transportation Secretary Richard Davey has pressed on several fronts to make his sprawling empire more efficient. A new cleaning contract for MBTA stations and facilities will be based on performance rather than mandated staffing levels; the Registry is offering more non-agency locations; and the Turnpike plans to implement an open-road tolling system that will supposedly result in significant staffing reductions there.
Still, in many areas, management’s hands remain bound by the Pacheco Law.
What if they weren’t? Well, consider this: In those occasional instances where the T has been able to sidestep Pacheco, the savings have been substantial. Late last year, the T awarded a $31.5 million contract to Midwest Bus Inc. to overhaul 193 of its buses. The T estimated it would be $17 million cheaper to have those buses loaded onto flat-bed trucks and transported to Owosso, Mich., for their overhauls than to do the work in-house.
So what drives the T’s high costs? “It is not the base wage that is the big problem,” Sullivan says. “Rather, it’s that they are overstaffed, and they rack up an incredible amount of overtime.”
How overstaffed? The number of maintenance personnel employed per bus mile is 63 percent higher than the average of the nation’s 29 largest transit systems, according to the Pioneer report. Sullivan also notes that the T has no time standards for repairs. Why? The T told him it would be hard to institute those standards in the union-manned garages, he says.
All of which illustrates an obvious point. When an authority and its workers are insulated from competition, there’s no agency-wide urgency to streamline the operation. But if the Pacheco Law were repealed and private companies could regularly bid for the right to perform work at the T, that would create powerful incentives for a more cost-efficient operation.
Now, let’s be clear. Rectifying this situation wouldn’t preclude the need for more funding for the T. Still, even if the savings were only about half of what Sullivan says they could be, that would be $20 million a year. That’s not pocket change, not even by public-sector standards.
Rather, it’s the pricey hidden premium with which the Pacheco Law and its enablers have saddled the public.