The MBTA’s board of directors on Monday approved a four-year contract extension with Keolis Commuter Services, keeping the commuter rail operator in place through the middle of the decade.
The new deal, which officials had hinted at for more than a year, followed weeks of intense negotiations with the French company and completed a major about-face from 2017, when state officials frustrated with Keolis’s performance said they would let the company’s contract lapse in 2022.
Keolis began operating the commuter rail in 2014, receiving an eight-year, $2.6 billion contract that included the right to negotiate an extension. The terms of the new deal will kick in almost immediately, effectively making it a six-year contract worth as much as $2.5 billion.
That brings an added cost to an agency whose finances are under strain from the COVID-19 pandemic.
But the MBTA said the deal, which includes an opt-out clause for 2025, is worth the added expense because it encourages Keolis to improve service and locks in commuter rail costs for several years.
“Obviously the pandemic is creating quite a bit of uncertainty,” said Robert DiAdamo, the MBTA’s commuter rail chief, adding that it would be difficult to find a new contractor under the current circumstances. “This will give us some cost certainty, so we can actually plan for the next couple of years.”
Crucial to the deal is a new set of incentives that MBTA officials hope will encourage Keolis to improve service along more than a dozen commuter lines.
Keolis regularly meets its overall goals for on-time performance, but has been criticized for failing to meet expectations on certain lines. While the company has been penalized for late trains, it will now be able to earn monthly incentives for reaching goals on individual lines.
For example, on the popular Worcester Line, Keolis could earn an extra $30,000 a month if 92.5 percent of trains arrive on time, $60,000 for 94 percent, and $70,000 for 98 percent. The incentive payments differ from line to line. Keolis won’t earn incentives, DiAdamo said, if it fails to meet the system-wide goal of 92 percent, a metric that does not include delays that are outside Keolis’s control, such as freight or Amtrak traffic.
The new contract also includes incentives to add coaches on particularly busy rush-hour trips and increase staffing onboard.
Under the terms of the contract, the MBTA will also pay Keolis more to oversee commuter rail construction projects. The company has taken on more heavy-duty infrastructure work in recent years, including construction of a second track on a portion of the Franklin Line.
In a statement, Keolis general manager David Scorey said the contract would enhance "the passenger experience, including a focus on providing more capacity, further increasing on-time performance and accelerating capital delivery.”
Keolis got off to a rough start with the MBTA, especially when historic snowfall overwhelmed the system in the winter of 2015. At the time, state Transportation Secretary Stephanie Pollack — who as part of the incoming Baker administration had just started the job — considered terminating the deal. In early 2017, Pollack said the Keolis contract was not well structured and would not be extended past 2022.
Service has improved since the low point of 2016, when about two-thirds of trains were late. According to MBTA data, Keolis trains now arrive within five minutes of their scheduled departure time more often than they did under the previous operator. The company has also boosted the number of locomotives and coaches in service.
Yet as most commuter rail riders will report, delays remain a frustration.
“It’s fair to say that they were not loved in 2015 or 2016,” said Brian Kane, interim director of the MBTA Advisory Board, an organization that represents the cities and towns served by the agency. “And I don’t think I’d say they’re loved in recent times, but they’re tolerated or accepted. They’ve certainly upped their game.”
Pollack and other MBTA leaders have publicly discussed a much longer deal with a future operator that would have stronger incentives and penalties to encourage improvements and require the company to handle more infrastructure work.
That type of contract has been seen as key as the MBTA eyes a long-term shift to a new commuter rail system that would run far more frequent service with electric-powered trains. On Monday, the MBTA board also took a cursory look at some electric models that could eventually be used on the commuter rail.
But procuring a new commuter rail contract has historically taken at least two years, and it became increasingly clear that the agency would not have enough time to arrange a highly complex contract before the Keolis deal expired, especially once the coronavirus hit. The Keolis extension will buy the MBTA time to fashion that contract, DiAdamo said.
The virus has lowered ridership substantially, although it is now increasing on the bus and subway. MBTA general manager Steve Poftak said Monday the agency will soon begin displaying real-time crowding information on a handful of bus lines on its website and the popular smartphone app Transit to help riders who are concerned about social distancing plan trips.
But officials have forecast that commuter rail riders, who pay higher fares than bus and subway passengers, could be the slowest to recover because its largely white-collar ridership can work from home and many may choose to drive instead. That raises the possibility that the MBTA could be paying more in the coming years for a system that serves fewer riders. The MBTA is considering ways to get bus and subway riders onto more spacious commuter trains during the pandemic, such as by lowering fares at the Lynn station this summer.
Meanwhile, the agency is expected to face significant financial hurdles in the coming years, according to a report released Monday by the Massachusetts Taxpayers Foundation. Despite huge federal government assistance available in the upcoming 2021 fiscal year, which begins next month, the T could face an “existential” financial shortfall of $400 million in 2022, the report said.
The foundation cited slow-to-recover ridership, planned initiatives to improve safety functions and service at the T, increased pension payments, larger state budget shortfalls from the virus, and costs to implement new service on the Green Line and the commuter rail to Fall River and New Bedford as presenting a “daunting task” for MBTA budget wranglers that could require service cuts.