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Commuter rail to stay in private control

Massachusetts Bay Transportation Authority officials have decided they will not take over direct management of the commuter rail when their contract with Massachusetts Bay Commuter Railroad Co. expires next year.

Since 2003, the MBTA has outsourced management of the commuter rail system to MBCR, a private company. That contract ends in June 2013, and other companies, along with the current operator, will have the chance to put in bids for managing the rail lines.

Jonathan R. Davis, the T’s acting general manager, announced at the agency’s general meeting this week that the so-called “public option’’ - the often-discussed idea of the T taking direct control of the commuter rail - will not be in the cards.


“In order to achieve our objectives of better service quality and cost efficiency, the preferred option is to continue to outsource both operations and maintenance of the commuter rail system,’’ Davis wrote in a memo to the Massachusetts Department of Transportation and MBTA board.

He explained that he had asked for two reports on the pros and cons of an in-house commuter rail system: One from KPMG Corporate Finance, the MBTA’s financial adviser, and another from the MBTA’s internal legal counsel.

Both groups concluded that outsourcing is still the best option.

While representatives from both the MBTA and MBCR declined to comment yesterday, Davis wrote in his memo that he believed the public option would ultimately cost taxpayers more than outsourcing.

Plus, he said, the time it would take to push through legislation to establish a public entity, as well as hire staff to manage the commuter rail system in-house, would all but require that the existing commuter rail contract be extended past its June 2013 expiration date.

And while consolidating the MBTA and the commuter rail might allow for lower administrative costs, non-managerial employees would likely ask for wages to match their MBTA peers.


And one advantage of having private contractors is that financial penalties can be imposed, which offers an impetus to perform better.

“One advantage of outsourcing is that the contract can establish significant penalties if the contractor does not achieve certain performance measures,’’ Davis wrote. “Admittedly, the current contract may not have gone far enough in this area, but it is something that can and would be fixed going forward.’’

Martine Powers can be reached at Follow her on Twitter @martinepowers.