MBTA loses reprieve from outsourcing restriction

A morning commute on the MBTA Orange Line. David L. Ryan/Globe Staff, file/Globe Staff

Just like that, one of the major reforms at the T is over.

The three-year window the Massachusetts Bay Transportation Authority had to freely outsource work to private contractors ended on July 1. It was a quiet conclusion to what had been the Baker administration’s most controversial proposal in the aftermath of the 2015 transit collapse.

It has also, admittedly by the T’s own reckoning, been financially successful: the agency claims to have saved hundreds of millions of dollars by having more ability to outsource, freeing up money that has been plowed back into badly-needed system improvements.

The so-called Pacheco Law, named for the state senator who championed it in the 1990s, requires agencies to prove that outsourcing work done by public employees will save money while maintaining quality. Supporters say the rule prevents sweetheart deals with contractors, while critics say it is cumbersome and designed to benefit the public union workers who most fiercely defend it.

Shortly after Governor Charlie Baker took office, a series of snowstorms shuttered transit service in Boston. In a bid to fix the agency, Baker pushed a hesitant Legislature to grant the T a three-year reprieve from the law, arguing the agency would benefit from privatizing some functions.

The T has had its struggles managing private vendors. Still, over the three years, the T outsourced cash-counting, warehouse management, police dispatching, customer service, and electrical work on the new fare collection system coming in 2020.

Officials have said one of the biggest benefits of the waiver was as a negotiating tactic: the threat of outsourcing, they said, helped the agency reach a labor agreement with two unions — one representing its bus and subway drivers, another for bus mechanics — that delayed raises in exchange for job protection.

MBTA spokesman Joe Pesaturo said the agency will save about $400 million over 10-year span through the combination of privatizing some work, and more advantageous contracts with unions.

The agency has been criticized from both the left and the right for how it used the powers. Senator Marc Pacheco said it was inappropriate to use the exemption as a negotiating ploy.

“I think they wanted to use it as a threat to the unions in negotiation,” he said. “I think if that’s the only reason you do it, I think that’s inappropriate. You’re supposed to be bargaining in good faith.”

Jay Gonzalez, a Democrat running for governor, wants to reverse some of the T’s contracts—even to the point of having public employees operate the commuter rail, which has always been under outside managers.

Meanwhile, Charlie Chieppo of the Pioneer Institute, a conservative think tank, believes the T did not wield its powers strongly enough over the three years. He especially wishes officials had privatized at least some of the bus mechanic work.

“When you compare the benefit we actually achieved to the potential, it’s really unfortunate,” he said.

Transportation Secretary Stephanie Pollack has said the administration will consider whether to push for a renewal of the exemption once the T completes a report on how it used that exemption, scheduled for September. But Chieppo and Pacheco both agree that, short of another crisis hitting the T, it will be difficult for Baker to win another exemption to the privatization law.