Free MBTA from Pacheco Law
An epic winter just tested the MBTA, and the agency failed. Now we are about to see a similar test of Beacon Hill’s reform resolve when it comes to fixing the T.
Among the findings in its report last week, the governor’s bipartisan commission on the T offered this important conclusion: The “MBTA is inhibited by the Pacheco Law from procuring private, cost-effective services.” And this vital recommendation for the Legislature: “Free the MBTA from the constraints of the Pacheco Law.”
The House leadership is ready to do that, at least temporarily. House Ways and Means Chairman Brian Dempsey told me that the budget he will unveil on Wednesday calls for suspending the anti-privatization law for five years as it pertains to the T. Given the challenges the T faces, “we think it’s important for that to happen,” Dempsey said.
Prior to the 1993 passage of the Pacheco Law, the T had contracting-out authority as the result of a management-rights law pushed through the Legislature more than a decade earlier. But the 1993 law, which makes it difficult to contract with private firms for any work being done by state employees, overrode the T reform law.
Pacheco supporters will tell you that the statute merely requires public managers to prove that contracting out will save money without sacrificing quality. Actually, the Pacheco Law is so complicated that the guide to applying it runs 20 pages, excluding various appendices. One of the law’s many unrealistic strictures is that a public manager must compare the private-sector price of performing a service with the cost of public employees doing it “in the most cost-effective manner,” something that takes a study all its own.
It obviously doesn’t make sense to contract out if state workers are doing a job for the approximate private-sector cost. But without an accurate sense of real costs, it’s very hard to know if the public costs actually are in a reasonable range. What’s more, the lengthy, laborious Pacheco price-comparison procedure is in and of itself an impediment to soliciting bids.
“It’s fair to say that Pacheco creates a complicated process,” notes Secretary of Transportation Stephanie Pollack. “Many ideas for cost savings are never even pursued because of the assumption that Pacheco would bar them.”
But surely there’s another way to tell whether maintenance and repair work is being done cost effectively? Well, a 2004 best practices report sponsored by the Federal Transit Administration emphasized the importance of time standards for regular maintenance tasks.
Yet when former state Inspector General Greg Sullivan, now research director at the fiscally conservative Pioneer Institute, did a 2013 report on the MBTA’s bus operation, he found that the T didn’t have such standards. T officials said that “the practical difficulty of instituting and enforcing time standards in the union-manned garages has dissuaded them from doing so,” Sullivan wrote.
The T commission, meanwhile, found that “there is a lack of performance metrics” at the agency and that “inefficient work practices and low productivity appear to contribute to substantial annual overtime costs.”
So: The Pacheco Law protects the T from the performance-improving pressure of private competition. Meanwhile, a lack of effective performance standards further abets widespread inefficiency and low productivity.
According to Sullivan’s Pioneer report, the T’s bus maintenance costs per mile are among the highest in the nation and almost double the national average for systems that operate more than 100 buses. Indeed, maintenance costs across the T’s entire operation are significantly higher than at comparable transit agencies, Sullivan says.
As we know from the T commission’s report, the agency has a maintenance backlog that runs into billions of dollars. How much might the T be able to stretch its budget if freed from Pacheco constraints? Well, here’s an example from the bus operation: In 2012, when the MBTA was able to sidestep the Pacheco Law because of capacity issues, the agency concluded that it would cost 50 percent more to perform in-house mid-life overhauls on some 190 buses than to transport them by flat-bed truck to a union firm in Michigan and have the work done there.
Put it all together, and here’s something lawmakers must realize: Dempsey is right. It’s time for them to step to the plate when it comes to Pacheco Law reform.