OVER BUDGET, BEHIND SCHEDULE
Report reveals costly, sluggish MBTA fare-collection overhaul
A new report by a Boston-based think tank has found that the MBTA’s farecollection overhaul project is $211 million over budget and now approaches $1B cost while running three years behind schedule.
“One takeaway that we have is that this mega project approaching $1 billion went off the rails originally, and the new MBTA (general) manager, Steve Poftak, basically took extreme steps to correct the problems,” said Greg Sullivan, co-author of the report released by Pioneer Institute on Thursday.
“We’re concluding that this project is back on track and it’s being successfully implemented day by day.”
The report examines the difficulties the agency encountered with its initial $723 million contract for the project, which seeks to modernize the T’s fare-collection system.
MBTA spokesperson Joe Pesaturo said T riders “will benefit greatly from the new tap-and-go system, which will allow them to pay fares by using phones, contactless credit cards, or the new CharlieCards on all subway lines and bus routes.”
In February 2019, the MBTA sent a breach-ofcontract letter to Boston AFC 2.0 OpCo LLC, the corporation tasked with completing and operating the system, but rescinded it a few months later and instead opted to renegotiate the March 2018 deal, the report found.
Jim Stergios, executive director of the Pioneer Institute, said this put taxpayers “on the hook for an additional $211 million.”
The new contract, signed in June 2020, increased its cost from $723 million to $934 million, and delayed full implementation by three years — from May 2021 to May 2024.
“The original contract, in hindsight, was a catastrophe because it was completely unrealistic to expect this system to be designed and operated in less than two years,” said Sullivan.
The new contract calls for a phased approach to implementation, rather than launching the new system across all stations at one time. The T said it determined the initial approach — which resulted in a compressed timeline for testing, installation, and customer transition — was not feasible.
The revised deal also “includes a robust risk allocation with substantial financial consequences and incentives around timeliness and delivery,” Pesaturo said.
“That agreement is the result of negotiations which addressed both the risks the MBTA faced in the original agreement, and the underlying concerns the MBTA had at the time about OpCo’s performance,” said Pesaturo. “If OpCo does prove to be delayed in completing the project, the price of the project will be reduced by every day of such a delay.”