The MBTA overpaid a Tennessee-based company by more than $5.3 million to outsource in-station customer service agents and did not set clear goals to track their performance, Massachusetts’ top government watchdog found in a new report.
A review from Inspector General Jeffrey Shapiro found although the MBTA saved money by using the company, Block by Block, instead of using state workers as “transit ambassadors,” the overpayments arose because the agency failed to account for special events. The study also found the T paid Block by Block employees higher hourly wages than the contract called for.
The so-called ambassadors are the employees typically dressed in red shirts that help riders get around, report maintenance and cleaning needs, and help ensure the safety and security of stations.
The agency also succeeded in expanding the number of hours and stations covered by customer service agents.
But a five-year contract between the MBTA and Block by Block lacked a way to track performance metrics, a key component of the agreement, and did not include penalties for non-performance.
Shapiro said that made it “impossible” to determine the quality of the company’s services or whether the contract, which ran from July 2017 to September 2022, was successful in making stations more accessible.
In a letter to state transportation officials, Shapiro said contracts should include specific performance metrics to make clear the level of service the vendor is expected to provide. Those metrics should also be coupled with independent audits, periodic reviews, and “secret shoppers.”
“The MBTA employed none of these common tools, so it was difficult to assess if the contract met the goal of improving service. For example, the MBTA did not even attempt to ascertain how Block by Block transit ambassadors were conducting and reporting elevator checks,” Shapiro wrote in the letter. “This simple and seemingly small detail has a potentially huge impact on MBTA riders, particularly those with disabilities.”
At a Thursday morning MBTA board of directors meeting, General Manager Phillip Eng said the agency has already taken steps to improve procurement processes and the management of vendors.
“We look forward to continuing to work with the [Inspector General’s Office] in the issues identified in the report. It’s extremely important to folks that know that we are taking this very seriously,” Eng said.
Block by Block President Blair McBride directed questions about the contract to the MBTA.
“We’re proud to have helped thousands of MBTA customers through the transit ambassador program,” McBride said in a brief statement to the Herald.
The contract exceeded its expected cost by nearly $5.37 million, Shapiro’s report said, with a majority of the overage a result of the MBTA’s “failure” to account for special service requests to cover events like Red Sox games or concerts.
“Once it was understood that special service requests resulted in increased costs, the MBTA should have planned for this in subsequent contract periods,” the report said. “Only once in five years did the MBTA factor in special event coverage when determining the ‘not-to-exceed’ cost, even though professional sporting events and concerts are planned well in advance and publicly announced.”
The transit agency also paid higher hourly rates than what was specified in the contract, according to the report.
Shapiro said he was surprised to learn that an agency the size of the MBTA would renegotiate rate changes outside of the contract “and not memorialize those changes in a written contract amendment.”
The decision to increase hourly rates presents a “significant issue for the MBTA, one that its senior leadership should address,” Shapiro said.
A new contract between the MBTA and Block by Block contains performance metrics and a team at the transit agency “actively reviews” Block by Block’s performance, according to Shapiro.
“In addition, we understand that beginning next month, the MBTA is taking specific steps to improve their contract administration by assigning and documenting a contract manager for contracts over $250,000,” Shapiro wrote in the July 26 letter. “We applaud these efforts.”
In the 56-page review, Shapiro recommended improvements in contract administration, oversight, rates, records and information retention, and federal procurement.
“While privatization succeeded in saving money for the MBTA on a same-coverage-level basis, the absence of performance metrics in the MBTA’s contract hindered the [Internal Special Audit Unit’s] ability to determine the overall success or failure of its other stated goals,” the report concluded. “The MBTA must strengthen its vendor management with the new 2022 Block by Block contract and with all of its contracts systemwide.”
The review is the third from Shapiro’s office that takes a look at contracts the MBTA has inked with private companies. Previous audits scrutinized an absence management contract with Workpartners and a police dispatch services agreement with IXP Corporation.
Shapiro said all three reviews found similar themes of “insufficient contract” oversight by the transit agency through a “a lack of performance metrics, a failure to abide by all terms of the contract, and poor records retention.”