MBTA Fines Keolis Over $800K For Delays, Other Problems

[NH2060]

From the Boston Globe (Fair use quote below):

The MBTA has penalized the company $434,000 for its inadequate on-time performance, which dipped to 85 percent in October. In addition, MBTA officials fined the company $370,000 for problems such as inadequate fare collection, staffing, cleanliness, and lighting failures.

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Anyone else think this is overkill? I know of at least one or 2 trains that were delayed on the Providence Line last month for a long time due to what I think were trespassing incidents.

[F-line to Dudley via Park]

It may not be fair since they're still cleaning up MBCR's entrails and dealing with a more difficult than anticipated birthing process for all the new equipment. But at least the enforcement mechanisms have real teeth. How many times did MBCR blow it per the letter of their contract's performance metrics and fines were simply never levied at all or "forgot" to be levied (*wink-wink*)? This is an improvement.

It doesn't sound like Keolis was all that surprised. They probably expected to take some initial losses while they were cleaning up what they inherited.

[BandA]

The company may be able to negotiate a lower fine because of delays that were beyond the company’s control, according to [Mac] Daniel.

I'm curious how Keolis perceives this - will managers not get their bonuses? (or do they pay them anyway because it's their first quarter & they have excuses). Could Keolis have done anything different to avoid this? It will be interesting to see how Keolis' managers respond in the next quarter.

Even if it isn't Keolis' fault, passengers & the "T" have suffered, therefore the vendor should feel our pain. I like this contract.

[BandA]

When I was working for a large company, the line-of-business badly missed their results for the quarter. Nothing much happened. But when they missed the second quarter in a row, the president left and there were lots of changes.

[deathtopumpkins]

Honestly, I'm sure Keolis isn't too upset considering $800,000 is a drop in the bucket compared to the $2,700,000,000 contract. I'm sure they anticipated this, and hopefully it will incentivize them to do better. Even if it is just teething issues since they're new, the riders have suffered from noticeably poorer service, and Keolis should be held to the terms of their contact.

[tvachon]

It's nice to see that this is being utilized (particularly being a Fitchburg rider), but as a daily commuter, when can the MBTA get fined? The red line has been abysmal since the summer. Even right now it has a moderate delay

[CRail]

Honestly, I'm sure Keolis isn't too upset considering $800,000 is a drop in the bucket compared to the $2,700,000,000 contract. I'm sure they anticipated this, and hopefully it will incentivize them to do better. Even if it is just teething issues since they're new, the riders have suffered from noticeably poorer service, and Keolis should be held to the terms of their contact.

The MBTA doesn't cut them a check for $2,700,000,000 and say "that's for you now help us run this thing." It's "Here's the 6th most utilized commuter rail network in the country, and here's what you have to run it with. Good luck!" Granted, It's surely a profitable sum, but remember all operational and overhead costs come out of that as well as some capital expenses (not buying locomotives and infrastructure, obviously, but they do have to pay for some vehicles and equipment). The $800,000 comes out of the company's profit, not their revenue, which is a MUCH lower number! My point is the "We give you THAT much money and you STILL can't do it!?" attitude is petty and would come from uneducated sources regardless of what the number was.

but as a daily commuter, when can the MBTA get fined? The red line has been abysmal since the summer. Even right now it has a moderate delay

Firstly, by who? The MBTA owns and operates the red line. They're going to fine themselves? And to what benefit?

Secondly, you don't want that. I've seen comments on articles by Commuter Rail riders assuming that charging the contractor will make the fares increase. Anyone who knows how the fare and revenue structure works knows that isn't the case, because fares go to and are set by the T and not the contractor, but if the T's budget was burdened by fines from its own delayed trains then you actually might risk raising the fares. Plus, they also set the schedules. If they're paying fines because they can't afford to staff a train because they're paying fines for not running the train because they can't afford to staff it (etc.), they'll just cut it and not fine themselves for not running it. You see why that makes no sense at all!?

[deathtopumpkins]

Honestly, I'm sure Keolis isn't too upset considering $800,000 is a drop in the bucket compared to the $2,700,000,000 contract. I'm sure they anticipated this, and hopefully it will incentivize them to do better. Even if it is just teething issues since they're new, the riders have suffered from noticeably poorer service, and Keolis should be held to the terms of their contact.

The MBTA doesn't cut them a check for $2,700,000,000 and say "that's for you now help us run this thing." It's "Here's the 6th most utilized commuter rail network in the country, and here's what you have to run it with. Good luck!" Granted, It's surely a profitable sum, but remember all operational and overhead costs come out of that as well as some capital expenses (not buying locomotives and infrastructure, obviously, but they do have to pay for some vehicles and equipment). The $800,000 comes out of the company's profit, not their revenue, which is a MUCH lower number! My point is the "We give you THAT much money and you STILL can't do it!?" attitude is petty and would come from uneducated sources regardless of what the number was.

Hey now, don't go sticking words in my mouth. I know they don't get handed a check for $2.7B. I know their profit margin isn't huge. My point was just that that's such a large number compared to $800k that no matter how slim their profit margin the fines are not going to bankrupt them. They clearly are making a profit from it, and, like I said, they knew this would happen, and they figured they'd still come out on top.

My attitude is not how you describe, nor am I being petty. Nor am I "uneducated". I just wanted to point out, like others, that they knew this was coming and it's not going to bankrupt them. It's spelled out in the contract, shouldn't come as a surprise, and is not the big deal it's being made out to be by the media and uninformed public.

[CRail]

While you untwist your knickers, my points were in response to your statement which neglected to point out what you acknowledge in retrospect, not your knowledge. I addressed a general attitude taken by people uneducated (not in the know) in the situation at hand who make a petty argument, which you mimicked in your comment. My statements did not regard any specific person. If we're going to nit-pick, let's do so consistently.

[BandA]

$800K is about 1% of the contract ($2.7b / 8yrs / 4 qtrs = $84375000 per quarter).

[BandA]

Managers in the state are (probably) worried about the transition to a new, Republican governor, and the unexpected budget deficit. If they are doing their job well (or appear to be doing it well) they are more likely to keep their jobs. Enforcing contract terms is part of their job.

[deathtopumpkins]

$800K is about 1% of the contract ($2.7b / 8yrs / 4 qtrs = $84375000 per quarter).

Hopefully (and logically) they won't perform poorly enough that they'll incur $800k in fines every quarter, but thank you for demonstrating exactly how small this fine is in comparison.
If this is the only quarter they incur fines in (unlikely but ideal), the fine would only amount to 0.03% of the contract amount. Assuming their profit margin is as narrow as 1% these fines would only eat away less than 3% of profit.
A drop in the bucket that they surely anticipated.

[BandA]

It's big enough for them to take notice! Not big enough for them to pay overtime out of their own pocket.

[Arborwayfan]

A fine in a contract is not quite the same as a criminal fine. Keolis agreed to do abc for a certain amount of money, and to get a bit less if they failed to do abc to standard. Unless the T and Keolis had negotiated some deal for the first quarter or two, this is just what the parties agreed to, and the T would have no reason not to follow the contract. It's a good thing that the T has begun as it means to go on, and it's also a good thing that this big sum of money is a small percentage of their total revenue.

[daytripper1]

A couple of things regarding these "fines". First off, there was a 90 day grace period on the fines. So Keolis could have completely tanked operations through Oct 1, and it wouldn't have cost them a penny.

It looks good that there's $800k+ in fines...but is that the ASSSSED amount of fines, or the PAID amount in fines?

Keolis knew that the cap on fines was $12mil/year. That was already factored in to the bid proposal when they put their bid together. There is no chance they expected to pay $0.00 in fines over 8 years. So anything under $1mil/month in fines is money in their pocket. If they only actually paid $800,000 +/- in the six weeks they COULD be assessed the fines, they're $200K +/- to the good.