GloucesterTimes.com, Gloucester, MA

September 17, 2012

Two transit giants seek MBTA commuter rail deal

From Wire and Staff Reports
Gloucester Daily Times

---- — BOSTON — There are two giant consortiums vying for the next MBTA commuter rail contract, seeking the chance to move 70,000 passengers around eastern Massachusetts every day.

And whichever one wins the deal will add to operations portfolios that already span the globe.

Their size is a strength that both companies tout as the Massachusetts Bay Commuter Rail company — which currently operates the system — and Keolis Commuter Services, which operates France’s commuter trains, seek the next contract, which could run for a long time.

“We run commuter rail operations around the world,” Keolis President Steve Townsend told the State House News Service last month.

Keolis runs trains in England, Australia and one system in the United States taking commuters from northern Virginia to Washington D.C., and has partnered with the operator of France’s national rail system in its potential bid to run Boston’s commuter rail system.

The MBCR, meanwhile, is the incumbent, and is closely associated locally with the Massachusetts Bay Transportation Authority, with which it works closely dealing with commuter rail issues in Gloucester, Rockport Manchester and beyond.

But it is also a consortium between train builder Bombardier, France-based transport company Veolia Transdev and Boston-based transportation management company Alternate Concepts. Veolia is an international transportation company with operations in 27 companies and more than 100,000 employees, according to its website.

The makeup of the board that will award the contract is different from the board that authorized a contract extension for MBCR in 2010.

In its first meeting last week, the reconstituted Massachusetts Department of Transportation Board of Directors spent some time reviewing the bidding process. Transportation Secretary Richard Davey, who is a member of the new board, has not and will not participate in the process because he was previously employed by MBCR.

While Townsend declined to share the aspects of Keolis that the company might highlight in a bid for the contract, he told the News Service the company has worldwide experience operating “high quality” train service. “We’re a $6 billion company,” Townsend said in a phone interview.

MBCR Board Chairman Jim O’Leary emphasized the expertise MBCR has gained since it took over the service from Amtrak in 2003.

“Obviously we’ve learned a lot over the past nine years,” O’Leary told the News Service during an interview in his Boston office. “It’s a very complicated operation including the presence of the 14 railroad labor unions” as well as areas of track and railroad bridges in need of repair, he added later.

Asked about MBCR’s argument that its expertise with a complicated system is an advantage, Townsend said, “I won’t respond to something that the incumbent would say. They can say whatever they’d choose.”

He made the case, however, for a fresh perspective on the operation and pointed out that MBCR had to take over the system itself, from Amtrak.

“It’s sometimes a positive thing to have a new look at a system,” Townsend said.

The two companies have differing takes on the fact that only two companies have submitted statements of qualifications – the first step in the bidding process – after 31 entities expressed initial interest.

“We would have liked to see more competition because that’s good for us,” Townsend said. “It’s always good to be measured against others and not just the incumbent and unfortunately that’s not the case.”

O’Leary theorized the size of the rail system limited the number of companies qualified to take it on.

“It’s a very large contract. There’s a lot of risk in this contract,” O’Leary said. He later said, “I think the T benefits when there’s more than one bidder. It’s competitive for two.”

The MBTA’s commuter rail system includes 737 operational miles of track, making it the fourth largest system in terms of mileage, after New Jersey, Chicago and Los Angeles, according to federal government data. Its 70.5 million unlinked passenger trips in 2011 places it fifth in the nation, just above Philadelphia and below Long Island, New Jersey, New York City’s Metro-North Railroad and Chicago.

MBCR is the largest private commuter rail operator in the country in terms of 2011 unlinked trips, and is second to Los Angeles — operated by Amtrak — in private commuter rail operations based on miles of track.

Of the 22 commuter rail systems in the country, six are run by Amtrak, three are run by Herzog Transit, and four are run by other entities, including Keolis in northern Virginia and MBCR in eastern Massachusetts and Rhode Island, according to the federal data. Eight are publicly run.

The MBTA is considering in its next contract making the private contractor responsible for certain capital costs, such as track upgrades and the purchase of rail cars, and that is an area where private companies also have an advantage, O’Leary said.

One of the looming rail projects is the planned replacement of Gloucester’s Annisquam River rail bridge, which is more than a century old and has been deemed as being in the worst condition in the system.

The current contract is a “fixed price” of $280 million per year, wherein MBCR makes a 6 percent profit and bears the risk of fluctuations in the cost of doing business, O’Leary said.

Keolis, too, would be interested in possibly taking on some responsibility for capital costs under a more long-term contract, Townsend said.

“We would welcome an opportunity to make some long-term investment in this system, and it’s just a matter of understanding what the MBTA would like,” Townsend said, continuing, “Generally we would like longer-term contracts.”