New York State Comptroller Thomas DiNapoli issued a report yesterday exposing billions of dollars of MTA waste over the last four years. DiNapoli’s office examined the MTA’s spending on personal and service contracts and discovered numerous inefficiencies and redundancies in the process that has cost the agency approximately $2.9 billion in unnecessary spending.
“The MTA has raised fares and received more tax dollars to cover its deficits and debt,” DiNapoli said in a statement. “At the same time, the MTA expanded its use of personal service contracts without a thorough evaluation of the need or cost-effectiveness of those contracts. Now more than ever, every dime counts, and the MTA needs to manage public resources more carefully. Consultant contracts should only be used when absolutely necessary, and there has to be documented justification of that need.”
According to the state audit, these contracts now consume nearly 15 percent of the MTA’s operating budget, and expenditures have increased from $315 million in 2006 to $881 million last year. Oftentimes, the MTA could not prove that the outsourced services — including contracts for engineering and architecture, waste management, consulting and information technology — represented the most cost-efficient option. DiNapoli also urged the MTA to establish a way to determine “whether these contracts were still necessary or if they could be suspended or scaled back to help manage fiscal constraints.”
Hand in hand with this recommendation was the comptroller’s finding that “the MTA contracted for some services that would appear to be within their in-house capabilities.” DiNapoli wants the MTA to document “the need to contract out for such services.” That’s being diplomatic. If the in-house capabilities exist, the MTA shouldn’t be paying anyone else to carry out its tasks.
As examples, DiNapoli’s audit cites 244 contracts worth $513.6 million for engineering and architecture services, 387 contracts totaling $203.9 million for maintenance services, 183 contracts worth $149.5 million for consulting services, and 46 contracts $99 million for waste removal. Furthermore, the MTA contracted out for real estate management services, tree trimming operations and bus engine repair efforts. All of these tasks could be and oftentimes are completed in-house.
In a press release, the Comptroller’s Office nicely bulleted its other findings:
- MTA records showed that the agency initiated or completed consultant contracts valued in excess of $4.5 billion between January 1, 2005 and October 16, 2008;
- Spending on miscellaneous contracts consistently exceeds $1 billion per year and is rapidly approaching $2 billion per year;
- The value of awarded contracts nearly tripled between 2006 and the first 10 months of 2008, while the actual number of contracts declined by 35 percent during the same period;
- New York City Transit alone accounted for 776 contracts worth $1.8 billion during the audit period; and,
- Nearly one-quarter of all service contracts were non-competitive, including awards to sole contractors and well as emergency purchases.
DiNapoli also issued a set of recommendations for the MTA:
- Improve documentation of compliance with the MTA’s “All Agency Guidelines for Procurement of Services” by determining whether agencies can collaborate on contracts, or fulfill their needs by using another agency’s in-house expertise or existing contract;
- Periodically re-evaluate personal and miscellaneous contracts after they begin; and,
- Take steps to scale back or suspend reliance on service contracts, where appropriate.
The MTA took few issues with the findings and created a subcommittee on service contracts while the audit was ongoing. Whether any financial streamlining comes of it remains to be seen. This audit was one of nine on the MTA DiNapoli has released recently, and his office promises more to come. No matter how much posturing the State Senate does, this is real financial oversight, and the MTA should listen to these recommendations.
You can find a copy of the Comptroller’s Report in PDF form along with the MTA’s response to it right here.
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