Home MTA Economics DiNapoli: Transit wasting millions on gas contracts

DiNapoli: Transit wasting millions on gas contracts

by Benjamin Kabak

For the past few months, the MTA has been scrambling to close a budget gap of nearly $400 million. Each week, the authority unveils a new approach to management that will, in the words of Chair and CEO Jay Walder, help make every dollar count, and these measures have included limiting overtime, changing work rules, renegotiating contracts and laying off station agents. Nothing is sacred as the dollars are scarce.

Late last week, though, New York State Comptroller Thomas DiNapoli unveiled the results of one of the numerous audits to which he is subjecting the MTA, and in it, he reveals that the authority could be wasting tens of millions of dollars on fuel contracts for New York City Transit and MTA Bus. Due to what DiNapoli is calling “wasteful practices and improper oversight” along with bad bookkeeping practices, the comptroller believes the authority spent $39 million more than it needed to on diesel fuel costs over a three-year span. At this point, the $13 million annually could be put to better use.

“New York City Transit and the MTA Bus Company are literally running out of gas because of their poor spending practices,” DiNapoli said in a statement. “They squandered more than $39 million of taxpayer dollars due to outdated, expensive contracts and delayed decision-making. Buses don’t need jet fuel, and taxpayers shouldn’t have to pay for it. There are some clear, decisive steps to cut excessive fuel spending. The MTA should work with OGS to lower its fuel bills and maintain accurate records for how the bus fleet buys and uses fuel.”

The audit — available here as a PDF — explores the MTA’s fuel procurement process and basically condemns the agency for negotiating an unnecessarily expensive and environmentally unfriendly contract for diesel fuel in 2002. In 2006, the MTA had to renew this contract at a loss of nearly $30 million because no other company submitted a bid. As I explored last week, the MTA’s contract bid system is a very fault one, and this audit simply reinforces that notion.

As a conclusion, DiNapoli’s suggestions were barely groundbreaking. He urged the MTA to “explore alternative contracting strategies including the use of the OGS fuel contract; finalize new policies regarding fuel accountability and train personnel on the new rules; account for fueling discrepancies on a daily basis; and require fuel to be tested for compliance with contract specifications.” Outcomes such as these make me wonder what the other dozen audits DiNapoli is conducting are truly going to find. Will his examination of the MTA’s overtime practices be more revealing that the authority’s own condemnation of the way overtime is abused or can DiNapoli find savings that amount to real annual dollars instead of token amounts in $10 million increments?

For its part, the MTA said it had already begun to implement changes DiNapoli suggested in the audit, further shining doubt on the utility of these non-stop audits. The report, said the MTA, “did not acknowledge the significant progress that had been made in establishing the necessary policies and procedures for fuel monitoring at the MTA Bus Company prior to the conclusion of the audit.” With the MTA in “general agreement” with the findings, DiNapoli’s audit highlight internal inefficiencies in a massive bureaucratic organization, but it also seems to be a classic example of closing the barn door after the horse has escaped. Unless DiNapoli can find real institutional abuses and shortcomings at the MTA, his audits achieve little.

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17 comments

Josh K May 24, 2010 - 1:42 am

Wasn’t MTA bus, until just a few years ago, several privately run companies? I wouldn’t be surprised if they weren’t effectively integrated into the MTA. The MTA hasn’t even fully integrated the IRT and BMT sides of NYCT yet.

I do have to agree with DiNapoli that getting the entire MTA on the NYS Office of General Services (OGS) fuel contract is something that the MTA really needs to follow through on. By going through OGS, the MTA gets in on a deal where economies of scale really start to apply. With the MTA, OGS (who manages a lot of the consolidated contracts for most state agencies, local governments and schools throughout NY) can even have even better leverage with the big oil companies. I think that all of the state agencies need to start applying this to everything. Why do MTA employees, state employees and local government employees have different health and pension benefits? Can’t those be contracted in such a way to get large scale discounts?

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nycpat May 24, 2010 - 2:01 am

Yes MTA Bus was recently private companies-crony capitalism- which is why Walder is a snake for wondering out loud in the media why express bus guys can’t drive local busses during their swing time. If they get swing time. All the bus divisions have different rules and rates. MABSTOA still exits as part of NYCT. MABSTOA drivers are TWU but not civil servants but receive NYCERS pensions?
Maybe Cuomo will straighten it out.

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BrooklynBus May 24, 2010 - 10:53 am

MaBSTOA does not receive NYCERS Pensions. As I understand it they have their own pension plan based on farebox revenues and that’s a major sticking point preventing full integration of MsBSTOA into NYCT operations. I wouldn’t hold my breath on the next governor straightening anything out.

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BrooklynBus May 24, 2010 - 10:38 am

Of course, MTA Bus has not been integrated into the MTA. It is a totally separate entity other than the same person is in charge of all bus operations. Planning functions for eaxample are totally independent. That’s why the criteria for making service cuts was different among the agencies. MTA Bus was much more lenient in their cuts. Virtually all MTA Express bus weekend opertions which have been retained cost more to operate than NYCT Express bus routes which are being curtailed on weekends.

IT will take them 40 years to integrate MTA Bus just like its taking them 40 years to integrate the administrative functions of MNR and LIRR. IT also took over 50 years for the MTA to start offering free transfers among all its bus lines, having retained the same archaic privileges offered by the private companies in the 1930s (except for the ones discontinued by MaBSTOA in 1962).

Your pension question is a good one.

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Scott E May 24, 2010 - 7:57 am

The problem with audits is that the group being audited often spends more time gathering (or generating) supporting documentation than they do being productive in their responsibilities. In this case, the MTA is accused of failing to provide documentation why the #1 (jet/kerosene) fuel is better than #2 (standard diesel). The auditor goes on to ask a national long-haul trucking company, as well as express-bus providers, which are not subject to the same stop-start patterns as city buses, rather they are continuous high-speed vehicles. The most stress on an engine is when it goes from a still state to a moving state, and perhaps the #1 fuel is better in this regard.

I do not claim to be an expert in any sense on diesel fuel, and I am open to the possibility that the MTA’s spending practices can be improved, but I really feel that the author had a preconceived agenda here.

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Al D May 24, 2010 - 9:54 am

How much did the audit cost? Actually, what is the total cost of all the MTA audits? Maybe that money should be used more wisely, particularly since the MTA has a reform-minded Chairman who has already demonstrated that he can and will act. And he hasn’t even finished his first year.

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BrooklynBus May 24, 2010 - 10:50 am

It’s amazing how you can criticize the auditor and not the MTA even when they do not disagree with the findings. I am willing to give Walder a chance but good intentions are not enough. So far the changes he is making directiy affects the customer. I’m still waiting for effciencies that don’t.

As reported in AM NY, why are they filling vacancies for cleaning supervisors at the same time they are laying off cleaners? And why is there one supervisor for every four cleaners? He talks about administrative efficiencies but where are they? He shelved his proposed 10% pay cut for managers until the fall, but alteady intends to put forth a second round of service cuts before the first round has even begun.

And Ben, you also end the article on a note criticizing Napoli rather than the MTA and so does Scott E. I’m beginning to think that most everyone commenting on this site is employed by the MTA.

Ben, you ask Napoli for “real institutional abuses” and “shortcomings” at the MTA? Would you consider anything the MTA does a “shortcoming”?

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SEAN May 24, 2010 - 4:21 pm

And Ben, you also end the article on a note criticizing Napoli rather than the MTA and so does Scott E. I’m beginning to think that most everyone commenting on this site is employed by the MTA.

Oh! How I wish I was employed by the MTA. Could you imagine a visually challenged CS rep. who knows more about how to travel from place to place in the tri-state area better than everyone else in that department put together.

So cool it! You sound like a troll.

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Benjamin Kabak May 25, 2010 - 12:09 am

I’m not employed by the MTA, and as far as I know, Al isn’t either. I don’t see why we can’t criticize the MTA for its poor contracting procedures, as I’ve done here and last week, and DiNapoli for wasting money — my money, your money — with these audits. He should just do a full forensic audit and be done with it. This year-long examinations into highly specific spending areas are running their course, and he has 14 concurrent audits on the MTA going right now.

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BrooklynBus May 25, 2010 - 9:52 am

Sorry, I didn’t realize there were 14 concurrent audits and that’s why you were criticizing him. I guess the question is would one big forensic audit be more efficient and would it be feasible considering the time it would take to complete?

I guess the advantage for Napoli of 14 separate audits is obvious. It gets his name in the news every time he releases more results, which is all that politicians are interested in.

I also hadn’t previously read your criticism of the MTA’s contracting procedures. You made some good points there.

SEAN May 24, 2010 - 10:19 am

Can the MTA buy feul hedging contracts on the futures market? I’m thinking in terms similar to the way airlines do. Granted JetBlue & Southwest the king of feul hedging contracts has really been taking a bath as of late with sed futures, however it maybe an option to save money.

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Alon Levy May 24, 2010 - 7:44 pm

It has no reason to. High fuel prices move people away from cars and onto MTA-operated transit.

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Al D May 24, 2010 - 10:32 am

There’s a Hess station on Bushwick and Metro that has diesel, is pretty reasonable, and is convneniently located! 😉 But DiNapoli and Liu should audit that gas station first!

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SEAN May 24, 2010 - 12:48 pm

Tanks a lot! Just putting an idea out there.

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Larry Littlefield May 25, 2010 - 8:57 am

While it’s useful for the Comptroller to give advice on saving nickels and dimes, it’s time for riders to demand that the Office of the State Comptroller show where the hidden $billions are.

For years, that office said the MTA had hidden billions, and could pay richer pensions, and had money for all sorts of things, without raising or even cutting fares. State legislature repeated it, and so did the Straphangers. And people believed it, because it was what they wanted to hear.

Now I want to see those hidden billions. Or I want the MTA to declare bankruptcy and walk away from its debts and retirement obligations. Let the politicians pay them out of their own pockets.

SHOW ME THE HIDDEN BILLIONS.

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Nathan H. May 25, 2010 - 12:54 pm

Let’s put a bounty on the MTA’s hidden billions: anyone that can find them gets a percentage, which should add up to millions!

I expect this would be as popular as the bounties on testable psychic ability.

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Streetsblog New York City » Joan Millman Shows Why Pols Should Be Banned From Fare Hike Hearings September 24, 2010 - 4:27 pm

[…] DiNapoli’s office have identified $56 million in potential overtime savings each year, and $13 million in potential annual savings on fuel contracts. The agency had to plug an $800 million deficit this year, and its debt payments […]

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