Toward the end of last week, the MTA announced $40 million in savings through cuts to back-end projects, and in doing so, authority officials said they would next begin to renegotiate vendor contracts. Today, the MTA has announced $18 million dollars in 2010 savings through just that route. By renegotiating contracts with 43 vendors and suppliers, the MTA will rack up the savings in 2010 and reduce costs by $70 million over the life of the contracts.
According to MTA officials, the savings will come via renegotiated paratransit and IT vendor savings, and the MTA says that riders will not notice the difference. “Companies in financial distress often go back to vendors and ask them to renegotiate contracts and that’s exactly what we’re doing here,” MTA Chief Operating Officer Charles Monheim said. “We took a new approach asking our suppliers if they could do better and in many cases, the answer was yes.”
Interestingly, as per The Times, those vendors who refused to negotiate will be penalized in the future with fewer MTA business opportunities. “Let me put it this way,” Monheim said to Michael Grynbaum. “They will be given all the rights any contractor would receive. But we may be less inclined, where we have discretion, to be favorably disposed to them.” Meanwhile, the MTA still has to find at least another $300 million in savings to close their 2010 budget gap, and without more massive cuts or a premature fare hike, they will be hard-pressed to do so.
2 comments
It’s going to be tough for the MTA to penalize vendors who aren’t playing along, largely due to the power that state law gives to the vendors in such situations. Unless the vendor defrauds the state, fails to meet the terms of the contract or has the higher bid, there isn’t much the MTA can do.
My old supervisor had a series of run ins with one major electrical equipment manufacturer and their regional distributor and no matter how many times they submitted something that everyone knew was woefully inadequate and cheaply built, the lawyers would still force us in engineering to accept the crappy equipment.
They won’t be sanctioned, but they won’t be given any sort of preferred contractor status.