FMCB Approves 4-Year Extension of Commuter Rail Contract with Keolis through June 2026
Posted on June 15, 2020
Contract extension incentivizes better service now and provides cost certainty in a challenging market.
With the goal of incentivizing better service now and providing cost certainty in a challenging market among other objectives, today the MBTA’s Fiscal and Management Control Board approved of a 4-year extension of the Commuter Rail Operating contract between the MBTA and Keolis Commuter Services, LLC, through June 30, 2026.
“Our main goals are to provide continuity and the best possible service for our Commuter Rail customers, as well as provide adequate time to plan for a future transformational procurement. With this extension in place, we look forward to continuing this partnership with Keolis,” said MBTA General Manager Steve Poftak. “This extension includes a number of additional benefits for riders, including further incentives for on-time performance, measures to address fare evasion, and flexibility and cost certainty in a challenging market.”
“We’re pleased the MBTA recommended and the board voted to extend Keolis’ contract for 4 years, exercising the full term of the contract options,” said CEO and General Manager of Keolis Commuter Services David Scorey. “This extension balances taxpayer and passenger needs as it keeps costs low while also enhancing the passenger experience, including a focus on providing more capacity, further increasing on-time performance and accelerating capital delivery. On behalf of our Keolis Boston team, we look forward to continuing our collaborative work with the MBTA and building upon the successful initiatives we’ve delivered together for the Commonwealth and our Commuter Rail passengers.”
Keolis Commuter Services is the MBTA’s contracted Commuter Rail operating partner with Keolis currently providing all mechanical, transportation, and engineering services. The 8-year contract that began July 1, 2014, and is set to expire June 30, 2022, included options for 2 2-year extensions through 2024 and 2026. The MBTA’s contract with Keolis is performance-based with the contract including a fixed price for a certain level of service and penalties related to on-time performance and passenger comfort. In collaboration with the MBTA during the current contract period, Keolis has added 10,000 more trains per year compared to 2014, including new weekend train service, piloted routes, and other services; deployed customer improvements that include technology that allows passengers to pay for tickets onboard with credit and debit cards; and reinforced safety management protocols that include an expanded and updated Safety Department.
This 4-year extension now also includes a number of additional benefits that include:
- Incentives for improved Commuter Rail service immediately through performance payments for on-time performance, train crew staffing, and seating capacity, which are designed to achieve service outcomes and promote continuous improvement. These incentives related to performance are worth a potential total of $5 million per year in fiscal years 2021-2026.
- Measures to address fare evasion/non-collection through the continuation of the Revenue Share Agreement for fiscal years 2023-2026, including the installation of automated fare gates that will significantly reduce ticketless travel. Train crew staffing incentives will also result in additional conductors onboard trains to check tickets.
- Investments in MBTA railroad infrastructure and assets, including incentives to accelerate capital investments that include early phases of Rail Transformation.
- Increased fleet availability and reliability through improved management of Mechanical Parts in fiscal years 2022-2026;
- Flexibility and time to develop transformational successor contract, with the possibility of re-procurement as early as 2025;
- Cost certainty in a challenging market with the MBTA paying less than the current market price for this contract;
- Extending this contract also avoids a potentially disruptive transition that might come with a re-procurement and followed by an uncertain multi-year transition to a new operator.
The 4-year extension of commuter rail operating agreement with Keolis has been approved for contract years 9 through 12 (FYs 2023-2026) with the MBTA given the ability to opt out after option year 3 (FY 2025). The agreement accounts for contractual cost growth with inflation rates reflecting current railroad industry relevant cost increases.
The projected net total new cost per contract year, which assumes a minimum of $100 million in capital work per contract year or a minimum general and administrative expense fee of $6 million, is an estimated $16,273,987 for CY7 / FY21; an estimated $34,704,927 for CY8 / FY22; an estimated $35,063,511 for CY9 / FY23; an estimated $43,398,524 for CY10 / FY24; an estimated $46,833,816 for CY11 / FY25; and an estimated $48,144,883 for CY12 / FY26.
During this 4-year extension, the MBTA will continue to plan for the future of the Commuter Rail with a new contract developed upon the completion of contract study and the development of additional contract objectives. The Rail Transformation capital plan will continue to be developed based on objectives for future Commuter Rail service with critical investments beginning to be made in infrastructure and rolling stock to better position the MBTA for a more competitive procurement. A new contract model will be identified based on information gained from the contract study, market sounding, and the commuter rail capital plan. Following the release of an RFI and a 6-month public procurement, a new contract will be awarded by January 2026 that allows for at least 6 months of transition between contractors.