MTA fails to save money by consolidating, according to NYS comptroller report

The state comptroller, Thomas DiNapoli, faulted the Metropolitan Transportation Authority for failing to do enough to save money, as promised, by consolidating purchasing.

Under a "Transformation Plan" approved in 2019, support functions were to be merged to improve service at lower costs by getting rid of duplication and redundancy, with processes standardized and simplified.

DiNapoli’s office found the MTA “was mostly operating under the same practices” years after consolidation of purchasing went into effect.

“Procurement Function officials stated that, while the consolidation of staff has been completed, Transformation is a continuous, ongoing process and there is no set timeline for completion,” a report summary said.

The MTA, which operates the region’s subways, buses and commuter rails like the Long Island Rail Road, and bridges and tunnels, spends over $7 billion a year on procurement. And while some progress had been made, the office found, more work has yet to be done.

For example, the MTA unit that directs purchases of items like bus and train parts reported savings of $152 million in 2022, but part of what was claimed as saved was due to “[c]anceled orders and services that were no longer needed.”

Also, the unit that manages about 85 warehouses and storerooms for the Long Island Rail Road, among others, “still uses procedures for the operations and management of its inventory assets that date back to the 1990s.”

In a statement, DiNapoli said: “More savings may be possible if it does more to coordinate purchasing among its agencies instead of the status quo of having them procure their needs independently. Consolidation, efficiency, and savings in this area was promised years ago, but has yet to be fully realized.”

In an email, MTA spokeswoman Joana Flores wrote: “The MTA successfully consolidated and reorganized the agency per the Transformation Plan, forging ahead with less redundancy and red tape. The MTA is still continuously improving business practices with more cost savings and has achieved reduced costs — identifying an additional $100 million in annual recurring savings for a total of $500 million annually, all while providing more subway, bus, and railroad service than ever before.”

The MTA also responded to the findings, disagreeing throughout, according to DiNapoli’s report.

“In response to our preliminary findings, MTA officials advised us that they are not required to define which, if any, portions of cost savings and cost avoidances at the MTA are related to the Transformation, including any cost savings or avoidances cataloged by the Procurement Function for any purpose.”

Spending at the MTA has long been unusual.

Per-mile costs paid to expand the region’s transit network are the highest in the world, according to a 2017 investigation by The New York Times, which cited antiquated rules, unwarranted staffing, bountiful contracts, and barely any competition.

Costs are also driven up by union rules: Unlike almost every other subway system around the world, where just one worker operates the train, rules here require under almost all circumstances that one worker, the operator, drives the train and another, the conductor, opens and closes the doors. Token booth clerks still staff posts, even though fares are now sold by vending machines or paid via tap-and-go. (Recent changes require the clerks to emerge, but just occasionally.)

While some commuter rails use, or are moving to use, fare gates to check for payment, the LIRR still staffs trains with conductors who walk the train aisles to inspect tickets, driving up labor costs. Newsday reported earlier this year that the MTA spent $1.42 billion in overtime last year, beating the previous record.

“The MTA’s costs both for building and operating are the highest in the world,” said John Kaehny, executive director of the group Reinvent Albany. “Really key thing here is that the high costs are the result in our view of state laws that require the MTA to go through contracting processes that are more based on politics than they are efficiency.”

Kaehny said that many of the 2019 transformation goals are "completely unrealistic."

Still, Kaehny said, the money at issue in the audit is a drop in the bucket.

"The amount of claimed savings discussed in the audit by both MTA and the Comptroller is truly dinky, near irrelevant," he said. "In 2022, the MTA spent or contracted to spend about $30 billion. The audit includes a dispute of savings that add up to a few hundred million."

By Matthew Chayes

matthew.chayes@newsday.comchayesmatthew

Matthew Chayes, a Newsday reporter since 2007, covers New York City.