Vendors renegotiate contracts to save MTA $40M

In its latest effort to shrink a nearly $400-million budget deficit this year, the MTA has renegotiated the contracts of dozens of vendors in order to save $40 million over the next 12 months, transit officials said Tuesday.

Shifting from the previous mindset that contracts were set in stone, Metropolitan Transportation Authority officials reached out to about 50 vendors, who supply the agency with everything from bus tires to train tracks, and asked, "Can you do better?" MTA Chief Operating Officer Charles Monheim said.

"In many cases the answer was yes," he said.

Of the 50 vendors, 43 agreed to renegotiate their contracts, for a total savings to the MTA of $18 million in 2010 and $40 million in 2011.

The biggest savings came from renegotiating contracts with paratransit providers in the city, which are subsidized by the MTA for offering door-to-door bus and van service for disabled commuters. The MTA expects to save $15.9 million this year by renegotiating those contracts, officials said.

Monheim said the MTA will be "less inclined" to work with those paratransit providers who refused to change their terms. The providers are generally hired by the hour and compete with numerous other paratransit companies for the MTA's business.

Most vendors realized it was in their financial interest to protect those of the MTA, Monheim said.

"These contracts were negotiated in different economic times," Monheim said. "There's a willingness to want to deepen the relationship and remain on good terms with us. This is how business is done these days."

The MTA still has a long way to go to close its budget gap, and doing so will be "extremely difficult," officials said. A host of service cuts, layoffs and other efficiencies have been implemented to close last year's deficit of nearly $400 million, and transit officials have said they don't plan to raise fares until next year.

Monheim said a key to reducing the deficit will be working with labor unions, which account for a large amount of the MTA's expenses.

"It doesn't solve the problem by itself, obviously," William Henderson, director of the Permanent Citizens Advisory Committee to the MTA, said of the renegotiated vendor contracts. "But it's better to have the savings than not, even though you don't get all the way there."