State Report Blasts MBTA Contractor
Company hired to run Transit Police dispatch service under-delivered, charged extra, and kept inadequate records, according to inspector general’s report
Ed. note: This article has been updated to reflect comments from IXP that were received after publication
The private company hired to run the MBTA’s Transit Police dispatch never met requirements for fast responses to calls, reduced its staffing levels without reducing its pay rate, and billed nearly $700,000 more than its initial contract despite not completing all the services outlined in that contract, according to a scathing report released by the state a month ago—but the T has already re-hired the company.
Neither the MBTA or IXP Corporation maintained or released many records required by the state inspector general for the audit, according to the report. The MBTA paid IXP $5.5 million to run its police dispatch from 2017 to 2022, and rehired them late last year, promising it has new requirements to hold the company accountable.
But the audit should prompt officials like new Gov. Maura Healey to take a close look at T contracts, according to experts on privatization of public agencies.
“The promises of cheaper, better, faster—we need to always evaluate these things. There may be other contracts we are not paying close attention to and we want to do a full evaluation, look at bringing this back in house or keeping in-house,” said Donald Cohen, executive director of In The Public Interest, a nonprofit that studies privatization. “Public safety is not something to be outsourcing. Contracting out is put as a silver bullet that will solve all your problems—it doesn’t. We need to be evaluating it at all steps, that notion and that reality.”
Ultimately, while MBTA officials promised privatized dispatch would cut down on overtime and reduce serious crimes on MBTA property, IG auditors could not determine if the five years of IXP running dispatch actually achieved those goals due to shoddy record-keeping—but they did determine that when it comes to dispatch times, public TPD workers in previous years did a better job than IXP.
In short: IXP was awarded its contract after former Gov. Charlie Baker removed regulations for private companies working for the public. Furthermore, auditors found the New Jersey-based company was paid despite not completing all of the work outlined in that contract, while the work itself was also below the standard IXP was required to meet.
The report raises questions not just about IXP’s performance, but also the MBTA’s management of how it contracts with private businesses. And it calls on the MBTA to actually hold IXP accountable under its new contract, which has gone into effect as the T has seen high-profile assaults on its trains, with attackers at one point crossing from one line to another before fleeing.
“Strong contract development, contract administration and record retention practices are essential to ensuring that the government receives the goods and services it needs at the agreed-upon price and quality,” the IG’s office wrote in its report.
“Why bother doing audits if you don’t read them and use them?” Cohen said. “The purpose is to evaluate whether the contract is providing a service. The reason [for audits] is not to create paperwork, it’s to say, Did they do it and should we continue working with them?”
A spokesperson from IXP wrote in response to this article, “As a privately owned business, integrity and solid proof of performance are our hallmarks for success. Our reputation is distilled from years of experience building upon these foundations. We value our long-term partnership with the MBTA PD and respect the IG’s office and their continued due diligence in finding areas of improvement for all parties. We believe that many areas of the IG’s report lacked the context needed to frame an appropriate accounting of the value and benefits that the IXP ‘private service’ brings to the larger T community.”
The spokesperson added, “Our value proposition is that a private, public safety emergency communications company can deliver the required emergency communications services at significant savings. Based on MBTA’s initial cost analysis, contracting with IXP over the five-year years resulted in an estimated savings of $4,671,288.00. Additionally, the MBTA benefited from cost savings realized by not having to hire and train 15 new transit police officers, who were immediately freed from dispatch responsibilities and returned to patrol functions.” (The company’s full statement can be found here.)
Reduced oversight, restricted bids?
In the early 1990s, Massachusetts lawmakers passed what is commonly called the Pacheco Law to regulate attempts at privatizing state government services. Under the law, private companies must prove they can perform work at a lower cost than state agencies and pay the same wages state workers would get for that work, along with offering work to public employees who lose their jobs because of privatization. Public employees have the chance to respond to bids as well, and any winning private bidder must prove they’re complying with Pacheco Law regulations.
But in 2015, then-Gov. Charlie Baker pushed a three-year exemption for MBTA bids through the state legislature. Under that exemption, the IG’s office was required to review the cost and performance of any private companies who won public bids—but only after the contracts were concluded. Otherwise, companies bidding for T work no longer had to show proof their work would be cheaper or better than what was already being done.
And T officials took advantage of the removed restrictions, contracting with numerous private companies by the end of 2017, including:
Paying Brinks, Inc. $18.7 million over five years for cash collecting and processing
Paying Global Contact Services $5.8 million over three years, with two one-year-options, to run the customer call center
Paying Block by Block $4.1 million a year, with three one-year options, to manage the customer service agents program
Contracting with Management Consulting Inc. over five years to manage warehouse operations
Contracting with Workpartners to manage workplace absence requests
Officials also called for privatizing Transit Police Department dispatch services, letting civilians answer and process calls to the TPD and direct police response instead of using TPD officers. According to the IG’s report, MBTA management argued this would cut costs and put officers back on patrol.
When the MBTA first put the dispatch work out for bid in 2016, they sent notifications to 1,200 companies and ultimately evaluated proposals from three—IXP, G4S Secure Solutions, and the Essex County Regional Emergency Communications Center. The bid committee rejected the last group’s proposal as technically noncompliant and ultimately proposed adopting IXP—even though IXP’s yearly price was more than $2 million compared to the G4S price of about $1.1 million.
In response to this article, an IXP spokesperson wrote, “The MBTA’s RFP for dispatch services described two primary service level metrics related to call-answering and dispatching requirements normally reserved for a primary 9-1-1 Public Safety Answering Point (PSAP). Instead of applying the industry standard to only the ‘highest prioritization level’ calls as outlined in the standard, the MBTA modified the standard to apply to every call and each dispatchable incident that originated at the TPD call center.”
The committee said IXP’s technical merit justified the high price, but the T’s Fiscal Management and Control Board thought otherwise and did not approve the contract. So a year later, the T re-bid the dispatch work with reduced staffing, including no longer requiring an on-site working supervisor. While this bid was also publicly posted, only 33 companies—including IXP but not G4S or the Essex County group—were notified. And while interested parties had two months to respond to the previous bid, this time they only had 22 days. IXP was the only company to submit a proposal.
Increased costs, decreased work
This time, IXP got the job—for a contract “not to exceed” $4,825,120 over five years. And they immediately started adding costs, according to the IG’s report. In addition, the MBTA paid consulting firm Accenture $154,000 to help with the transition.
During the transition and afterwards, TPD officers in the dispatch center trained IXP workers on the center’s software and other TPD-specific systems, the IG’s office found. But because TPD did not track the specific time its officers spent training IXP workers, the IG’s office could not calculate that additional cost.
“The Office questions the need for the MBTA to hire a consulting company to assist with the transition period because in its response to the MBTA’s RFP, IXP noted its success in transitioning multiple past clients to its services,” the IG’s report reads. “The MBTA and IXP should have documented issues about IXP’s inability to be ready on day one, the incurred additional MBTA costs, the changes to day one readiness for IXP hires and the impact on all of this on the contract rate.”
Almost immediately, IXP reduced the staff it was contractually obligated to provide, going from three telecommunicators on the 11pm to 7am shift to two. IXP and TPD amended the contract to allow that reduction—but never adjusted IXP’s pay rate to reflect it was providing less of a service.
“At a minimum the MBTA should have documented its rationale for agreeing to this change, but more appropriately, the MBTA should have negotiated a corresponding rate reduction,” the report found.
Cohen said privatizing public services will often lead to those services being reduced in the name of saving money.
“[Private companies] say they are going to save money and be more efficient—does efficiency mean spending less and getting equal or better service? Or might there be things you don’t want to spend less on?” Cohen said. “They could be cutting corners. When you take from concrete things that matter … bad things happen.”
Under the initial contract, the MBTA would pay IXP a maximum value of $4,825,120 for up to five years, or $965,000 a year. The first part of the contract ran for three years, with the possibility of two one-year options.
And during those option contracts, IXP suddenly got more money—$300,000 the first year, and $388,00 the second. According to the IG’s report, that additional $688,00 outside the scope of the original contract went to additional employees, increased pay rates, and bonuses for IXP workers—but auditors couldn’t determine if those extra dollars got better results.
“Based upon information provided, it is not clear that the MBTA received enhanced service levels—notably for call-answer and call-dispatch times—for each of the two years that it agreed to increase the fixed-rate contract rate,” the report reads.
Missed metrics and unmet requirements
The report notes that TPD employees said IXP workers generally performed well despite a lack of familiarity with the Boston area, and records show the company met staffing requirements for 98.4% of shifts. The company only received one written complaint during its first five years of work, although a footnote in the report makes the point that “Having only one written complaint during this contract period raises other questions.”
Ultimately, the IG’s office wasn’t able to fully evaluate IXP’s performance because neither they, TPD, or the MBTA kept full records of the company’s performance, according to the report. And some of the information that is available shows numerous missed marks:
The contract required IXP to audit T technology and dispatch center business processes once a year at no additional cost, but IXP never performed that audit
The contract required IXP to employ a lead telecommunicator, but while the company said another worker handled those duties, it did not employ that specific person for nearly two full years of the five-year contract.
Monthly reports did not contain staffing levels or call-answering metrics as required by the contract
“Throughout this review, IXP represented that TPD or the MBTA agreed that IXP did not need to comply with certain metrics, services and responsibilities in the contract, including dispatch times, certifications for telecommunicators, and certain operational and management services,” the report notes. “TPD did not produce written amendments that supported these assertions, and the contract required all contract changes to be executed in writing.”
And according to the report, IXP either did not prove they met or failed to meet the standards for two basic responsibilities—answering calls, and dispatching officers. Under the contract, IXP needed to answer at least 90% of all calls within 10 seconds, but they did not track or report that data and TPD also did not maintain enough data for the IG’s office to determine whether IXP met that metric.
TPD did keep records of when IXP workers dispatched police officers after a call. Under the contract, the company was required to make a dispatch within 60 seconds for 90% of both emergency and non-emergency calls. They never came close.
The highest percentage of calls dispatched in 60 seconds came in 2020, with 66%—a full 24% below the required metric. Over the course of the contract, the yearly average dispatch time ranged from 1 minute and 14 seconds in 2020 to 1 minute and 45 seconds in 2022.
In comparison, IXP’s numbers were significantly lower than TPD’s metrics in the four years prior to privatization. While TPD did not meet the 90% threshold either, that four-year range saw them dispatching calls in 60 seconds between 73.82% and 79.41% of the time.
“The IG’s office found that dispatch times were faster when TPD officers handled dispatch services,” the report said.
An IXP spokesperson said, “The consistent misapplication of an industry standard of 90% of the ‘highest prioritization level’ calls dispatched in 60 seconds, applied against all calls, led to an unachievable dispatch metric that neither Transit Police nor IXP achieved on a regular basis. IXP consistently answered incoming calls for an average of 4 seconds. We believe we regularly achieve the desired 10-second call answer time despite the inability of on-site technology systems to measure the data as precisely defined in the contract.”
Overall, auditors concluded, IXP did not meet several requirements in the contract and TPD and the MBTA never took steps to enforce IXP meeting its obligations. IXP did not perform several tasks, such as including staffing information on monthly and annual reports and using average call-answer times instead of reporting the percentage of call-answer times under 10 seconds. And though the contract called for IXP to be penalized $1,000 for understaffed shifts, the MBTA did not assess that penalty at least 11 times, the report said.
Undetermined benefits, starting the cycle again?
The MBTA privatized dispatch in order to save money overall and to hit policing goals—lowering crime, reducing overtime, and putting officers back on patrol. The IG’s office said it was unable to determine if any of those goals were met.
Aside from TPD performing better in terms of dispatch times, the transit police had already reduced overtime through a new patrol system before IXP was even hired, the IG’s office found. Serious crimes had also dropped after that new system was in place, and the IG’s office said it was unable to determine what privatization had accomplished.
“Primarily due to a lack of records and information, as well as achievements realized before hiring IXP, the ISAU found that it could not: 1. Determine whether the MBTA achieved costs savings; 2. Correlate the MBTA’s hiring IXP to its operational goals of privatization; or 3. Conclude that hiring IXP enhanced police dispatch service performance,” the report says.
Earlier in 2022, the IG’s office reviewed the MBTA’s contract with Workpartners to run absence management services—handling leave requests—and also found record-keeping issues. While the Workpartners review found the agency did streamline the leave request process, for nearly the entire contract the company also charged the wrong rate for storing former employees’ leave records and overbilled the MBTA by more than $220,000, the IG’s office found. When an MBTA employee pointed out the error, Workpartners fixed the billing process—but did not tell the T about the overbilling until the IG’s office raised the issue during their audit.
“The incorrect billing—Workpartners charging both active and former employees at the higher contract rates—likely went unnoticed, in part, because the MBTA lacked effective invoice review,” the Workpartners audit noted.
That contract with Workpartners ended in February 2022, and the MBTA signed a new contract with them that May. Similarly, the T’s contract with IXP ended in September 2022, and the agency immediately signed a new contract with IXP for $5.2 million over five years. The bid went out to 1,000 vendors, but IXP was the only company that responded, according to MBTA spokesperson Joe Pesaturo, who said that was part of why the T hired the company despite its performance issues.
“Additionally to moving forward with the RFP award the MBTA would have hiring challenges for these types of positions currently,” Pesaturo wrote when asked why the T contracted with IXP again.
But having the initial contract, awarded during that period where the MBTA was exempt from Pacheco regulations, gave IXP a huge edge in re-bidding—and that likely discouraged other companies, Cohen said.
“Why would another company bid on something the other company already has? They have the inside track,” Cohen said. The staff is already doing work and the systems are set up. Bringing in a new contractor is like getting married again, it’s a lot of work to onboard the new contractor. … you get in and never get out.”
Pesaturo said the new contract adds Service Level Agreements (SLA) and Key Performance Indicators (KPI) not in the first contract with IXP. Those are based on staffing and dispatch times, with dispatch needing completion in 60 seconds 90% of the time, or IXP will face penalties, Pesaturo said.
Cohen said it is crucial for bodies like the MBTA to actually enforce the provisions of their contracts, and officials should examine what happened during the exemptions to the Pacheco law to strengthen its provisions.
“It is super important for an agency that is contracting to have the staffing power and willingness to enforce the contract,” Cohen said. “This audit alone says they need to re-evaluate the exemptions to the MBTA, maybe they’ve learned things to improve on Pacheco.”
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