A new report from a Boston-based think tank has revealed that the MBTA fare collection overhaul project is $211 million over budget and is now approaching a cost of $1 billion while falling three years behind schedule .
“One takeaway we have is that this nearly $1 billion mega-project was initially off the rails and new MBTA CEO (General) Steve Poftak basically took extreme steps to fix the problems.” to fix,” said Greg Sullivan, co-author of the report released Thursday by the Pioneer Institute.
“We conclude that this project is back on track and being successfully implemented day by day.”
The report examines the difficulties the agency encountered with its original $723 million contract for the project, which aims to modernize the T’s fare collection system.
MBTA spokesman Joe Pesaturo said T drivers “will benefit greatly from the new tap-and-go system, which will allow them to pay for fares with phones, contactless credit cards or the new CharlieCards on all subway and bus routes .”
In February 2019, MBTA sent a breach of contract letter to Boston AFC 2.0 OpCo LLC, the company tasked with completing and operating the system, but recanted a few months later, opting instead to renegotiate the March 2018 deal, it said found the report.
Jim Stergios, executive director of the Pioneer Institute, said this has “snapped taxpayers for an additional $211 million.”
The new contract, signed in June 2020, increased its cost from $723 million to $934 million and delayed full implementation by three years – from May 2021 to May 2024.
“The original contract was a disaster in hindsight because it was totally unrealistic to expect this system to be developed and operational in less than two years,” Sullivan said.
The new contract calls for a phased approach to implementation, rather than rolling out the new system to all stations at once. The T said it found the initial approach – which resulted in a condensed timeline for testing, installation and customer transition – to be unfeasible.
The revised deal “also includes a solid allocation of risk with significant financial consequences and incentives related to timeliness and delivery,” Pesaturo said.
“This agreement is the result of negotiations that addressed both the risks MBTA faced in the original agreement and the underlying concerns MBTA had about OpCo’s performance at the time,” Pesaturo said. “If OpCo is found to be delayed in completing the project, the price of the project will be reduced by each day of such delay.”