Amtrak Backing Away From MBTA
By Randy Trick
WASHINGTON, Oct. 09, 2002–Amtrak has decided to walk away from its role as operator of the Boston area’s commuter lines after nearly two decades.
Amtrak and other rail companies had until noon Friday to file bids for the contract to operate the rail system. While three other rail companies have qualified to place a bid by the deadline, Amtrak announced it has no plans to enter the process to renew its contract, which expires in June.
To the Massachusetts Bay Transit Authority (MBTA), the bidding process means new faces in the fray.
“The MBTA is excited to have such robust competition,” MBTA spokesman Joe Pesaturo said. “Amtrak has had a monopoly for the last 17 years.”
Under the current contract, the MBTA pays Amtrak $15 million annually to manage and operate the rail system and maintain the tracks, coaches and other infrastructure, which the MBTA owns.
In a letter to the MBTA, Amtrak president David L. Gunn said the details of the proposed contract make it impossible for his company to bid.
“The provisions contained in the [request for proposals] would radically alter the contractual relationship that exists under your current agreement with us, and make it impossible to develop a reasonable pricing strategy to control risk,” Gunn’s July letter said.
The main factor affecting Amtrak’s decision is liability. According to Amtrak spokeswoman Karina VanVeen, the MBTA’s request that Amtrak provide $75 million in insurance coverage is impossible for Amtrak to meet.
“Financially that’s not something we can do,” VanVeen said.
Also, Amtrak would have to indemnify the MBTA, clearing the transit authority of liability in the case of accidents.
According to the MBTA, keeping the authority free of liability is an industry standard, and under the current contract, Amtrak is often free of liability even in the case of its own negligence.
Gunn also said in his letter that Amtrak “does not have the flexibility or fiscal resources to gamble on a five- or ten-year fixed-price contract.”
In response, the MBTA said that asking for bids on shorter contracts, such as two or three years, would discourage other rail companies from bidding because of the complexity of the job and difficulties in transitioning from one contractor to another.
A final point of contention between Amtrak and the MBTA, which is related to the liability issue, is the condition of the MBTA’s property. Amtrak said much of the environmental equipment is old and in need of replacement. The MBTA took issue with Amtrak’s complaint, saying it has invested heavily in infrastructure.
“Don’t forget who’s been taking care of the equipment for the last 17 years,” the MBTA’s Pesaturo said of Amtrak’s maintenance.
Ultimately, “the provisions from the MBTA asked its contractors to meet requirements we felt we couldn’t,” VanVeer said.
Amtrak is not fully willing to walk away from Boston, however. Amtrak’s prime showpiece, the Acela Express, shares rails with MBTA’s Attleboro line.
Although Amtrak has shown no interest in operating the MBTA’s entire operation, Gunn offered to continue operating the southern leg of Boston’s commuter rail system. This would allow Amtrak to retain control over scheduling both the Acela Express and the local transit lines.
VanVeen said Amtrak’s plan to abandon its contract with the MBTA was a business decision. Amtrak has experienced financial woes over the last year. It was kept afloat this year by a $270 million emergency loan from Congress after Gunn threatened to end service over the Fourth of July weekend.
Now Gunn is asking Congress for a minimum of $1.2 billion for the current fiscal year. Whether he will get his full request is unclear.
The White House, in preparing its budget request, recommended funding Amtrak at last year’s level – $521 million. The Senate Environment and Public Works Committee has approved the $1.2 billion, but the House Transportation and Infrastructure Committee has approved only $762 million, which Democratic members of the committee warn will mean a cut in long-distance service.
Published in The Lawrence Eagle Tribune, in Massachusetts.
