Unbalanced contracts, layers of bureaucracy and weak contract management make New York Metropolitan Transportation Authority projects too costly and lengthy, according to a board member.

"It's going to require a change in culture," Scott Rechler said at Wednesday's monthly MTA board meeting in lower Manhattan.

Scott Rechler, chairman and chief executive officer of RXR Realty LLC, speaks at the Bloomberg Commercial Real Estate conference in New York, U.S., on Wednesday, Nov. 9, 2011. He was appointed to the MTA board in 2017
"It's going to require a change in culture," said MTA board member Scott Rechler. Bloomberg News


The authority, one of the largest municipal issuers with $38.7 billion in debt, has formed working groups to examine cost containment and streamlined procurement processes.

"My personal view is that we're at a tipping point," said Rechler, who likened the transit crisis of today to escalating crime in New York City in the early 1990s.

The state-run authority, which operates city subways and buses, two commuter rail lines and several intraborough bridges and tunnels, has operated for the past year under a state of emergency ordered by Gov. Andrew Cuomo. New leadership has begun an overhaul of the system after continued train, bus and signal breakdowns.

Crumbling infrastructure reared its ugly head again around afternoon rush hour Wednesday when plaster from the ceiling at Borough Hall station in downtown Brooklyn fell onto subway tracks, disrupting service on the Nos. 4 and 5 lines.

Projects such as the Second Avenue Subway and East Side Access for Long Island Rail Road commuter trains have run notoriously late and over budget. The latest estimate for East Side Access is $11.5 billion, way up from the original $4.5 billion, with the completion data pushed incrementally to 2022 from 2009.

In addition, cumbersome contracting mechanisms have deterred many firms from bidding for MTA projects, forcing the authority to hire repeat contractors, even those with poor performance track records.

"Fewer and fewer groups are willing to bid on MTA contracts," said Rechler, the chief executive of RXR Realty LLC and a former vice chairman of the Port Authority of New York and New Jersey. A Cuomo appointee, he joined the board in June 2017.

Problems, according to Rechler, include lack of accountability and excessive red tape.

"Take a look," said Rechler, generating some laughter as he displayed a flow chart for a 40-step change order process that more resembled a small-print version of a European subway route map.

Joe Lhota said the "sclerotic nature of our procurement process" frustrated him when he returned last summer for his second run as MTA chairman. "The bureaucracy and the time element involved was just unnecessary."

Fixes, said Rechler, include appointing a lead person on project -- "think of it as a CEO" -- who is accountable for scope, cost and scheduling with the ability to veto unwarranted design demands and scheduling changes.

Rechler also called for performance-based compensation.

"Carrots and sticks work," Lhota told reporters after the meeting.

The MTA's $477 million contract with Judlau Contracting and TC Electric to rehabilitate the L subway line's Canarsie Tunnel under the East River secures timelines, costs and service interruptions. The contracting team would be on the hook for $410,000 per day if it misses the July 2020 deadline for reopening the tunnel.

Previous tunnel work on the N and R lines between Manhattan and Brooklyn for Hurricane Sandy-related repairs was incentivized, said Lhota. "It did come in clearly ahead of schedule and just a smidgeon under budget. That was a result of good planning and was a result of the incentives that were involved."

Charles Moerdler, who chairs the board's task force on procurements, cited progress at reducing the timeline for New York City Transit operating service contracts. The goal, he said, is to reduce the period from requisition to award to 113 days from 273, "and there could be room for more."

Moerdler said about 90% of the reductions would not involve legislation or regulatory changes. Efficiencies already in place, he said, included electronic transmission and markup by the law department and streamlining goal assignment for women and minority business contracts, use plan review and waiver appeals.

Initiatives in progress, Moerdler added, include reducing the time to prepare for biddable scopes and to assign and review insurance requirements.

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