The New York Metropolitan Transportation Authority (MTA) “has not done enough to consolidate its procurements across its agencies to save money as was expected under its Transformation Plan, according to an audit conducted by the office of New York State Comptroller Thomas P. DiNapoli, a Democrat who has been in office since 2007.
In response, the MTA said it “generally disagreed with the findings” and “continues to work on increasing efficiency and savings, and that they are not required to define what savings stem from the Transformation Plan.”
The MTA, which accounts for approximately 25% of all dollars invested in public transportation across the U.S., invests more than $7 billion annually on procurement, covering everything from construction contracts to office supplies. “Under the Public Authorities Law, the MTA was required to create a Transformation Plan by June 30, 2019,” Napoli said. “One part of the plan was to consolidate procurement for the MTA’s five operating agencies (MTA New York City Transit, MTA Bus, MTA Metro-North Railroad, MTA Long Island Rail Road,), MTA Construction & Development and MTA Headquarters to save money and avoid redundancies. That consolidation of MTA’s Procurement Function went into effect Oct. 2021.”
The MTA’s Procurement Function has four components: Procurement Operations, Material Management and Distribution, Supply Chain Strategy and Rolling Stock Strategy. As of May 2022, the MTA had approximately 1,050 employees in Procurement Function, with one Chief Procurement Officer instead of five (one for each operating agency). “However, the actual practice of buying goods and services had not changed as of Sept. 2023, two years after the effective date of the consolidation,” the audit said, providing the following as examples:
- “Procurement Operations, which handles direct purchases of things like parts for railcars and buses, has not changed its procurement processes. It reported cost savings of $152 million in 2022, but the audit looked at $37.7 million of that total and concluded none of it was due to Transformation or consolidation. Instead, the savings was from canceled orders and services that were no longer needed. Just $4.29 million of the sampled savings was the result of Procurement Operations actions.
- “Material Management & Distribution, which manages 85 warehouses and storerooms for New York City Transit, MTA Bus, Metro-North and LIRR, stocked about $800 million in materials for these agencies but still uses procedures for the operations and management of its inventory assets that date back to the 1990s. However, it did expand Transit’s inventory management dashboard to all agencies to increase efficiency.
- “Procurement Function was supposed to implement a Category Management Strategy but did not change its procedures or most of its practices to reflect the new business model. Supply Chain Strategy, however, did show that three MTA agencies that use railcar parts are using category management to negotiate a price reduction from a major supplier [not identified in the audit].
- “Supply Chain Strategy claimed it saved $3.75 million consolidating uniform purchases and $3.2 million on railcar parts purchases, but it could not document the savings.
- “Rolling Stock Strategy officials indicated that, partly due to lack of staff, the unit did not achieve results since consolidation.”
The audit recommended that MTA “define the initiatives that are related to its Transformation Plan so that progress on the plan goals can be monitored.” It also recommended that Procurement Function “clearly define the cost savings and cost avoidance it achieves and develop new procurement procedures that can be used across MTA divisions to further efficiency and savings.”
“The MTA faces continued pressure to implement its capital programs and savings initiatives, which would benefit from furthering its stated goals of transforming its procurement process,” DiNapoli said. “More savings may be possible if it does more to coordinate purchasing among its agencies instead of the status quo of having them procure their needs independently. Consolidation, efficiency, and savings in this area was promised years ago, but has yet to be fully realized.”
