The Maine Military Authority is looking to rebound from the cost overruns of a Massachusetts transit bus renovation contract, and is still seeking a $7 million investment from the Maine Legislature.
On Monday, the board of the Massachusetts Bay Transportation Authority authorized a $1 million addition to a $19 million transit bus overhaul contract with the Maine Military Authority, which is “a big step in the right direction,” according to Gen. Douglas Farnham, adjutant general of the Maine National Guard.
Farnham, whose state agency oversees the MMA, said Wednesday that nothing new has been signed with the MBTA yet and that documents are still being finalized, but that the two organizations have a “general agreement for going forward.”
“The agreement we’ve been working on over the last several months was a way to get started again and allow us to satisfy vendors and break even going forward,” Farnham said. “We need to at least break even going forward.”
The MMA had completed 11 of the 32 MBTA buses called for in the 2014 contract when Gov. Paul LePage halted the work last September, saying the agency underbid the contract, putting Maine taxpayers at risk of having to cover cost-overruns.
The MMA was the only bidder on the contract and underbid it by about 17 percent, according to the MBTA’s estimates. Farnham and other Maine officials later determined that rebuilding the dual diesel-electric buses was more complex and costly than predicted due to the complex nature of the transit vehicles and challenges in finding replacement parts.
The conceptual agreement between the MMA and MBTA, outlined in a presentation by MBTA procurement officials earlier this week, calls for an additional $2.1 million to be added to the project by the MBTA — $1 million of which was authorized Monday — and a $6 million commitment from Maine to cover past debt from the 11 completed buses and any excess costs above the revised contract.
That $6 million would come from the $7 million package for the MMA that LePage has asked the Legislature for in a supplemental budget request, Farnham said.
The past debt is comprised of the losses incurred on the initial 11 vehicles, including a range of parts that cost more than expected and extra time spent working on them, Farnham said.
On those initial buses, the MMA was losing more money during “a learning curve” where the MMA “should have been able to do it cheaper and cheaper,” Farnham said. “That was happening, but they had inefficiencies because of the cash flow constraints.”
Now, the MBTA said that the MMA “has a clear understanding of the requirements for the successful completion of the remaining vehicles.”
Farnham said he did not want to speculate on when the new agreement would be finalized or when work would restart, but that ideally work would restart after the $7 million investment from the state’s surplus revenue is authorized.
The agreement “doesn’t necessarily have to be contingent on the supplemental [budget funding] but the supplemental sends a big signal,” Farnham said.
“We have to have the quality product, but we also need to be efficient and lean enough in a way that’s competitive,” he said. “We’re very appreciate that MBTA has worked with us.”
The $7 million investment also is aimed at helping reposition the MMA, which was created as a state enterprise in 1997 to offer military vehicle repair services at the industrial park of the former Loring Air Force Base. Since the drawdown of troops from the Afghanistan and Iraq wars, the MMA has been transitioning to civilian contract work — fixing school buses as well as municipal buses — and those opportunities continue to look promising, Farnham said. The refurbishing of buses increases their lifespans by several years and is less costly than replacement costs for the school districts and communities that own them.
About half of the MMA’s 65-employee workforce was laid off last fall, while the other half are currently working on contracts for school and municipal transit buses, as well as preparing for a new contract with a private company to refurbish heavy equipment, Farnham said.
“There’s a demand for the work they’re doing. It’s a viable alternative to buying new equipment and vehicles,” Farnham said.