OIG Finds That the MBTA Overpaid for Warehousing and Logistics Contract

In a report issued today, Inspector General Jeffrey S. Shapiro found that the MBTA overpaid Mancon for handling its warehousing and logistics functions. The report, MBTA Privatization Review #5: Warehousing and Logistics Contract with Mancon, LLC (2017 – 2026), details the history of the procurement which began over a decade ago and how over time the MBTA reduced Mancon’s contractual obligations without reducing the contract rates it was paying.

“The MBTA is a steward of public funds. When it does procurements or renegotiates contracts, those that do so must always remember that these are public dollars; that must be at the forefront of their minds. As such, any reduction in scope should be balanced with what the MBTA is receiving in return,” IG Shapiro said.

In addition, the MBTA failed to track Mancon’s performance during the early years of the contract and impose penalties when Mancon did not meet expectations. The MBTA then had to hire costly consultants to fix the contract and add MBTA staff in order to hold Mancon accountable. These efforts had their desired effect and MBTA saw better performance leading to greater inventory accuracy at the central warehouse, on-time deliveries and round-the-clock parts availability.

In 2019, the OIG provided the MBTA with recommendations to improve its contract management. While the MBTA accepted some of those recommendations, it did not act on one of the most critical, which was to ensure adequate inventory controls were in place in its base locations, as it had done at the central warehouse.

In 2015, the Legislature, through Chapter 46, temporarily exempted the MBTA from requirements to privatize services. The law requires the OIG to conduct a review of privatized contracts upon their completion. Since October 2023, the OIG has reviewed contracts for absence management, transit ambassadors and police dispatch services, which included a supplemental report and customer call centers. There are two remaining open contracts for which the same review process is required.

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