METRO’S FINANCIAL HEALTH improved this year thanks to major new earmarked funding from Maryland, Virginia and the District. That was a breakthrough, but the transit agency’s prospects remain imperiled by long-term threats, including stagnant ridership as well as unfunded pension and health-care commitments made to current and future retirees — a tab of $2.8 billion and counting.
That, along with tough spending constraints imposed by local lawmakers, is the impetus for Metro’s increasingly aggressive moves to outsource maintenance, operations and jobs to private contractors. The moves fit with similar efforts in transit systems elsewhere, notably Boston, which are credited with cost savings. They’re part of the right strategy for Metro — if accompanied by rigorous quality control and oversight.
Privatization is opposed by Metro’s largest union, Amalgamated Transit Union Local 689, which sees its interests directly threatened by shifting spending and jobs from to nonunionized private firms. Like transit unions elsewhere, it warns that outsourcing will result in corner-cutting on service and safety by companies focused on profit.
It’s a legitimate concern, but there is precedent for successful outsourcing, including in Metro’s own SafeTrack maintenance surge last year, about half of which was handled by contract labor, according to Metro officials.
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Until recently, in addition to short-term contracts for consultants and safety experts, Metro’s outsourcing for ongoing work focused on peripheral tasks such as custodial services. That changed this summer when the agency announced an $89 million, five-year contract with Transdev, an international transit firm, to operate and maintain buses in a big chunk of its Northern Virginia service area. The projected savings of $15 million, or $3 million annually, is not game-changing; Metro’s annual operating budget is $1.9 billion. But ATU 689, seeing it as a crack in the dam of organized labor’s stranglehold on Metro jobs, threatened to file a grievance. (It’s worth noting that the union itself bid for the job, but its bid lacked basic information, including cost projections, that private bidders provide routinely.)
Now Metro is soliciting bids for what could be a bigger contract, to operate six new Metro rail stations and maintain 11 miles of track along the second segment of the Silver Line. That segment, now under construction, is due to open in 2020; it will run from Reston to Dulles International Airport and into eastern Loudoun County. The agency says the contract might even include some train operators along the segment.
Metro’s incentive is clear: Among outsourcing’s potential cost-savings, the agency would not add employees to its permanent workforce, thereby saving pension costs. But it is important to bear in mind that privatization is not a surefire panacea. While Boston’s transit agency claims tens of millions of dollars in savings annually, there are counterexamples where privatization has gone wrong — including the District’s Circulator bus service, operated and maintained by a contractor called First Transit, which has suffered from shoddy maintenance and breakdowns.
Ultimately, privatization, like other aspects of Metro’s operations, will be a test of management. In recent years, under General Manager Paul J. Wiedefeld, there has been improvement in that area. It needs to continue.
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