An MBTA commuter rail train waits at a station in 2019. Photo by Paul Morris | Flickr / CC BY-SA 2.0

Keolis Commuter Services, the French company that had fallen out of favor early in its contract, will continue to operate the Massachusetts commuter rail system until at least 2025 under a renegotiated contract approved by the MBTA Board on Monday.

Under the new agreement, Keolis could continue to run MBTA trains for four years beyond the original eight-year contract’s 2022 end date. However, the T can opt to end the partnership after only three additional years if officials feel ready to launch a search for what they described as a “transformational” successor.

In 2017, Transportation Secretary Stephanie Pollack said the MBTA planned to seek a new operator at the contract’s conclusion rather than use one or both of the two-year extensions available. The administration’s position has softened since then.

Officials on Monday described the updated extension as a better deal than what the T could get in the current pandemic-affected market, and they said it also offers flexibility to prepare a long-term plan — which sprung from the Rail Vision project — for reimagining the commuter rail with more frequent, interconnected and potentially electrified service.

“I think that this is fantastic,” said Monica Tibbits-Nutt, vice chair of the FMCB. “I’m very excited about continuing with Keolis. I think the partnership has just continued to get better, and I think as we’re looking at the Rail Vision and what the state’s goals are as we move forward with commuter rail transformation, this is the best way for us to move forward, especially during this incredibly uncertain time.”

The FMCB voted 4-0 to approve the contract through June 30, 2025 or June 30, 2026, with Chair Joseph Aiello abstaining because of what he described as a “potential conflict of interest.” Keolis’s board in France had already voted to sign off on the agreement, according to MBTA Commuter Rail Executive Director Rob DiAdamo.

Keolis was tapped in 2014 to take over commuter rail operations on an eight-year, roughly $2.7 billion base contract with two additional two-year extensions available. Since then, the company has been in charge of day-to-day management of a 12-line system that connects dozens of cities north, west and south of Boston to the state’s capital. Before the pandemic disrupted commuting patterns, the commuter rail system averaged about 114,000 trips per weekday, slightly less than a fifth of daily subway ridership.

MBTA and Keolis staff have been exchanging proposals since April, and the version they settled on will pay the French company about $2.56 billion in operating costs and $97 million in capital costs over the next six years. The total price tag will be about $200 million to $224 million higher than in the original contract’s remaining years plus extensions.

Exact costs per year will vary in part based on performance. The updated contract includes a new incentive program rewarding Keolis for exceeding required on-time performance, staffing and seating capacity standards.

Those benefits would be paid out on a tiered, line-by-line structure, maxing out at a combined total of about $5 million per year. However, DiAdamo said the T would not pay any bonus if some lines dipped below minimum performance requirements, hoping to prevent rewarding Keolis from prioritizing certain trains at the expense of others.

Brian Shortsleeve, a former MBTA general manager who is now a member of the FMCB, described the incentive program as “a big win for riders.”

“This should drive better service, higher fare collection and increase capital investment,” he said.

The agreement also extends a revenue sharing agreement first reached in July 2017 through the life of the longer contract. MBTA officials said that agreement will help ensure installation of long-planned fare gates at North Station, South Station and Back Bay and recoup millions of dollars per year in uncollected or evaded fares.

Under the agreement, the T will take on costs of mechanical parts as well starting in 2021, a section that DiAdamo described as “allocating the risk and costs where it belongs.” The contract also includes a 6 percent fee on new supplemental work aimed at incentivizing completion of capital projects.

Keolis faced criticism from riders and Massachusetts leaders earlier on in its contract for unreliable performance, drawing fines in late 2014 for performance-related penalties and experiencing major service disruptions during the winter of 2015.

The company made progress, though, and figures presented at Monday’s meeting showed that it hit an average unadjusted on-time performance of either 89 percent or 90 percent each of the past five years. Before the pandemic hit, Keolis had its best-ever performing quarter.

Over the past year, officials hinted they were warming to the idea of an extension, both because Keolis improved and because the FMCB threw its weight behind a bevy of desired long-term upgrades to the commuter rail network.

Near the end of the extended contract, the agency plans to put out a new request for investments with a six-month public procurement process, then award the next contract by January 2026 — or 2025, if they choose to end Keolis’s contract a year early — to allow for a six-month transition period.

MBTA officials touted the financial certainty in the contract extension and noted that keeping Keolis in place will give them enough time to assess how the COVID-19 outbreak will affect commuting trends and to determine what the next contract needs if the T intends to achieve the sweeping vision that the board laid out as an ultimate goal.

“We’ve got four years of cost certainty if we need it, but we only need to have three years if we feel like we understand sooner rather than later where ridership is going and what the next transformational procurement should look like,” said MBTA General Manager Steve Poftak. “We really like the flexibility that the three-plus-one structure looks like as we think about the future.”

Commuter Rail Operator Extended Through At Least 2025

by State House News Service time to read: 4 min