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Partnership for NYC Responds to MTA Debarment Proposal

The Partnership for New York City submitted the following comments to the MTA in response to far-reaching proposed regulations on the debarment of contractors.

The Partnership for New York City is compelled to comment on proposed regulations promulgated pursuant to Section 1279-h of the Public Authorities Law, enacted as part of the 2020 budget. Typically, we would defer to industry experts to argue the details of regulations, but this is a case where poorly conceived regulations will almost certainly present a significant obstacle to necessary improvements in our regional transportation infrastructure and, consequently, result in a negative impact on the economy of the city and state.

In short, the regulations make the risk associated with winning an MTA contract so extreme that responsible contractors are highly unlikely to bid. The unilateral risks imposed on contractors by these draft regulations are both substantive and political. The substantive risks relate to the fact that the MTA both defines the terms of contracts and change orders and is the sole arbiter in the event of disputes. The political risk is that the MTA is effectively controlled by the Governor and other elected officials who appoint its board and control its funding. For a contractor bidding on a large MTA procurement, these combined risk factors, under the terms of the proposed regulations, are impossible to effectively manage. As a result, responsible contractors are unlikely to participate in MTA procurement and the result will be the inability of the MTA to complete essential transportation infrastructure projects.

It is clear that some action was required to ensure that the MTA and its projects are not held captive by relatively few large vendors and contractors who are willing and able to do business with the authority. The threat of debarment for verified poor performance is a reasonable condition of procurement contracts. But the proposed regulations impose conditions that are impossible for responsible vendors and contractors to fulfill since a failure on the part of the MTA to perform its side of the contractual obligations is not accounted for. Unfortunately, it is the experience of virtually all MTA contractors that the authority is likely to be the primary source of time delays and cost overruns on major projects.

The transformation process being undertaken by the MTA, pursuant to the state budget, promises to result in more predictable costs and improved project management. This should result in more competition for MTA procurements and better performance by both the agency and its vendors. Unfortunately, as written, the proposed regulations on debarment threaten the progress toward a more efficient and predictable procurement process and better cost controls.

The Partnership urges the MTA Board to work with industry and business experts to adjust the proposed regulations on debarment to standards that improve performance without jeopardizing the authority’s ability to secure solid and competitive contracts. The Partnership would be willing to identify experts to help in this process and to develop regulations that protect the public interest while encouraging participation by top-quality contractors and vendors.