Audit  Audit of the Massachusetts Bay Transportation Authority - Keolis Contract

The MBTA did not accurately assess performance-based incentives and penalties for Keolis.

a. The MBTA did not assess approximately $3,324,126 worth of performance-based penalties for Keolis. 

b. The MBTA inappropriately assessed approximately $257,724 worth of performance-based penalties against Keolis. 

c. The MBTA overpaid Keolis by approximately $105,810 in performance-based incentives. 

d. The MBTA underpaid Keolis by $105,210 in performance-based incentives it had achieved.

1. The MBTA should develop and implement sufficient policies and procedures, including a monitoring component, to ensure that the performance-based incentives and penalties it assesses Keolis are accurate and in accordance with the executed contract.
2. The MBTA should implement a verification process to ensure the correct escalation factors are used when calculating incentive and penalty amounts. This will help prevent errors and ensure accuracy in future calculations.
3. To help increase transparency and accountability, the MBTA should consider publicly reporting on the performance of its contractors. This would provide riders, taxpayers, and other stakeholders with insight into how contractors are performing relative to the MBTA’s expectations.

The MBTA and its customers are exposed to safety risks if the MBTA fails to properly manage resolution of issues at commuter rail stations and with regard to snow and ice. This can result in avoidable injuries or accidents and financial loss. Failure to properly document the management of Americans with Disabilities Act (ADA) inspections can result in unnecessary inconvenience or denial of service to residents and can create avoidable financial risk for the MBTA. Failure to appropriately oversee the fare collection efforts of its contractor and coach and locomotive availability can result in the perception of unfairness for riders, reduction in service levels during peak times, and the loss of ridership and contractor-penalty revenue for the MBTA.

Proper documentation of inspections is crucial for evaluating performance and ensuring that agreed-upon service levels are met. Without these records, it can be impossible for the MBTA to properly manage its operations and challenging to address any potential shortcomings or hold the responsible parties accountable.

1. The MBTA should establish policies and procedures to monitor station maintenance, snow and ice removal, ADA inspections, locomotive and coach availability, and fare collections.
2. The MBTA should document all inspections, regardless of outcome.

1. The MBTA should establish adequate policies and procedures to monitor and enforce the monthly and annual performance incentive caps. This should include a monitoring component that ensures that there is sufficient, appropriate ongoing supervision and reporting on this issue, including financial reviews of the contract and the payment of incentives.
2. The MBTA should implement a verification process to ensure that the correct escalation factors are used when calculating the annual cap for all incentives. This will help prevent errors and ensure accuracy in future fiscal years.

1. The MBTA should establish policies and procedures, including a monitoring component, to ensure that its contracted service provider’s employees with access to the MBTA’s information technology systems complete cybersecurity awareness training.
2. The MBTA should ensure that its contractor complies with all terms and conditions of its contract and that it retains sufficient documentation of this.

1. The MBTA should develop an internal control plan based on a current department-wide risk assessment that includes all aspects of its business activities.
2. After completing the internal control plan, the MBTA should ensure that the internal control plan is communicated to all employees, used within its operations, and reviewed and updated at least annually.