Wednesday, April 14, 2010

Vendors give New York MTA price concessions to cut deficit

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The New York Metropolitan Transportation Authority announced Tuesday a new breakthrough in its search for ways to shrink this year's expected operating budget gap of nearly $800 million. MTA said it had renegotiated contracts with 43 vendors and suppliers, saving $18 million in 2010 and more than $70 million over the life of the contracts.

This news came one week after the MTA said it was saving more than $40 million, without affecting services, by eliminating more than half of the planned projects in its 2010 operating budget.

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“Companies in financial distress often go back to vendors and ask them to renegotiate contracts and that's exactly what we're doing here,” MTA Chief Operating Officer Charles Monheim said. “We took a new approach asking our suppliers if they could do better and in many cases, the answer was yes.”

The biggest savings, $15.9 million, came from new contracts with paratransit providers, which Monheim said was possible because of increased competition. Renegotiated contracts with IT vendors, parts, and other suppliers resulted in $2.6 million in savings.

Previously, the MTA identified $49 million in savings through a 15% reduction in administrative payroll.

Press reports said the consulting firm Accenture helped develop the savings strategies.

As for vendors that refuse to renegotiate, The New York Times quoted Manheim as saying: “They will be given all the rights any contractor will receive. But we may be less inclined, where we have discretion, to be favorably disposed to them.”