Objective

To determine whether the Metropolitan Transportation Authority (MTA) took action to comply with the MTA Board-approved Transformation Plan, resulting in improved service levels for the customer, process efficiencies, and reduced costs. The audit covered the period from January 2017 through August 2023. 

About the Program

The MTA comprises the nation’s largest bus fleet and more subway and commuter rail cars than all other U.S. transit systems combined. As of December 2023, the MTA reported a total of 70,000 employees. 

In April 2019, New York State enacted Section 1279-e(1)(a) of the Public Authorities Law, which required the MTA to “develop and complete a personnel and reorganization plan” (Transformation) by June 30, 2019.

The MTA Board approved the Transformation plan on July 24, 2019. The plan called for all support functions to be merged to drive higher service levels at lower costs due to elimination of redundancies and duplications, standardization and simplification of processes across the MTA for accountability, and improved performance levels. The end result would be one Procurement Function for MTA’s five operating agencies, MTA Construction & Development (formerly MTA Capital Construction), and MTA Headquarters. The majority of the Transformation effort would be front-loaded in the initial 6–9 months, with some aspects completed over an additional 18–24 months. 

The MTA spends over $7 billion annually on procurement, ranging from office supplies and market research to rail cars and construction contracts. As of May 2022, the Procurement Function, which has four units, had approximately 1,050 employees. 

Key Findings

The Procurement Function, while making some improvements, has not demonstrated that it achieved the objectives of improved service levels for the customer, process efficiencies, and cost reductions.

Although the effective date of the consolidation of the Procurement Function was October 28, 2021, it was mostly operating under the same practices in September 2023, almost 2 years later. As a result of what was verbally described as the “consolidated, restructured, and reorganized” Procurement Function, there was only one Chief Procurement Officer (CPO) instead of five (one for each MTA operating agency). However, Procurement Function officials stated that, while the consolidation of staff has been completed, Transformation is a continuous, ongoing process and there is no set timeline for completion. 

According to documents provided, the Procurement Function intended to implement a Category Management Strategy—the practice of buying common goods and services as an organized enterprise to improve the efficiency and effectiveness of acquisition activities. However, the Procurement Function did not change its procedures or most of its practices to reflect the new business model. Under the new CPO, operating practices, for the most part, were not changed in the Procurement Operations and Material Management & Distribution units. While Rolling Stock Strategy and Supply Chain Strategy are new units, their practices are a mix of old and new. Consequently, service levels for Procurement Function customers, which include staff from the other agencies that are now under one CPO, still follow most of the old policies and procedures. Procurement Operations reported cost savings of $152 million for calendar year 2022. However, we concluded that none of the $37.3 million in savings we sampled can be attributed to Transformation or consolidation actions.

Key Recommendations

• Define and distinguish Transformation-related from non-Transformation-related initiatives required to achieve Transformation goals, and formally monitor the progress toward their completion. 
• Clearly define cost savings and cost avoidance for the Procurement Function, and maintain documentation to support the basis for reporting cost savings and cost avoidance. 
• Develop and issue new procedures that can be used by all agencies, where appropriate.