Massachusetts Bay Transportation Authority's Termination of Contract for Light Rail Vehicles

Gao ID: PSAD-81-11 November 10, 1980

The Massachusetts Bay Transportation Authority (MBTA) awarded a contract on May 1, 1973, for the manufacture of 175 light rail vehicles (LRV's) using the standard LRV specification developed by MBTA, and funded and approved by the Urban Mass Transportation Administration (UMTA). The LRV began experiencing problems when placed into a passenger revenue service. When the contract terminated in November 1979, the project had been amended three times. Its total cost amounted to $68.3 million, of which $48.1 million were Federal funds. Although the MBTA contract settlement terms were not submitted to UMTA for approval before final execution of the settlement agreement, UMTA conditionally approved the settlement.

MBTA has an obligation to achieve the original project objectives within the Federal funds committed at the time of the settlement. If MBTA were to request additional Federal funds for the project, such a request would be carefully reviewed in view of the MBTA original obligation. Considering the lack of UMTA involvement in monitoring the project, UMTA cannot be assured that MBTA will be able to achieve the project's approved objectives.

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