Federal transit officials have refused to release more than $50 million in 1999 capital funding for the T because of the controversy, and have threatened to freeze more money this year, said MBTA Chief of Staff Michael Mulhern.

"We're going to see a total collapse of our capital program if we're not able to free up federal funds," Mulhern said.

The MBTA separated the maintenance work from the rest of Amtrak's commuter rail contract and put the work out to bid two years ago in an effort to get a lower price than what Amtrak was charging.

The T awarded the contract to Bay State Transit last year, saying the firm offered to do the work for roughly $35 million per year over five years, compared to Amtrak's bid price of $58 million per year.

But the U.S. Department of Labor insisted that the deal with a new commuter rail maintenance operator would fall under federal labor protection laws that require the T to pay any laid-off Amtrak workers substantial settlement amounts.

MBTA officials disagreed, and spent months trying to convince the Labor Department to back off. Federal officials responded by threatening to withhold the T's funding.

Two new MBTA board members who attended their first meeting at the end of last month asked the MBTA staff to calculate the financial impact of complying with the federal labor law, sources said.

The T had originally estimated the payments would total about $30 million, offsetting the five-year projected savings of $116 million with the new firm, Mulhern said.

"Now, in order to appease the DOL and the unions, we think it's going to cost at least $71 million," he said.

T officials also believe Amtrak could slash its bid price by as much as $13 million per year, Mulhern added.

The T still plans to rebid the commuter rail contract as a complete package in three years. In the meantime, the new numbers make the switch to a new contractor less compelling, Mulhern said.

The MBTA already has paid out $3.5 million to Bay State Transit in "mobilization costs," Mulhern said, but the T and the firm were never able to work out a deal with Amtrak unions that would have allowed the company to take over the service.

"The authority had to make a business decision that allowed for no interruption of service come July 1," he said.

Amtrak issued a statement Friday saying the railroad has "a shared commitment" with the T not to interrupt service.

"As a result of the MBTA's efforts, we are working hard to tighten our belts and to increase productivity to meet the MBTA's budget needs," said Lynn Bowersox, a spokeswoman for Amtrak's Northeast Corridor.

"We and our work force want to be competitive without sacrificing quality, and maintain a modest but fair profit margin," she added.

Charlie Moneypenny, a legislative agent for the Transport Workers Union local that represents the Amtrak employees, said he never believed the T could have saved money by switching to a new firm.

"When you look at this closely, it begins to look a lot less like savings lost and a lot more like the Big Dig's baby brother," he said.

Publication date: 2000-05-07