CapMetro mulling $752 million contract for a new company to oversee its bus operations

Capital Metro’s operations committee considered Wednesday a more than three-quarter billion dollar contract — one of the largest single contracts in the Austin-area transportation authority’s history — for a new third-party company to oversee its bus operations.

Keolis Transit Services, under the proposed $752.6 million contract, would oversee all operations and maintenance of CapMetro's bus services. The contract, which has a base three-year term with two optional one-year extensions thereafter, is likely the largest of its kind in the nation, Muhammad Abdullah, CapMetro's vice president over procurement, told the American-Statesman.

The proposal, endorsed by CapMetro staff and approved unanimously by the operations committee, now heads for final consideration during CapMetro’s board of directors next scheduled meeting on Sept. 25. Officials praised the Keolis proposal for being the least costly of the three bids, the company's experience with electric fleets and standing up new bus rapid transit systems and for having a dedicated labor relations team to work with unions.

However, local and national leadership for the Amalgamated Transit Union — which represents more than 1,200 employees who operate Austin's public transit system — have raised concerns about Keolis, contending the multinational company has a poor track record on labor issues.

CapMetro has contracted with its current provider, MV Transportation, since 2012 after state lawmakers passed laws that led to the transportation authority dissolving its in-house service provider. The Dallas-based company, which is currently negotiating a contract with the local ATU unit, submitted a bid to continue its service but was not recommended by CapMetro staff to the operations committee.

A Keolis spokesperson declined to comment on the proposals or the critiques of the company's interactions with unions. An MV Transportation spokesperson declined to comment on CapMetro's move toward switching providers.

Rationale to re-procure the contract

MV Transportation's current contract is set to expire on Dec. 31, 2023. The current MV Transportation contract started in August 2019 and had one remaining one-year extension, according to CapMetro meeting documents.

CapMetro opted not to utilize the remaining one-year extension option outlined by the current MV Transportation contract. CapMetro CEO Dottie Watkins said that is because the current contract has been "significantly modified" to a degree that has made enacting the agreement overly complicated.

"Simply from a pure contract administration standpoint, the more modified your contract is the harder it is to administer," Watkins told the Statesman. The current contract has 33 listed modifications, the majority of which have been redacted, according to CapMetro's open contract portal.

In 2019, CapMetro's board of directors initially approved a longer contract with MV Transporation. That contract had a base period of five years with two optional three-year terms. With the options and a 5% contingency, the 11-year contract would have cost more than $1.4 billion.

As a result of all the changes, Watkins said CapMetro staff started making plans to re-procure the contract in January 2022. The request-for-proposal process started in March, with CapMetro receiving proposals from MV Transportation, Keolis and MTM Transit. CapMetro currently contracts with MTM to operate MetroAccess, a demand-response service for people with disabilities.

The Keolis proposal received an "A" rank, meaning it met evaluation standards. MV Transportation and MTM received an "M" rank, meaning their respective proposals failed to meet evaluation standards.

During CapMetro’s finance committee meeting Wednesday, Terry Follmer, CapMetro’s vice president over internal audits, said the request-for-proposal process undertaken by CapMetro and the ultimate recommendation of Keolis complied with the agency's rules around soliciting and selecting proposals.

Local transit union concerned about possible switch

Speaking before the vote Wednesday, two leaders of Amalgamated Transit Union Local No. 1091 in Austin decried CapMetro's move toward hiring Keolis.

"I'm appalled and very disappointed how CapMetro has handled this (request-for-proposal) process by recommending Keolis as their service provider," Darrell Sorrells, vice president of ATU Local 1091, told the operations committee. "We anticipate not getting a fair contract in 2025 or our upcoming negotiations. We are gearing up and preparing for continuous negotiations."

In June, while the request-for-proposal process was underway, John Lyons, ATU's director of joining industry councils and collective bargaining, sent a letter to Watkins asking for CapMetro to consider Keolis' labor record when weighing the proposals.

"Keolis has a history of hostile anti-union conduct which we believe distracts from public agencies' mission to provide their communities with safe, reliable and accessible transit service," Lyons wrote in the letter obtained by the Statesman.

Watkins said CapMetro staff considered how the bidders would work with ATU Local 1091 and, informed by the June letter, did research on the three companies' history with labor disputes. She said elements of the contract — like having CapMetro set the floor for wages and benefits for employees — could ease contract negotiations.

Any contract finalized between MV Transportation and ATU Local 1091 by the end of the year would be honored by Keolis, Watkins said.

A Keolis spokesperson declined to answer questions from the Statesman about its history with unions. Speaking during the meeting, David Scorey, CEO of Keolis' operations in North America, said he was "disappointed" to hear the comments from Austin's ATU chapter and that they did not reflect how the company operates.

ATU Local 1091 President Brent Payne told the Statesman that negotiations to finalize a contract that would carry employees through December 2025 are nearing completion.

This article originally appeared on Austin American-Statesman: CapMetro committee selects company Keolis to oversee bus operations