MBTA: Outsourcing

The Massachusetts Bay Transit Authority (MBTA) needed help outsourcing their spare parts and material warehouse operations to improve inventory availability and accuracy while reducing operating cost.

CHALLENGE

Guide MBTA through an outsourcing process to competitively bid transition and ongoing operation of their Material Warehousing & Distribution Activities to a qualified 3PL. Their operations consisted of ~$60+ million of spare parts and material inventory stored at a central warehouse and in 18 storerooms attached to their maintenance facilities. The scope included building a new central warehouse, upgrading the existing storerooms, and providing dedicated delivery services from the central warehouse to the storerooms. All equipment, IT systems, and personnel to be provided by the successful 3PL contractor.

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SOLUTION

Developed a bid and award strategy in conjunction with the MBTA Chief Procurement Officer and an MBTA Executive Steering Committee, created an RFP based on best practices from past Optio Tempore outsourcing work for private industry clients, guided a 2 step bidding, evaluation, and award process, which attracted 6 qualified bidders and a shortlist of 3 qualified 3PL candidates for the final round of site visits, customer interviews, 3PL presentations and a Best and Final Offer (BAFO).

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BENEFITS

Process resulted in the award of a 5 year contract with two 2 year optional extensions valued at $28,400,000 over the first 5 year period. All bidders were complimentary of the process for its fair and thorough consideration of all bidders. The MBTA was very satisfied that that process yielded a 3PL contractor with substantial experience in rail and bus spare parts management with a strong track record of success. The MBTA expects to save north of $64 million in operating and capital costs over the next 5 years by executing the outsourcing program and better managing the spare parts and material inventory.

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