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May 20, 2010

DiNapoli: MTA Gas Guzzlers Cost Taxpayers Extra $39 Million

Bus Fleet Used High-Priced Jet Fuel Instead of Lower-Cost Diesel Alternative

New York City Transit and the MTA Bus Company spent $39 million more than they should have on diesel fuel due to wasteful practices and improper oversight, according to a new audit issued today by New York State Comptroller Thomas P. DiNapoli. In addition, the MTA Bus Company’s records showed unexplained discrepancies in fuel delivery, quality and usage, leading auditors to conclude that the agency needs to significantly improve its fuel procurement process.

“New York City Transit and the MTA Bus Company are literally running out of gas because of their poor spending practices,” DiNapoli said. “They squandered more than $39 million of taxpayer dollars due to outdated, expensive contracts and delayed decision-making. Buses don’t need jet fuel, and taxpayers shouldn’t have to pay for it. There are some clear, decisive steps to cut excessive fuel spending. The MTA should work with OGS to lower its fuel bills and maintain accurate records for how the bus fleet buys and uses fuel.”

The MTA Bus Company was created in 2004 to absorb seven private companies operating under franchises from the New York City Department of Transportation. The fleet operated 1,323 buses at the time of the audit, which covered the period between October 2006 and September 2009. Diesel fuel powers 78 percent of the fleet while 22 percent use compressed natural gas (CNG).

The diesel bus fleet can use either the widely-available diesel fuel known as ULSD#2 or ultra low sulfur diesel #1 (jet/kerosene). In 2003, the MTA signed a five-year contract with Sprague Energy Corporation to supply jet/kerosene, despite regulatory changes that would make ULSD#2 a cheaper and equally environmentally friendly alternative by 2006. Even after the expensive jet/kerosene fuel contract ended, the MTA extended their deal with Sprague by a year when they could not find other bidders to supply jet/kerosene. The contract extension cost the MTA an extra $27.5 million.

In addition, auditors noted:

  • The terms of the one-year contract extension required both NYC Transit and MTA Bus to absorb a 55 cent per gallon price increase on jet/kerosene costs, while also agreeing to purchase a minimum of 50 million gallons;
  • The Office of General Services (OGS) had a statewide contract for diesel and gasoline fuel that would have cost the MTA nearly 29 cents less per gallon than its contract price;
  • The amount of fuel pumped from tanks did not match the amount of fuel recorded as dispensed to vehicles at four of eight MTA Bus Company depots, leading auditors to conclude that the agency could not account for fuel usage.

Auditors recommended that the MTA:

  • Explore alternative contracting strategies including the use of the OGS fuel contract.
  • Finalize new policies regarding fuel accountability and train personnel on the new rules;
  • Account for fueling discrepancies on a daily basis; and
  • Require fuel to be tested for compliance with contract specifications.

MTA officials generally agreed with the audit and switched to ULSD#2.

Click here for a copy of the audit.

Since 2007, as part Comptroller DiNapoli’s commitment to monitor the MTA, ten audits have been issued as well as nine financial and policy related reports of the MTA budget and operations. There are currently 14 MTA audits in process, including audits on overtime, real estate management, cash management, management of the capital plan, fleet maintenance of buses and subways, use of federal stimulus funds and participation of MWBE in state contracts. On May 13, 2010, Comptroller DiNapoli and New York City Comptroller John Liu announced a joint audit that will review the fiscal and community impact of subway and commuter rail service disruptions, as well as how effectively and efficiently the MTA managed the planned service changes.


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