1. MBTA-Keolis Commuter Rail Contract: Report on Year 1 July 21, 2015

2. Commuter Rail contract history MBTA Commuter Rail system operated by contractors since inception Amtrak - 1987-2003 Massachusetts Bay Commuter Railroad Company - 2003-2013 Keolis - July 2014-Present MBCR struggled with schedule adherence, passenger comfort, and other elements of contract performance. In response to MBCR problems, Keolis contract is structured with penalties for failure to meet requirements. DRAFT FOR BOARD REVIEW – Slide 2

3. Metrics for which there are requirements and penalties On Time Performance (“OTP”) measured by schedule adherence “On time” defined as within five minutes of scheduled time 50% of potential penalties related to OTP Non-OTP Metrics Other 50% of potential penalties relate to non-OTP issues Staffing - requirement of one conductor per 300 passengers Equipment availability and reliability - baseline requirement of 65 locomotives and 359 coaches Cleanliness/functionality of passenger amenities (HVAC, station condition, etc.) - assessed by periodic MBTA field inspections Equipment inspections - assessed by periodic MBTA audits and FRA inspections of locomotives and coaches Fare Collection - assessed based on MBTA staff observations DRAFT FOR BOARD REVIEW – Slide 3

4. Overview: Year 1 trends in Keolis performance On Time Performance is not acceptable; while improving, OTP remains inconsistent Staffing is a problem Equipment availability and reliability is still an issue DRAFT FOR BOARD REVIEW – Slide 4

5. On Time Performance On Time Performance is not acceptable; while improving, OTP remains inconsistent Peak period service continues to be a major problem Some lines still lag Opportunity to improve OTP, particularly with trains 5-9 minutes late Peak period OTP will require more work Other performance failures (staffing shortages and equipment failures) contribute to delays and are fully within the control of Keolis DRAFT FOR BOARD REVIEW – Slide 5

6. A decade of on-time performance results 10-year period of MBCR management (2003-2013): annual average actual OTP was 88.5% DRAFT FOR BOARD REVIEW – Slide 6

7. OTP – How did Keolis do in Year 1? OTP during Contract Year 1 has been inconsistent, but has generally fallen within historical range DRAFT FOR BOARD REVIEW – Slide 7 PeriodActualAdjusted July-December88.3% January 26-March 3058.1%58.4% Year 1 All83.6%84.7% Year 1 Excl. Jan. 26-Mar. 3087.5%88.8% April-June85.7%89.5% June87.9%90.5%

8. How Close is Keolis to Meeting the OTP Requirements? DRAFT FOR BOARD REVIEW – Slide 8

9. OTP during the peak period is unacceptable DRAFT FOR BOARD REVIEW – Slide 9

10. Peak period on-time performance DRAFT FOR BOARD REVIEW – Slide 10 LineAbbrv. RockportRKP NewburyportNBP HaverhillHVL LowellLWL FitchburgFCH WorcesterWOR NeedhamNDM FranklinFRK ProvidencePVD StoughtonSTO FairmountFMT MiddleboroughMDL KingstonKNG GreenbushGRB

11. Is performance affecting ridership? Despite progress, post-winter loss of ridership continues DRAFT FOR BOARD REVIEW – Slide 11

12. Is performance affecting pass sales? Increase in pass sales may indicate return of regular riders DRAFT FOR BOARD REVIEW – Slide 12

13. Other performance criteria – Staffing Levels Management – Key contract-specified positions are now filled (after a delay), but other staffing lags and affects customer experience. Problem increased in 2015 due to lack of training offered before and after transition to Keolis in 2014 Lack of staffing has caused cancellations (>30 in May), as well as delays and difficult fare collection New staff now being trained by Keolis and being licensed per Federal law Lack of staffing generated $1,031,250 in potential penalties during Year 1, separate from delay penalties. DRAFT FOR BOARD REVIEW – Slide 13

14. Other performance criteria - Staffing DRAFT FOR BOARD REVIEW – Slide 14

15. Other performance criteria – Equipment availability and reliability 65 locomotives (including 2 spares) and 359 coaches (or equivalent number of seats using double decker coaches) expected daily Equipment that is available but unreliable contributes to poor OTP Maintenance facilities being operated with only 2 shifts; backlog of maintenance and repair work to be done MBTA reviews maintenance records to track completion of work ordered MBTA periodically audits maintenance records and locomotives’ condition Locomotive availability currently 98% MBTA worked with supplier of new locomotives to fix warranty defects 24 of 40 new locomotives have been delivered and are being integrated into service; delivery of balance expected by October 5 locomotives leased by MBTA also available as needed Coach availability not fully recovered since Winter Was 100% 5 of 6 months before winter Reduced to 95%-98% in months 10-12 DRAFT FOR BOARD REVIEW – Slide 15

16. Other performance criteria – Fare collection Consistent reports from riders about uneven fare collection; little data Pass sales (but not usage) recorded automatically Access not controlled as with subway Passes checked visually only 10-ride tickets punched manually only Fare revenue is down despite increase in pass sales, which may indicate that non-pass revenue is not being collected Fare collection penalty applied relatively rarely since inspection is ad hoc and not systematic MBTA urging Keolis to reinvest a portion of penalties in training/hiring new Fare Agents, especially for crowded trains Need better data on fare collection DRAFT FOR BOARD REVIEW – Slide 16

17. Contract penalties – How are they used to produce better performance? Complex penalty structure built to be driver of better performance in OTP, staffing, equipment availability/reliability, and customer comfort/amenities Dollar amounts set for each instance of each fault. Illustrative penalty amounts in year 1: $500 for a peak period train that is 5-10 minutes late $2000 for non-working HVAC $5000 for a peak period train that is cancelled On Time Performance (OTP) has penalties for any train >5 minutes late, but establishes 92% OTP as “remedial” level generating maximum penalty Monthly cap on penalties 50% of cap can be assessed for late trains (OTP penalties) 50% of cap for other faults, including equipment, staffing, customer amenities, fare collection, etc. (non-OTP penalties) Year 1 monthly penalty cap (OTP and non-OTP) was $868,850 Year 2 monthly penalty cap (OTP and non-OTP) will be $1,098,040 DRAFT FOR BOARD REVIEW – Slide 17

18. How many penalties in Year 1? The contract provides for a four-month start-up period (July-September 2014), during which MBTA could not assess penalties Total assessed October-June: $7,531,125 OTP penalty cap reached every month Non-OTP penalty cap reached six months out of nine Delays after monthly OTP cap is reached do not generate additional penalties that month If the OTP is between 92% and 99%, each OTP penalty is reduced by a set percentage (up to 40%), according to a sliding scale tied to the overall OTP DRAFT FOR BOARD REVIEW – Slide 18

19. Total Penalized Trains, All Penalties DRAFT FOR BOARD REVIEW – Slide 19 About 13,000 trains run each month. In Feb-Mar, this was about 10,000 each month

20. What the MBTA will be doing in Year 2 Dedicate portion of penalties assessed in Year 1 to fund improvements for passengers Steam cleaning of equipment - underway Hire new Fare Agents to help with boarding process and fare collection - awaiting Union concurrence Hire new Passenger information staff to provide real time information through on-line systems and at stations - underway Reinvest future penalties in ways that will improve customer experience Community partnerships to improve station appearance – in development for 2015 No penalty reinvestment will go to any items to which Keolis is contractually obligated DRAFT FOR BOARD REVIEW – Slide 20

21. What the MBTA will be doing in Year 2 Identify and begin to implement technology to provide reliable ridership counts Provide more peak period and line by line focus in on-line “report cards” Explore and implement improved customer information systems at stations Continue to reinvest penalties in customer focused initiatives (ex: community partnerships to enhance station conditions) Use of ‘mystery shoppers’ to check on fare collection. DRAFT FOR BOARD REVIEW – Slide 21

22. What MBTA has asked of Keolis 5 month Performance Improvement Plan Substantial agreement between Keolis and MBTA on provisions Specific goals and commitments for training new staff (engineers and conductors) Monthly OTP target of at least 92% (adjusted) average Expedited implementation of initiatives to improve utilization of maintenance shops Implementation of Winter Resiliency Plan Cooperation in implementing new schedule to reflect actual passenger demands and current operational practices Test effectiveness of penalties calculated on daily (not monthly) basis to make every day count DRAFT FOR BOARD REVIEW – Slide 22