New York MTA’s Vendor Contracts at Risk Absent Federal Aid

(Bloomberg) -- New York’s Metropolitan Transportation Authority is warning its subway car makers, bus manufacturers and other suppliers that many of the agency’s contracts are at risk if it fails to receive $12 billion of federal aid to cover lost revenue during the pandemic.

Pat Foye, chief executive officer of the MTA, sent letters to Kawasaki Rail Car Inc., New Flyer of America Inc., Bombardier Transportation and other suppliers Thursday, stressing the need for additional federal funding and highlighting the potential amount of jobs at stake in a vendor’s state.

“I am writing to alert you that because of this financial devastation, many current and all future contracts are in jeopardy without an injection of $12 billion in emergency federal aid,” Foye wrote.

Foye’s letter is a warning to the companies but also to federal lawmakers as the MTA has said vendors and suppliers from Republican-leaning states and regions rely on the agency’s business. MTA board members last month called upon chief executive officers and real-estate developers in the New York City area to press federal lawmakers to help the MTA.

The lobbying comes as some Congressional Republicans are still balking at providing another large round of economic stimulus even as President Donald Trump signaled he would embrace a larger package.

The MTA, which is losing about $200 million a week in revenue, has said it may need to cut subway and bus service by 40% and commuter-rail service by 50% absent additional federal cash. Major capital projects may also be delayed, including the expansion of the new Second Avenue Subway, updates to train signals and the plan to create direct access to Penn Station from Connecticut and New York City suburbs.

The MTA is the largest mass-transit system in the U.S. and hires manufacturers and suppliers throughout the nation. Foye’s letter went out to MTA’s 11 biggest vendors, which are located in Pennsylvania, New York, Kentucky, South Carolina, Tennessee, California and Washington D.C.

“Let me be clear: federal funding for mass transit isn’t a red or blue issue -- it’s a jobs issue,” Foye wrote.

The MTA’s $51.5 billion 2020 to 2024 capital plan, its largest ever, is on hold. The agency estimates every $1 million of MTA capital spending results in 13 jobs across the U.S. The agency has created nearly 100,000 out-of-state jobs in nearly all 50 states, according to the MTA.

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