State

$7 million rescue package sought for Maine Military Authority

LIMESTONE, Maine — Gov. Paul LePage’s administration is requesting to use $7 million of the state’s General Fund surplus to help the Maine Military Authority recover from an underbid contract to refurbish Massachusetts transit buses.

The request for the $7 million is aimed at giving the Maine Military Authority the capital needed to complete the bus contract with the Massachusetts Bay Transportation Authority, continue work on smaller contracts and garner future business, said Brig. Gen. Douglas Farnham, commissioner of the Maine Department of Defense, Veterans and Emergency Management, during a meeting Wednesday of the Legislature’s Joint Standing Committee on Appropriations and Financial Affairs.

A Massachusetts Bay Transportation Authority bus being serviced can be seen on Sept. 28, 2016, at the Maine Military Authority's facility at the Loring Commerce Centre in Limestone. (Anthony Brino | Staff Writer)

A Massachusetts Bay Transportation Authority bus being serviced can be seen on Sept. 28, 2016, at the Maine Military Authority’s facility at the Loring Commerce Centre in Limestone. (Anthony Brino | Staff Writer)

“The budget request covers losses incurred during the slower than expected ramp up of [Massachusetts Bay Transportation Authority] production, losses incurred as a result of the underbid of the contract, and provides some working capital in order to properly operate,” Farnham, whose agency oversees the Maine Military Authority, said in prepared remarks.

In September 2016, the LePage administration halted work on the Maine Military Authority’s $19 million contract to renovate 32 Massachusetts Bay Transportation Authority buses, saying the contract was underbid and that Maine taxpayers could be on the hook for cost overruns.

The underbidding of the contract was not deliberate, Farnham said in September, but stemmed from “the complexity of the project, the condition of the incoming buses, some unexpected part variations [and] misunderstandings in the scope of work.”

In October, as the Maine Military Authority was beginning an effort to renegotiate the contract, 35 Authority employees were laid off, leaving about 30 workers remaining to service other, smaller contracts, such as for school district buses.

Now, the LePage administration is seeking to inject $7 million into the Maine Military Authority to rehire the laid-off workers, complete the Massachusetts Bay Transportation Authority contract and “pivot” the state-run business to garner new contracts, Farnham said, adding that the renegotiated contract is expected to be finalized soon.

The Maine Military Authority was created as “an instrument of the state of Maine” in 1997 to offer military vehicle repair services at the industrial park of the former Loring Air Force Base in Limestone, and at its peak it employed 500 workers devoted largely to renovating humvees. After the drawdown of the Afghanistan and Iraq wars, the facility downsized and shifted to servicing civilian vehicles, including school buses and transit system buses. The Massachusetts bus contract was the Maine Military Authority’s first major commercial contract with a transit system, and as of last fall, the Loring facility had completed 11 of the 32 buses.

At the legislative committee hearing, Farnham argued that the additional funding would be needed to help the Maine Military Authority “pivot,” and that this would be the first time the Maine Military Authority received funding from state taxpayers. During its time, the Maine Military Authority has contributed “millions” to the state General Fund and tuition assistance to the Maine National Guard, Farnham said, without specifying how much in total the organization has generated.  

“If we are going to complete the [Massachusetts Bay Transportation Authority] contract, compete in the future, provide Aroostook County jobs and produce a quality product, we need to be smart and lean,” Farnham said. “But we also need the working capital and financial flexibility the Maine Military Reserve Fund will provide.”

 

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