Commuter rail operating agreement
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- NEW VEHICLE FLEET SUPPORT
- SUPPORT INVENTORY VALUATION
- PHYSICAL INVENTORY AND AUDIT
- OBSOLETE, SURPLUS AND SCRAP SUPPORT PROPERTY AND SUPPORT INVENTORY
- MATERIALS MANAGEMENT INFORMATION SYSTEM
- FAILURE TO MAINTAIN ADEQUATE LEVELS
- Schedule 3.8
- OPERATOR DELIVERABLE REQUIREMENTS LIST
MATERIALS MANAGEMENT AND PROCUREMENT MATERIALS MANAGEMENT The Operator shall manage the purchase, storage, security, disbursement, control and disposal of all Support Property and Support Inventory necessary to perform the Agreement Services. The Operator shall ensure that all Support Property and Support Inventory purchased by the Operator in order to perform the Agreement Services shall be used solely for the purpose of providing the Agreement Services. The Operator shall not sell, loan, give away or use for purposes other than Agreement Services, Support Property and Support Inventory purchased or obtained for the Agreement Services, without the express written consent of the MBTA. This applies to material designated as scrap as well as usable material. Title and ownership of Support Property and Support Inventory shall pass to the MBTA upon purchase by the Operator except as otherwise provided in this Agreement. Support Property and Support Inventory shall be available for inspection by the MBTA at all times. The Operator shall develop and implement a materials management process that will optimize efficiency and inventory value through forecasting of replenishment requirements as well as control of all phases of the materials handling function. A preliminary Materials Management Plan shall be submitted to the MBTA for review and approval no later than 60 days after NTP (ODRL 3.4-01). The Materials Management Plan must ensure that adequate levels of critical inventory (particularly long lead-time items) are maintained without any interruption in availability. The Operator shall designate each item of critical or unique material (the "critical material") and determine necessary stocking levels in order to ensure continuous availability during seasonal demands and to support fluctuations in lead time that typically occur. Critical material must be available in sufficient quantities to support the operation of Agreement Services. This applies to all Service Equipment as well as Service Property and Support Property. The Operator shall develop a list of critical material including item number and description, average unit price (the “AUP”), lead time, vendor contact data, order quantity and reorder point. This list shall be submitted to MBTA each quarter for review and approval no later than 90 days after NTP (ODRL 3.4-02). The Operator shall determine quantities of critical material to be kept in stock for normal consumption and quantities to be kept on hand for emergency use (i.e. safety stock). Normal consumption and safety stock may be physically warehoused together, but must be warehoused as separate lots. Warehousing may be done virtually via electronic recordkeeping and dispensing protocols. This also applies to Service Property and Support Property material and must include a category for project material. Any attempt to charge out safety stock or project material for any use must be accompanied by an email alert to the Operator’s material management personnel as well as MBTA officials. Any use of safety stock or project material must be approved by the Operator's Manager – Material Management or his or her designee. The Operator shall develop a processes for kitting common use materials for complex tasks such as locomotive and coach periodic inspection and maintenance (ODRL 3.4-03) no later than 12 months after the Mobilization Commencement Date. Kitting may be done on site by Operator Personnel or off site by a primary vendor or consolidator. The Operator shall also identify opportunities to develop kitting for common processes used in tasks other than vehicle maintenance. The Operator shall use the Commuter Rail IT Environment to monitor levels of materials and inventory. NEW VEHICLE FLEET SUPPORT From the date of acquisition through the expiration of any applicable warrantees, only Original Equipment Manufacturer (“OEM”) parts and material may be purchased and applied to Rolling Stock Fleet vehicles acquired pursuant to the MPI HSP46 Locomotive Procurement program and the Hyundai-Rotem CTC-1800 and BTC-800 Bi-Level Coach Procurement program or any designated Rolling Stock Fleet vehicles acquired thereafter (collectively, “New Fleet Vehicles”). The Operator shall arrange long-term (no less than annual) commitments from OEMs for parts and material for New Fleet Vehicles. The Operator may consider OEM material consignment agreements, guaranteed delivery schedules with on-site and off-site warehousing and other means of preventing accumulation of excess inventory while ensuring timely availability of parts. These arrangements must be in effect by the Agreement Services Commencement Date (ODRL 3.4-04). The Operator shall develop parts lists for New Fleet Vehicles in compliance with guidelines established by the MBTA Vehicle Engineering Group or an MBTA-approved alternate. These lists shall be submitted for MBTA review and approval no later than 90 days after NTP (ODRL 3.4-05). The Operator shall develop lists of unique and critical parts for New Fleet Vehicles and ensure sufficient safety stock is on hand for unanticipated increases in consumption. This shall be done under the guidelines established by the MBTA Vehicle Engineering Group and is subject to MBTA approval. These lists shall be submitted for MBTA review and approval no later than 90 days after NTP (ODRL 3.4-06). The Operator shall develop a list of components, especially high value parts and assemblies for New Fleet Vehicles to be restored for use via repair-and-return no later than 6 months after the Mobilization Commencement Date (ODRL 3.4-07) and arrange repair-and-return contracts with New Fleet Vehicle OEMs or OEM-approved alternates following MBTA approval. Sufficient spare parts and assemblies must be in inventory to support consumption and repair-and-return vendor turnaround times. The Operator shall either purchase additional spares once repair-and-return agreements are made and turnaround times are known or demonstrate that additional spares are otherwise sufficient. The Operator shall ensure secure storage of all New Fleet Vehicle parts and material. The Operator shall ensure continuous availability of New Fleet Vehicle parts and material. STORAGE AND HANDLING Support Inventory shall remain on MBTA property unless the Operator receives MBTA approval to store such Support Inventory elsewhere. Capital spares shall be stored in secure storage; behind chain link fence or other barriers to restrict access. All material, except for low value consumables (i.e. hardware, some cleaning materials, etc.) and common use hardware shall be kept in secure storage areas in order to minimize the incidence of undocumented consumption, hoarding, pilferage and other modes of undocumented inventory depletion. This includes outdoor storage of maintenance of way and other large, durable or slow moving material. Requests for exceptions to this policy are subject to prior written MBTA approval. The Operator shall ensure that all Support Property and Support Inventory is properly handled and protected to prevent damage. Support Property and Support Inventory must be protected from the effects of precipitation, heat, sun, cold, damp, and other effects of time and weather. Support Property and Support Inventory shall be stored so that it does not warp, twist, or otherwise distort during storage. The MBTA may reject as non compliant Support Inventory not stored in conformance with this Agreement. The Operator shall develop and submit a Damaged Inventory Report that is submitted quarterly on the 1st day of February, May, August and November for MBTA review (ODRL 3.4-08). Loss of value due to improper handling or storage of Support Property or Support Inventory shall be the responsibility of the Operator, pursuant to Schedule 4 (MBTA Assets and Third Party Agreements) of this Agreement and will require immediate replenishment upon discovery of damaged material. The Operator shall ensure adherence to any OEM recommended storage requirements. SUPPORT INVENTORY VALUATION The Operator shall ensure that the inventory value maintained in the Commuter Rail IT Environment shall be equal to or greater than the system average price based on the actual purchase price of the Support Inventory acquired for use in the Agreement Services, and shall be subject to audit and verification by the MBTA or its authorized representatives. The Operator shall adjust the inventory value to reflect the results of the annual physical inventory. At no time during the Term shall the value of the Support Inventory fall below 90% of the value of the Support Inventory on the Agreement Services Commencement Date, unless the MBTA adjusts the inventory value to reflect inventory items that the MBTA adds, at its cost and expense, to the inventory, or removes from the inventory obsolete or otherwise unused inventory items. In the event that the MBTA adjusts the total value of the inventory as described in the preceding sentence, the Operator shall ensure that at no time during the Term does the value of the Support Inventory fall below ninety (90%) of the adjusted value of the Support Inventory. The Operator may propose adjustments to inventory value based on need. This includes increases made to ensure uninterrupted availability of critical material, adjustments made in support of changes in lead time, economic order quantity, reorder point, consumption patterns, seasonal need or other substantiated reason. Any change will be subject to MBTA approval. The Operator shall calculate the average unit price of all parts in the inventory. This may be used as an index to justify increasing inventory based on the average price of any part being higher than the year before. The Operator may propose adjustments to inventory value based on obsolescence or extremely low consumption. Obsolete material must be approved by MBTA for disposal before it may be removed from inventory and sold or discarded. Extremely slow moving, but necessary or unobtainable material (i.e. parts needed to restore wrecked and damaged vehicles or infrastructure) may be proposed for write down (i.e. “devalued” to minimum allowable amount) subject to prior written approval from the MBTA. PHYSICAL INVENTORY AND AUDIT The Operator shall conduct an initial physical inventory and annual physical inventory of the Support Inventory and an initial audit and annual audit of the Support Property. No later than 10 days prior to the Agreement Services Commencement Date, the MBTA and the Operator shall complete an initial physical inventory of the Support Inventory and an initial audit of the Support Property to determine the quantities thereof. This initial inventory and audit shall be as provided in Schedule 3.12 (Mobilization) of this Agreement. Upon completion of the initial physical inventory and audit, a listing of Support Inventory and Support Property shall be attached to this Agreement. This inventory shall be a Condition Precedent as provided for in Schedule 2 (Conditions Precedent) of this Agreement. The Operator shall conduct an annual physical inventory of all Support Inventory. This must be completed by June 30th annually (ODRL 3.4-09). The MBTA shall, with the cooperation of the Operator, conduct or cause to be conducted an annual audit of the Support Property. OBSOLETE, SURPLUS AND SCRAP SUPPORT PROPERTY AND SUPPORT INVENTORY The Operator shall identify any Support Property or Support Inventory considered obsolete, surplus or scrap, subject to MBTA approval as part of the annual physical inventory and audit and as required during the normal course of business. The Operator shall develop and implement a plan for handling all obsolete and scrap material including ferrous and non-ferrous metals, trash, hazardous solid and liquid waste, and recyclables (ODRL 3.4-10). This plan must be submitted for MBTA review and approval no later than 60 days after NTP. Obsolete material is Support Inventory that is: not readily, economically, and commonly available to the Operator; or not in current parts catalogs; or not a standard item supplied by an OEM; or rendered unnecessary by an action of the MBTA. An item of Support Inventory deemed obsolete by the MBTA may continue to be utilized until depletion, unless the item has been determined to be inappropriate due to safety or other failure considerations. Material that is obsolete because it is no longer available, but still required to support the delivery of Agreement Services shall be replaced by the Operator. The Operator shall prepare an estimate for “reverse engineering” or otherwise developing an ordering description and specification for acquiring the obsolete material from an approved alternate source. This estimate must be a fixed price/fixed fee estimate and include testing as may be necessary. Such jobs will be treated as Supplemental Work. Obsolete material shall be properly disposed of by the Operator after approval is obtained from the MBTA. Surplus material is Support Inventory for which the annual turnover is less than 0.20 for the prior three years, and for which there is more than a five year supply. The inventory in excess of the five year supply may be disposed of by the Operator with prior written approval from the MBTA. The Operator may scrap an item of Support Property or Support Inventory if the actual cost to repair or repair-and-return such item exceeds the economic cost to replace the item, with the prior written approval of the MBTA, if the Operator replaces it with a new or completely remanufactured item. The Operator may also scrap-and-replace items of Support Property and Support Inventory that are no longer economical to maintain when operating economies can be realized from standardized configurations, with the prior written approval of the MBTA. For such standardization, the Operator shall use only new or completely remanufactured items. The Operator shall, at least annually, dispose of any Support Property and Support Inventory identified as obsolete, surplus, or scrap. Disposal of non-capitalized units of property shall be accomplished through sale by competitive bidding. Capitalized units of property must be disposed of in accordance with instructions from the MBTA. Capitalized units of property include capital spares included with a Service Equipment purchase. Disposal of any obsolete, surplus or scrap Support Property and Support Inventory shall be on a first-in, first-out (FIFO) basis. All Support Property and Support Inventory retained shall be the most recently acquired unless the Operator is otherwise instructed in writing by the MBTA. The proceeds of sales of obsolete, surplus, or scrap Support Property and Support Inventory shall be deposited into an escrow account to be maintained by the Operator and, at the direction of the MBTA, either be remitted to the MBTA or used by the Operator to acquire other Support Property or Support Inventory to be utilized in providing the Agreement Services. The Operator shall also credit to the escrow account the amount of any and all proceeds from the routine sale of used inventory items. The Operator shall set-up this escrow account no later than the Agreement Services Commencement Date and shall submit written documentation of the same to the MBTA (ODRL 3.4-11). Should the disposal include sale to a division, joint partner, or subsidiary of the Operator, the price paid shall be the book value of the disposed material unless a higher price is received. The Operator shall submit a monthly report detailing all transactions to or from the escrow account (ODRL 3.4-12). The cost of selling or otherwise disposing of such items shall be included in the Annual Fee. INVENTORY CONTROL The Operator shall develop an inventory maintenance plan (the “Inventory Maintenance Plan”). The plan shall detail the amount of inventory required to maintain the Service Equipment, Service Property, and Support Property. The plan must include a process and schedule for monthly review and metrics for measuring the effectiveness of the plan. The plan is subject to approval by the MBTA. The plan shall be initially submitted to the MBTA for review and approval no later than 60 days after NTP (ODRL 3.4-13). The MBTA shall review and approve or return the plan for amendment within 30 days after receipt. The Operator shall amend and resubmit the plan within 20 days. If the plan is rejected a second time, the Operator shall immediately arrange a meeting with the MBTA to quickly resolve the issues of contention. The plan shall be updated annually and submitted to the MBTA as part of the corresponding Mechanical Services Plan and Engineering Services Plan. The Operator shall determine the minimum and maximum levels of each item of Support Inventory to be maintained as part of the Inventory Maintenance Plan. The MBTA may, in its sole discretion after consulting with the Operator, direct the Operator to adjust minimum and maximum line item inventory levels. The Operator shall maintain actual levels of Support Inventory that exceed the MBTA-approved minimum inventory levels including spare component pools. The Operator shall ensure that long lead time inventory items are maintained at the MBTA approved level. The Operator shall not deplete existing stocks to generate working capital for the Operator's benefit. Consumption of existing stocks that results in replacement with consignment material is not permitted without prior written approval from the MBTA. The Inventory Maintenance Plan must include minimum levels of necessary common use material to be stocked at all secure outlying points to support troubleshooting and running repair of locomotives and coaches in order to avoid train delays; inoperative or unusable locomotives; un-air conditioned, un-heated or un-lit coaches; coach door defects and other failed systems critical to train operation. Stocking such levels of specific parts and material may introduce higher minimum stocking levels of these parts in order to support multiple stocking locations (i.e. minimums cannot be established only by measuring against fleet size, lead time, etc.) The Inventory Maintenance Plan must include minimum levels of necessary common use and long lead time Service Property items including track, signal, grade crossing, bridge, station and facility components. The Inventory Maintenance Plan must include a three year forecast for all material needs with special attention given to long lead time items as well as material from overseas suppliers. The Inventory Maintenance Plan must include minimum acceptable levels at all fuel storage locations and a process for managing those levels. The plan shall include a process for managing bulk fuel delivery schedules and monitoring in order to prevent storage tank levels from falling below required minimum levels during inclement weather, holiday weekends, etc. The Inventory Maintenance Plan must include lists of all seasonal material and fluids and plans to ensure adequate stocking levels to meet peak demand. Details include item number and description, vendor contact information, min/max level, order quantity, lead time, delivery schedule, and deployment locations. The Inventory Maintenance Plan must include multiple suppliers for critical winter needs. The Inventory Maintenance Plan must include schedules and ordering information for winter blend fuel including the method for ensuring that the blend remains within allowable tolerance for variation (i.e. mix on site in MBTA storage tanks or pre-mix at vendor terminal). The Inventory Maintenance Plan shall include a process for monitoring and tracking all spare component pools including reclaim pools in order to eliminate the incidence of inventory shrinkage. This process must include methods of periodically tracking the status and location of all pool components. There shall be no variation in inventory levels of pool components from the levels as of the Agreement Services Commencement Date without MBTA approval. The Operator is responsible for restoring all missing, damaged, vandalized or otherwise ruined pool spares. The Operator shall develop and implement a process for generating and maintaining a “None on Hand” list for tracking of stock outs as well as a process for reconciling the none-on-hand items including expedited delivery, alternate sourcing, inventory adjustments, etc. This process must be submitted to the MBTA for review and approval no later than 60 days after NTP (ODRL 3.4-14). The Operator must ensure that there are no unanticipated stock-outs and that Procurement and Stores personnel meet with end users monthly to maintain continuous forward progress in solving material issues. This process must include the following elements: There can be only one officially sanctioned None on Hand list. There must be a procedure for populating the list and all additions and deletions must follow this process. Included with each entry must be the item number and description of each none-on-hand item; vendor data, min/max level, economic order quantity, lead time, buyer's contact information, delivery due dates, any other pertinent information such as work-arounds, units held out of service awaiting material, delays in infrastructure maintenance and repairs, etc. None-on-hand material must be prioritized by criticality, length of time of stock out, and the extent to which it is unique (i.e. there is lack of alternate vendors for the material). A meeting of relevant Operator Personnel must be convened monthly to review and act upon the status of each item on the list. MBTA staff shall be notified of all monthly material meetings, receive all reports in advance and may attend as necessary (ODRL 3.4-15). A report detailing the status of Work In Progress (the “WIP Report”) with respect to the Operator ordering process shall also be presented and discussed at this monthly meeting. The Operator must develop a means to ensure that procurement department administrative time is included in all its lead time estimates and kept to a minimum. All items waiting in the Operator's procurement queue must be stratified on the WIP Report by length of time in the queue - >15 days, > 30 days, >60 days, etc. Any items in the procurement queue for >30 days must receive priority treatment unless they are critical, in which case immediate attention is required. The Operator shall use the WIP Report to ensure that all stakeholders understand the details and effects of each stock-out, that remedial actions are determined and managed correctly and in a fashion to remedy the stock-outs as soon as possible and that no missing parts or material are overlooked. The Operator must ensure that all fleets and other assets are available for the maximum amount of service. An updated None on Hand list shall be generated following each of these meetings and forwarded to the Operator’s management and to MBTA officials within five (5) days of each meeting (ODRL 3.4-16) Attendance sign-in sheets shall be generated at each meeting whether or not MBTA representatives are in attendance and forwarded to the MBTA. QUALITY OF MATERIALS Support Inventory material and services shall be selected to achieve or exceed performance requirements of the Agreement Services. Services include repairing and overhauling components, hazardous and scrap material haulers, monitoring and audit services, etc. All Support Inventory materials to be used in the Agreement Services shall be first quality products and conform to OEM specifications. If OEM specifications are not available, then other appropriate specifications or standards (such as AAR, AISI, Aluminum Association, ASTM, AWI, NEC, NFPA, SAE, ASME, or others) shall be utilized, unless otherwise specified by the MBTA. Track material must meet or exceed the requirements of AREMA and American Railway Engineering Standards, whichever is more stringent. The Operator shall not acquire or use materials that will negatively impact safety, durability, reliability, regulatory compliance, or operating economy relative to the Service Equipment or Service Property original design or as modified through upgrades or improvements. The Operator shall acquire Support Inventory that is identical to and interchangeable with parts, material, circuits, logic, ergonomics and dimensions on the existing Service Equipment and Service Property. Unless otherwise specified in this Agreement, the requirement for interchangeability shall apply to material used for repairs, maintenance, and replacements. Interchangeability shall be defined by form, fit, and function. Safety, durability, delivery time, cost and appearance are integral parts of function. All track car fuels and fluids must be ordered by the Operator in compliance with MBTA technical specifications. In the absence of a technical specification for a specific item, the Operator must develop and implement a technical specification subject to MBTA approval (ODRL 3.4-032). Technical specifications must be approved by the MBTA before any orders are placed for applicable material. The Operator may recommend substitutions or changes in configurations of material and spares that do not lessen the safety, reliability, appearance, availability, operating economy, or regulatory compliance of the Service Equipment or Service Property. The Operator shall acquire sufficient quantities of MBTA approved substitute material in order to provide for fleet needs and provide a viable pool of spares. Substitute material may only be purchased with prior MBTA approval. All Support Inventory purchased for the Agreement Services shall comply with all local, state, and federal regulations. MATERIALS MANAGEMENT INFORMATION SYSTEM The Operator shall, no later than 135 days after NTP, develop, implement and administer a Material Management Information System Plan so as to use the Commuter Rail IT Environment to monitor and control materials management activities (ODRL 3.4-18). These activities shall include, but not be limited to, maintaining an inventory of all existing materials and parts; optimizing stocking of materials and parts; calculating the costs of materials and parts used for work orders; controlling the ordering of materials and parts; and tracking specific materials, including materials for Supplemental Work Projects, serialized components, budgets and project costs. The Materials Management Information System shall be fully operational and up-to-date not later than 90 days after NTP (ODRL 3.4-19). The Operator also shall ensure that existing MBTA materials management data is loaded into the Commuter Rail IT Environment not later than 90 days after NTP (ODRL 3.4-20). The Operator shall separately identify and track materials used for Supplemental Work in the MBTA approved or MBTA supplied Materials Management Information System. FAILURE TO MAINTAIN ADEQUATE LEVELS In the event that the Operator fails to perform the necessary maintenance on the Service Property or Service Equipment within the allocated maintenance schedule due to the Operator’s failure to maintain an adequate level of inventory, the Operator shall be held liable for the costs associated with such failure to perform such maintenance, including all applicable penalties. FUEL PURCHASING The MBTA shall select a locomotive fuel vendor(s) and pay for bulk locomotive fuel that is delivered to the fuel storage tanks located at the Southside S&I Facility and CRMF and used in Commuter Rail Services. The MBTA shall also pay for the delivery of bulk locomotive fuel transported by an MBTA owned fuel truck or vehicle and used for the Commuter Rail Service at the Readville Yard or other facility as mutually agreed to by the Operator and the MBTA. The Operator shall order and arrange for the delivery of locomotive fuel from the MBTA-approved vendors. The Operator shall maintain sufficient levels of fuel in storage tanks to permit compliance with the requirements cited in the Inventory Maintenance Plan. The Operator shall monitor the composition and quality of the fuel in the storage tanks by performing frequent periodic chemical analysis. Winter and summer blends shall be maintained within specified allowable variation as described Sections 7.8 and 7.10 of this Schedule 3.4 (Materials Management and Procurement). The Operator shall develop and implement fuel testing plan including sampling schedule subject to MBTA approval no later than 90 days after NTP (ODRL 3.4-21). The Operator shall replace at its sole cost any fuel that is degraded as a result of the Operator's own conduct or omission(s). The Operator shall schedule testing to ensure that problems associated with degraded or contaminated fuel are minimized. Other Fuel The Operator shall provide or secure, at its own cost and expense, all fuel used by the Operator, including locomotive fuel delivered to outlying points, in the performance of Agreement Services other than fuel dispensed from the storage tanks described in Sections 11.1 through 11.6 of this Schedule 3.4 (Materials Management and Procurement), above. All such fuel shall meet or exceed the fuel specifications of the OEMs. Operator shall ensure that fueling that occurs at locations other than Southside S&I and CRMF is done in compliance with all state and federal regulations, as well as in accordance with all applicable SPCC Plans. No labor than 90 days after NTP, Operator shall develop and maintain a waste/recycling tracking plan to account by volume, weight, commodity and cost for all materials including trash/waste that is disposed (ODRL 3.4-34). Fuel Accounting Requirements No later than 60 days after NTP, the Operator shall develop and implement a system using the Commuter Rail IT Environment for accounting for all fuel deliveries and dispensing that includes, but is not limited to, the following (ODRL 3.4-22): Every gallon of fuel that is dispensed must be accounted for with a dispensing ticket that identifies the unit number to which it was applied, date and location; Every gallon of fuel that is delivered must be accounted for on the fuel transporter's delivery ticket as well as a matching Operator delivery receipt; Variation between transporter and Operator receipts must be limited to 0.1% with a written explanation for any variance that exceeds this tolerance; A daily reconciliation must be performed that balances all delivery quantities, storage quantities and dispensing quantities with variation not to exceed 0.1%. Any variation that exceeds that limit must be accompanied with a written explanation. Defined periodic checks of physical storage inventory (at least twice daily) using means other than receiving or dispensing meters (e.g. measuring sticks, tape measures, sight glasses, etc.) Defined service intervals for receiving and dispensing, meter inspection, calibration, maintenance and overhaul. A defined periodic audit process of receiving and dispensing practices. This must include written reports submitted to the MBTA within 48 hours of completing each individual audit. Laborer/Fueler training must include specific instructions on the use and care of fuel receiving and dispensing apparatus; monitoring fuel deliveries; filling out dispensing tickets, etc. Daily, weekly, monthly and annual reports (ODRLs 3.4-23 thru 3.4-26) that include all fuel delivery, dispensing and variation data and cumulative information along with explanations and narrative as required. Monthly reports for all inspection, maintenance, calibration, repair and overhaul of fueling apparatus (ODRL 3.4-27). The Operator must make all reasonable efforts to remedy unacceptable variation through improvements in accounting practices; inspection, maintenance, calibration & repair of fuel storage, receiving and dispensing apparatus; employee training and, if necessary, discipline. These efforts must be documented in the Operator's written explanations for fuel variance as well in periodic reports cited in Section 11.8 (Fuel Accounting Requirements) of this Schedule 3.4 (Materials Management and Procurement). Locomotive Fuel Usage The Operator shall provide to the MBTA monthly reports showing fuel usage by locomotive by date, time of day, fueling location, and amount (ODRL 3.4-28), and a monthly report of fuel purchases by the Operator (ODRL 3.4-29). No later than 90 days after NTP, the Operator must develop and implement a plan to ensure that locomotive idling time is minimized (ODRL 3.4-019). MBTA locomotives shall be idling continuously for no longer than permitted by 310 CMR 7.11(2). Monthly reports cited above shall include hours running and hours idling by locomotive number based on baseline equipment manipulation cycle requirements. The plan must show compliance with Section 1.3.5 of Schedule 3.8 (Environmental Services) of this Agreement. MASSACHUSETTS SALES TAX The MBTA and the Operator agree that, pursuant to M.G.L. c. 64H(tt)(E), the Operator is exempt from Massachusetts Sales Tax on property it purchases that is required to perform Agreement Services. In the event of a change in state law or any other duly authorized legislative, judicial, or regulatory determination that the Operator is required to pay sales tax on such property, the MBTA and the Operator shall agree to a Service Change that compensates the Operator for its increased costs resulting from such determination. The MBTA and the Operator agree that, consistent with M.G.L. c. 64H(tt)(E), the Operator is not entitled to a sales tax exemption on the purchase of any property used to administer, oversee, supply, maintain, or control any of the Operator’s own offices, facilities, workshops, vehicles, equipment or business operations. The Operator is responsible for maintaining all appropriate and required records related to the purchase of property required to perform the Agreement Services and for compliance with all applicable tax laws (ODRL 3.2-31). CAPITALIZATION Capital Funded Material All capitally funded material purchased by the Operator must be done in compliance with FTA and MassDOT procurement guidelines. Capital Spares The Operator shall not use capital spares under any circumstances without written MBTA authorization. Capital spares shall be stored in compliance with Section 3.2 of this Schedule 3.4 (Materials Management and Procurement). The Operator may not, under any circumstances, “borrow” or scavenge parts from capital spares. The Operator shall provide written justification proposing the use of a specific number of capital spares based on need (ODRL 3.4-32). This justification must include potential impacts on safety, service, vehicle or system availability, vehicle or system reliability, reasons for reduction in the prior number of spare components. This shall be submitted for MBTA review and approval at least 15 days before the components can, if approved, be withdrawn from capital inventory and made part of the spare component pool. WARRANTY MATERIAL The Operator shall develop and implement a warranty control and administration plan. This plan must cover all current and future equipment warranty programs and must be submitted for MBTA review and approval no later than 90 days after NTP (ODRL 3.4-33). The Operator shall provide segregated storage for all warranty material and strict controls on removal, storage, tracking, disposition, return and replacement of all components covered under warranty programs. Warranty programs are purchased by the MBTA as part of capitally funded rolling stock and other system procurements. As such, any proceeds from warranty programs will be remitted directly to the MBTA. OPERATOR DELIVERABLE REQUIREMENTS LIST
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