Board committee advances SFMTA vendor-managed inventory pilot amid union concerns

SFMTA officials told the Budget and Finance Committee on July 24 that a two‑year vendor‑managed inventory (VMI) pilot would create a faster, more reliable supply chain for rail and bus parts and reduce a backlog of purchase orders that has left vehicles out of service.

Virginia Harmon, SFMTA’s contracts and procurement manager, said the pilot is a focused purchasing contract for critical parts with performance metrics the vendor must meet, including a 98 percent fill rate for critical items within 24 hours and liquidated damages for failures. "This pilot will allow us to test an alternate method, in a relatively risk‑free environment where we anticipate a more effective supply chain," Harmon said.

SFMTA and procurement staff said the pilot is not a jobs‑elimination measure and that affected purchasing staff would be reassigned to other divisions. Ashish Patel, who oversaw the RFP evaluation, described a competitive selection process and noted contract protections: "They actually guaranteed us a fixed cost of every part identified in the contract for the first 2 years of the pilot," he said.

Labor representatives disputed SFMTA’s assessment. Rachel Richmond of Professional & Technical Engineers, Local 21, thanked staff for assurances but asked the controller and city attorney to review whether the proposal triggers the charter’s Prop J requirements for contracting out work currently performed by city civil‑service employees. Ken Easton (Local 21) told the committee the change "will almost certainly lose jobs," and urged stronger written controls to prevent circumvention of city procurement standards.

Budget analyst staff recommended amendments requiring SFMTA to report actual savings at the end of the initial two‑year term and to set the initial contract term and total not‑to‑exceed amount. Committee members expressed competing priorities: several voiced urgency to relieve parts backlogs that leave buses and trains sidelined, while others pressed for assurances on job protections and procurement safeguards.

After public comment and lengthy questioning of SFMTA staff about meet‑and‑confer with unions and Prop J, the committee voted to move the item to the full Board "without recommendation," asking the controller and city attorney to advise the Board before final action. The committee also accepted the budget analyst’s amendments to require post‑pilot reporting on savings and performance.

Next steps: the Board of Supervisors will receive the amended ordinance and the committee requested follow‑up information from SFMTA, the Controller’s Office and the City Attorney on Prop J implications and the meet‑and‑confer record.