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Corporation Implements Innovative Parts Purchase Contract

NEWARK, NJ, February 13, 2002 -- The NJ TRANSIT Board of Directors today approved a $45.4 million contract with Motor Coach Industries Service Parts, Inc. (MCISP) of Des Plaines, IL to stock and deliver parts for NJ TRANSIT's new cruiser bus fleet from a New Jersey-based warehouse. The new arrangement will save NJ TRANSIT millions of dollars in operating costs.

This plan calls for MCISP to lease a warehouse in East Brunswick and maintain certain inventory levels. As a result, NJ TRANSIT will save as much as $11 million dollars over the life of the contract because the Corporation will not be required to purchase and stock a complete parts inventory for the new buses. Prior to purchasing the MCI cruisers, NJ TRANSIT bought nearly 600 buses -- and spent more than $5 million to provide an initial parts supply for those buses -- between 1996 and 1999.

The five-year contract -- with an option for three additional years -- marks the first time a public transportation agency will participate in a parts procurement program similar to those found in the airline and trucking industries. Academy Bus Company -- a private carrier that provides service under contract to NJ TRANSIT and independently in New Jersey and other states -- is planning to join NJ TRANSIT in this program.

"This proposal shows both innovation and fiscal responsibility," said Acting State Transportation Commissioner and NJ TRANSIT Board Chairman John F. Lettiere. "Consistent with Governor McGreevey's directive to trim costs, NJ TRANSIT is answering the call through a program that combines financial prudence with an approach unique to public transportation."

"I am pleased that NJ TRANSIT is bringing this innovative procurement approach to the public transportation sector," said Myron P. Shevell, Vice Chairman of NJ TRANSIT's Board of Directors and Chairman and Chief Executive Officer of New England Motor Freight, Inc. of Elizabeth, the largest family owned LTL carrier in the Northeast, which operates 30 terminals throughout 12 states, Puerto Rico and Canada and through its partnership carriers services 95 percent of the population of the continental United States. "I know that using an independent vendor to maintain a parts warehouse provides major costs savings and allows vehicles to be repaired and returned to service more quickly."

"This approach is an excellent business and customer service decision," said NJ TRANSIT Executive Director Jeffrey A. Warsh. "This contract will result in buses spending more time on the road than in the shop while avoiding millions of dollars in parts inventory costs."

NJ TRANSIT has ordered up to 1,400 cruiser buses from Motor Coach Industries (MCI). To keep the new fleet operating properly, the Corporation requires parts to cover maintenance, accident repairs, modifications and upgrades, and to comply with warranties. Under normal procurement procedures, NJ TRANSIT would purchase parts from MCISP's principal warehouse in Louisville, KY and store them at NJ TRANSIT facilities.

To ensure that MCISP's prices remain competitive, NJ TRANSIT staff will perform random price audits, comparing MCISP's prices to those offered by other bus parts suppliers. If MCISP's prices are more than five percent above the highest prices offered by other bus parts suppliers, MCISP will be required to adjust their prices.

This approach will also benefit NJ TRANSIT by providing more space in the Corporation's central parts storage facility, which currently maintains parts for routine maintenance and major overhauls of the Corporation's entire bus fleet. Under this proposal, MCISP will stock parts for MCI cruiser buses in the East Brunswick warehouse and provide them to NJ TRANSIT's bus garages, usually within 24 hours.

Finally, when buses are retired, NJ TRANSIT disposes of obsolete parts. It is impossible to recoup the full value of any remaining parts. The contract with MCISP will save NJ TRANSIT significant costs on future parts disposal.

NJ TRANSIT is the nation's largest statewide public transportation system providing bus, rail and light rail services for 380,600 daily commuters on 238 bus routes, two light rail lines and 12 commuter rail lines. It is the third largest transit system in the country with 163 rail stations, 26 light rail stations and more than 17,000 bus stops linking major points in New Jersey, New York and Philadelphia.