With AnsaldoBreda’s Exclusive Contract Expired, What Is Next?

11_2_09_ansaldobreda.jpgA diagram of the rail car plant repeatedly promised by Ansaldo Breda. To see the full image go here.

Because the news broke on a weekend, the press reports on the dissolution of the talks between Metro and AnsaldoBreda on extending the exclusive contract to build rail cars for the agency were less-than-complete.  Before the news of the verdict in the Christopher Thompson case broke, I was working on a F.A.Q. that would answer all of the questions that are being asked about AnsaldoBreda, the future rail car contract, and what’s next for Metro and AnsaldoBreda.  The full F.A.Q. is available after the jump.  If you have any questions not answered, leave them in the comments section and I’ll do my best to answer them by the end of the day.

What happened?  I thought the Board and AnsaldoBreda agreed to a contract extension at the September Board Meeting?

While the Board had agreed to extend its exclusive contract with AnsaldoBreda for the construction of light rail cars, that extension came with some pretty hefty conditions.  The most contentious of those was the requirement that AnsaldoBreda deposit hundreds of millions of dollars into a bank account that Metro could draw against everyday that the Italian Rail Car Company was late delivering vehicles.  At the last moment, AnsaldoBreda requested that there be hard limits on how Metro could draw against the account.  Metro didn’t agree.

What happens to Metro’s rail car contracts now?

Metro will need to open the bidding process for any rail car company to make a run at getting the contract for constructing the "Measure R Cars."  We expect the contract competition to be announced at the next Metro Board Meeting.  Back in March staff "warned" that it would take six months for the bidding process to come to its conclusion, so we can expect a contract to be signed early in the summer of 2010.  If Metro had cut bait with AnsaldoBreda in March, we would have known for months who was going to be building our rail cars for the future by now.

Will this effect the Measure R Time Lines?

Maybe, but we don’t know how.

On one hand, the ten month delay in putting the contract out to bid is a disaster.  Cars will cost more and we basically wasted half of a year.

On the other hand, AnsaldoBreda’s working relationship with Metro was so terrible, they were years behind on delivering cars that were too heavy to be used properly, that it’s probably a good thing that they probably won’t be making the cars for all of the Measure R projects.

So That’s It?  No More AnsaldoBreda in L.A.?

Like the villain in a horror-serial that won’t go away; we haven’t heard the last of AnsaldoBreda.  First, they still have to complete their current rail car contract which should have been completed years ago.  Second, Board Member Richard Katz, who was a supporter of AnsaldoBreda during some Board Meetings, blasted the Metro contractor in the press claiming they owe Metro some "free" light rail cars as reparation for their late performance in their current contract.  AnsaldoBreda offered the cars as an attempt to soothe feelings and doesn’t seem interested in following through on that commitment now.

Last, there is nothing to stop AnsaldoBreda from submitting a proposal in the open bidding process.

What About the Rail Car Plant Promised to Los Angeles?

The rail car plant, and the "good high-paying jobs" were only promised to Los Angeles as a bribe to earn approval from the Board.  Poster Erik G. did yeoman’s work tracking down the history of these promises, and I would bet that L.A. doesn’t see a rail car plant built by AnsaldoBreda anytime soon.

Are There Any Winners in This Story?

In short?  No.

The Mayor, his supporters, and unions were basically used by AnsaldoBreda to force a long-term extension of their exclusive rail car contract even though their performance level on their current contract is terrible.  There has to be some egg on their faces.

AnsaldoBreda didn’t get the contract, so they can’t be viewed as winners.

Someone mentioned "taxpayers" as winners, but we lost in this debacle on two fronts.  First, the cars will be "six months more expensive" than they would be if Metro had went to bid in March.  Second, Metro can’t legally consider where rail cars are built when awarding a contract.  However, Villaraigosa repeatedly mentioned the carrot of created jobs as the top reason to move forward with AnsaldoBreda.  He even put it in the statement announcing AnsaldoBreda and Metro weren’t going to come to terms.

Let’s hope the people reading the grant contracts in Washington, D.C. for the Mayor’s ten-year plan don’t read L.A. Streetsblog or any Los Angeles news source.

  • I’d like to reiterate what I said in the last thread on Breda.

    Despite now facing daunting time pressures etc. Metro must somehow find time
    amidst the whirl of activity surrounding the new rail car procurement to figure out what has gone wrong with the last two rail car procurements and applying those lessons as we go forward with this new procurement. We can’t keep repeating mistakes plaguing these multi-million dollar expenditures whose results will operate on our rail lines for 30+ years

    Leadership by at the Metro Board is desperately needed on this issue.

    If this entails paying big bucks for a consultant with expertise, it would be money well spent if we can avoid a repeat of the P-2000 and P-2550 debacles.

    http://la.streetsblog.org/2009/10/31/breaking-news-contract-talks-between-metro-ansaldobreda-breakdown-rail-car-contract-goes-to-bid/#comment-46031

  • Alex

    The truth Mr. Newton is that the “carrot” of the created jobs was an imaginary incentive. It didn’t exist. AnsaldoBreda was never going to create 600+ jobs with one relatively small contract, as pointed out by Mr. Antonovich during the last board meeting by stating that if Siemens, which has several US contracts, does not employ over 600 people, how was AndsaldoBreda going to do it with just one? So the taxpayers did not really lose anything there.

    Another truth is that AnsaldoBreda played the political card rather than the tried and true practice that a good product will sell itself. Fix the problems in good faith and the work will come on it’s own. Shame on AnsaldoBreda’s management for trying to sell such a pack of lies rather than building a working and successful relationship based on trust and shame of the MTA for buying it all. THAT’S where the taxpayers lost!

  • Mike

    I am glad MTA is finally cutting Breda loose. I DO think we ought to cut MTA a break. They are human after all, and we do make mistakes. I would just ask MTA not to commit the same mistake again! Keep building the rails! We need them badly!

  • Alex

    Mike,

    I’m sorry, but I wouldn’t cut the MTA a break, here’s why: the lies were plainly in front of them and the made a concious choice to ignore them (all but Mr. Antonovich). If they had taken the time to investigate AnsaldoBreda’s claims deeper (or had a consultant do it for them), they would have found there wasn’t a prayer in the world that they could achieve the employment levels they claimed. If they had, this issue would have been put to bed at least 6 months ago instead of dragging it out needlessly. They turned a blind eye to the obvious because they wanted their legacy to be that they brought employment to LA. In fact, they also ignored the recommendations of not one, but TWO LA Metro CEO’s that said go out for bid. So what are they doing a year later? Why have the CEO if you’re not going to follow his advice?

    I’m the first person to cut people slack and give the benefit of the doubt whenever possible, but I’m sorry not in this case.

  • I could rant on forever on the issues concerning this issue.

    First off, how often do you see politicians willing to sell their souls for the prospect of a few jobs, a new source of sales tax revenue (Wal-Mart, Ikea, Cabela’s, etc), or any other form of “economic development?

    Then there is the relationship issues that METRO seems to have with manufacturers in general. How many bridges have been burned between METRO and bus manufacturers? Not saying whose fault it is but there is only so many companies out there to do business with. Then again maybe METRO and Breda where a match made in…

    Finally the reason why standardization is important when building rail systems. If LACTC/RTD would have gone with low floor platforms instead of high floor platforms like most of the new light rail systems across the country, they could be adding on to the Utah Transit Authority’s massive order for S70 cars which would have lowered the price per vehicle.

  • cph

    At the time the Blue Line was being built (1985-1990), there wasn’t a practical low floor light rail design. (San Diego is low platform, but they used mechanical lifts which LACTC wanted to avoid.)

  • Well we do have the benefit of hindsight. Several of the transit systems that came along in the 90’s did solve the lift problem mainly with concrete ramps for wheelchairs.

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