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Houston METRO Cancels Controversial Contract With Spanish Rail Car Company
Friday, December 17, 2010 - 08:45 PM
(Houston -- Wendy Siegle, KUHF News) METRO’s board has approved a deal to terminate its controversial contract with a Spanish rail car company. The settlement means METRO is moving closer to negotiating a much-needed federal grant for the construction of two light rail lines.
Earlier this year the Federal Transit Administration ruled that METRO, under the previous leadership, broke "Buy America" rules when it awarded two light rail contracts to Construcciones y Auxiliar de Ferrocarriles (CAF), a Spanish-owned rail car vendor.
The violation put $900 million dollars in FTA grants for a rail expansion on hold. METRO president and CEO George Greanias says, by canceling the contract with CAF, METRO has a better chance of securing the funds. “This meets a very important requirement the FTA put on us if we were going to move forward on the full funding grant agreement,” Greanias said.
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METRO had already sunk $41 million dollars into the construction of the rail cars before the Spanish company was told to stop work. Under the agreement CAF will pay back $14 million dollars of that to METRO. The agreement stipulates that CAF will forfeit any additional payments for unpaid work and lost profits.
Greanias says METRO plans to rebid the light rail contract in January. CAF USA, a subsidiary of the Spanish company, will be able eligible to participate in the re-procurement process. Greanias says CAF USA will be treated like every other bidder. “We’re being very careful in putting together the re-procurement request that we have a very level playing field," Greanias notes. "And we have the Federal Transit Administration working with us to make sure that what we do creates a level playing field.”
As for the $900 million in federal funding, Greanias says he expects to get a definitive answer from the FTA in June or July. He's confident METRO will receive the funding, but stresses that if it doesn't, the agency has a backup plan to keep the rail expansion moving.
“If for some reason the full funding grant agreements did not come through we’d have more than sufficient local funds to do exactly what the fall back alternative says, which is to complete the East End line, bringing it across Main, and cleaning up the streets—getting everything back in better shape than we found it when we started—and being prepared to extend the other lines as money comes available.”
Greanias says he doesn’t anticipate any problems in qualifying for the grant as long as METRO continues to comply with the FTA.