Firm's track record may decide fate of its MTA contract

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Firm's track record may decide fate of its MTA contract

In other cities, AnsaldoBreda has been accused of missing deadlines and specifications on rail cars -- but so have its competitors. A $300-million contract in Los Angeles is at stake.

By Maeve Reston

July 23, 2009
Pressured by intensive lobbying from groups that include Los Angeles County's most powerful labor unions, transportation officials are slated today to decide whether to give Italian rail-car maker AnsaldoBreda a second chance at a $300-million contract.

For months, Los Angeles County Metropolitan Transportation Authority officials have been locked in debate with the company over the quality of the 50 rail cars it has built under an existing contract that is three years behind schedule. When MTA executives said they planned to seek competitive offers rather than extend the contract for another 100 cars, the company pledged to build a $70-million rail-car manufacturing facility in downtown Los Angeles if the contract is renewed.

At a time when city unemployment is at 12.5%, that caught the attention of city officials who argued the factory could be the centerpiece of a clean technology corridor proposed by Los Angeles Mayor Antonio Villaraigosa, who sits on the MTA board.

But federal regulations bar Villaraigosa and other MTA board members from considering that offer, leaving them to focus on the company's performance. Some board members have been scrutinizing AnsaldoBreda's record in five other North American cities, as well as several recent contracts abroad.

Mixed reviews

Interviews and records reviewed by The Times show that AnsaldoBreda has faced similar public criticism in the past, but that several competitors also have checkered records.

"Anywhere in the world . . . you can find every rail manufacturer having problems," said MTA board member Richard Katz. "I don't know if it's because public agencies don't know how to order cars or they keep changing them, or if the private sector doesn't know how to deliver cars."

Top MTA staffers say AnsaldoBreda has not met its contract terms. Because the cars weigh on average 109,557 pounds -- about 6,000 pounds more than specified -- the MTA has had to reinforce five bridges along the Expo Line, according to the chief executive overseeing its construction. Staff also initially complained that the cars were incompatible with others in the fleet, a requirement waived by a former mid-level MTA official.

The firm's officials have disputed the weight calculations, blamed delays on MTA-ordered changes and highlighted inconsistencies in MTA statements -- including a glossy brochure on the Gold Line Eastside Extension in which former MTA Chief Executive Roger Snoble says the AnsaldoBreda vehicles perform "like a 21st century rail car."

This week, the firm's union allies accused a competitor, Siemens Transportation Systems Inc., of lobbying to scuttle the potential contract extension. Officials at Siemens -- one of six companies interested in competing for the work -- denied that charge.

Global portfolio

AnsaldoBreda officials say the contract options are critical to expanding their North American operation. The company's only other active manufacture or overhaul contract in the United States is refurbishing 27 cars for Buffalo, N.Y. But the firm is bidding on a driverless system in Honolulu and plans to compete for projects in Miami, Washington, D.C., and San Francisco.

In the 1980s, Breda Costruzioni Ferroviarie, which merged with Ansaldo Trasporti in 2001 to form AnsaldoBreda, built 48 light-rail cars for Cleveland. A spokesman for the transit agency there said the cars arrived six months late, but "customers were very happy with them."

Breda manufactured 364 cars in the 1980s for the Washington Metropolitan Area Transit Authority. Asked about the cars earlier this year, the authority's vice chairman, Peter Benjamin, said the agency has "had a perfectly reasonable experience" with them.

In the early 1990s, Breda manufactured cars for MTA's Red Line, which opened eight months ahead of schedule. The firm's officials have touted the comments of a former MTA executive who called Breda's system support "outstanding." But in a January memo to board members, MTA staff said the reliability and availability of the 30 original vehicles ordered from Breda "is by far the lowest" of its rail fleet.

Breda also built 151 light-rail cars in the 1990s for the San Francisco Municipal Railway; a spokesman would say only that they "carry more than 140,000 people a day successfully on our system."



Both AnsaldoBreda and Siemens have faced past criticism from officials at the Massachusetts Bay Transportation Authority. When the Massachusetts agency temporarily halted a Breda contract for trolley cars in December 2004 after a series of derailments, a top executive told the Boston Globe: "We bought a lemon."

Both sides filed claims against each other, but later worked to complete the contract. Agency spokeswoman Lydia Rivera said "the reliability and performance of the vehicle has improved dramatically."

In 2007, a state auditor faulted the Boston-area transit agency for failing to "provide detailed track standards and conditions data necessary . . . to properly design" the cars.

Subsequently the agency complained publicly about its order for 94 subway cars from Siemens, which ran three years behind schedule. Oliver Hauck, president of Siemens' transportation division, said the delays stemmed from ownership changes at its third-party car assembler and a bankrupt supplier.

AnsaldoBreda SpA, the Italy-based parent company of AnsaldoBreda Inc., has recently won deals in Brazil, Saudi Arabia and Taiwan.



Contract dispute

AnsaldoBreda's recent troubles with DSB, Denmark's state railway system, caught the attention of MTA board member Mike Antonovich, a county supervisor who favors seeking other bids rather than extending the firm's Los Angeles contract. Last year, DSB threatened to cancel AnsaldoBreda's contract for 83 diesel trains that were ordered in 2000 and scheduled for service six years later. The dispute was resolved in May when AnsaldoBreda agreed to pay a $411-million settlement.

Despite improvements over the last year, DSB said in a statement that the process had been "unacceptable."

AnsaldoBreda's lobbyist, Chris Lehane, said delays stemmed from complications after the company's 2001 merger. But he said AnsaldoBreda's owner, Finmeccanica, has done everything it can to address the problems.

Antonovich argued in a letter that DSB's criticism illustrates the company's "inability to fulfill its contractual obligations."

Although there have been past problems with Los Angeles County's contracts with Siemens and another rail contractor, Sumitomo, the MTA's new chief executive, Art Leahy, said they did not rise to the level of the recent disputes with AnsaldoBreda. He said his focus has been on the Italian firm's work in Los Angeles and "what way they might find to persuade us that they've resolved their quality control issues."

maeve.reston@latimes.com