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MTA's train wreck of a deal

A rail-car contract with Italian manufacturer AnsaldoBreda that was suspect to begin with has finally run off the rails.

November 03, 2009

Ignoring the advice of this page, transit experts and both the current and former heads of the Metropolitan Transportation Authority, the MTA board in September awarded a $300-million contract to Italian company AnsaldoBreda to build 100 rail cars at a new factory it promised to construct near the Los Angeles River. Mayor Antonio Villaraigosa, a strong backer of the contract, crowed afterward, "This means that L.A. is going to be the center of green jobs in the nation."

Well, no, it isn't. AnsaldoBreda, it turns out, is just a tease. After a year of negotiations, the company appears to have gotten cold feet as the contract deadline arrived Friday. It asked for a last-minute change that couldn't be approved without the consent of the MTA board, but was far too late to obtain it.

This isn't the first time that Villaraigosa's uncomfortable political alliance of environmentalists and unions has produced bad policy. Other notable failures include Measure B, an initiative voters rejected in March that would have directed the Department of Water and Power to build solar-energy facilities. Its benefits for union electricians were clear, but those for the environment and consumers were dubious. Then there was the clean-truck program at the Port of L.A., which in part attempted to replace independent drivers with Teamsters; those provisions of the plan are now tied up in court.

AnsaldoBreda's promises were lavish: an energy-efficient "green" factory that would pay its unionized workers top wages, plus a money-back guarantee in the form of a $300-million performance bond. Yet long before Friday, it was clear that those vows were suspect -- AnsaldoBreda's history with the MTA is a tale of incompetence and expense. The company is past its deadline on a previous contract to deliver 50 rail cars; some cars arrived up to three years late and were thousands of pounds overweight. Rather than accept the agreed-on penalties for these defects, the company is disputing them.

This saga may not be over. The rail-car contract will now be put up to bid, and Ansaldo- Breda is free to compete (though next time it would probably seek a more profitable deal). The MTA board could give preferential treatment to companies that agree to build the cars in L.A., which would give AnsaldoBreda an edge. If the board does so, it must also agree not to seek federal money to defray the cost of the cars because federal contracts don't allow such local preferences. A board concerned about taxpayers and transit riders would go for the federal money and pick a contractor with a solid performance record and a low bid. Villaraigosa, who sits on the board and appoints three of its 13 members, should show that he runs that kind of board.

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