Metro Issues Media Statement on Rail Car Contract Negotiations

Italian rail car manufacturer AnsaldoBreda S.p.A. has declined to sign a contract with Metro to exercise an option to provide 100 additional light rail cars to meet the agency’s operating needs for new rail lines in Los Angeles County. As a consequence, Metro will proceed with seeking industry bids on a new rail car procurement.

Good faith negotiations between the two parties have gone on for more than a year. The Board of the L.A. County Metropolitan Transportation Authority had set a deadline of midnight Oct. 30 to reach agreement on exercising the rail car options. But within hours of the deadline last night, AnsaldoBreda S.p.A. required changes to the agreement that were inconsistent with the Board’s direction, including financial penalties for late deliveries. Considering AnsaldoBreda S.p.A. has been late in delivering its base order of 50 cars, Metro officials declined to accept this last minute change.

Last week the agency’s Board of Directors gave AnsaldoBreda S.p.A. additional concessions including a guaranty financial cap and agreed to accept the company’s offer of two free rail cars because it couldn’t deliver rail cars within the weight limits specified in the contract.

With half a dozen new rail projects expected to open in the next decade, thanks to the Measure R transportation sales tax, Metro needs more than 100 rail cars manufactured and accepted in time to operate those lines. To avoid losing valuable time while negotiations with AnsaldoBreda S.p.A. were ongoing, the Board directed Metro staff to simultaneously prepare for soliciting bids for new rail cars. Industry experts have been advising staff  in drafting the package. If all goes according to schedule, the transportation agency’s Board next spring will award a contract for new rail cars. AnsaldoBreda S.p.A. would be eligible to bid on this new contract along with manufacturers from around the world.