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$300 million no bid contract for subway cars in Chicago!!!!
If you ask me it sure sounds like an invitation for corruption! Mayor, CTA privately talked about $300 million no-bid deal By Jon Hilkevitch and David Kidwell, Chicago Tribune reporters 8:26 a.m. CDT, April 12, 2012 The Emanuel administration and the CTA engaged in private discussions on a $300 million no-bid contract with the maker of the transit agency's new rail cars, but the talks collapsed amid disclosures about the poor quality of the company's work, the Tribune has learned. Bombardier Transportation's pitch to build and operate a South Side rail car overhaul facility on vacant city and CTA land in a CTA rail yard took off in May 2011 after Mayor Rahm Emanuel was elected, CTA officials told the newspaper. The talks over the public-private partnership continued for 10 months, "in keeping with the mayor's priority of creating jobs and generating economic development," CTA spokeswoman Molly Sullivan said. CTA lawyers had been working to justify the unusual practice of awarding such a large contract without competitive bids, the transit agency said. But the city and CTA backed away from the talks in recent weeks amid Tribune reports that disclosed defective-parts problems with Bombardier's ongoing production of 706 new rail cars under a contract that totals $1.14 billion. First word of the previously undisclosed discussions with Bombardier comes as Emanuel is asking the City Council to give him broad authority to partner with the private sector to build everything from schools and sewers to ports and railways. The details uncovered by the newspaper highlight both the potential benefits and pitfalls of such public-private partnerships. A vote on the mayor's proposal to create an "infrastructure trust" could come as soon as next week. Emanuel's plan calls for a panel of business experts appointed by him who would identify infrastructure projects that would be built for the city and find ways to fund them other than the traditional practice of government borrowing money and paying off the debt with taxes. The panel's meetings and deliberations would not be subject to open meetings or public records laws. Emanuel's press office repeatedly refused to answer questions about what involvement the mayor had in the Bombardier discussions. On Tuesday his top spokeswoman would only acknowledge the mayor was initially attracted to the Bombardier plan because of potential jobs. She said the mayor soured on the idea because of the no-bid aspect, without saying when that happened. "The mayor doesn't do sole-source deals," said Emanuel communications director Sarah Hamilton. "It was a nonstarter. It was never going to happen." CTA officials said the no-bid component had nothing to do with scuttling the deal and that Emanuel had encouraged it all along. "Very early, even before he took office, he asked me how we might turn this billion-dollar expenditure into an opportunity for jobs," said CTA President Forrest Claypool, who was appointed to the post shortly after Emanuel's inauguration. "So when I took office we took that mandate and ran with it." Claypool described the Bombardier proposal as a "very, very rare potential for a win-win. The goal was a noble one. " As recently as November, a top Bombardier executive who was in Chicago for what was billed as the official rollout of the rail cars discussed with an enthusiastic Emanuel the company's plans to build the repair facility, according to a CTA source. The CTA routinely seeks competitive bids on major projects, but Sullivan said the agency had compelling economic reasons to consider dealing exclusively with Bombardier. Because there are no Chicago facilities equipped to perform midlife overhauls on rail cars, the CTA has to pay to send its aging cars elsewhere, Sullivan said. The Bombardier proposal would have saved the CTA those shipping costs while creating much-needed jobs on the South Side. The Montreal-based company proposed building the facility on its own at the CTA's 63rd Street Lower Yard at Calumet Avenue in the Washington Park neighborhood, on land it would lease from the city and transit agency for as little as $1 a year. In return, the company would be awarded a multiyear, $300 million contract to update 20-year-old rail cars at the facility, CTA officials confirmed. The yard is adjacent to the CTA Green Line East 63rd branch tracks and nearby freight main lines. By allowing Bombardier to use proprietary information to create a uniform rail car design, the CTA's older trains from another maker would be configured with many of the same technical specifications on the new trains from Bombardier — resulting in greater operational and maintenance efficiencies, Sullivan said. As an added economic incentive, the repair shop could attract business from the state of Illinois and possibly surrounding states, which are planning to buy 110 mph passenger trains for Amtrak routes. Bombardier was recommending that a maintenance yard at the Chicago hub of Midwest operations would be needed to service the high-speed trains, according to CTA officials who were close to the talks with Bombardier. Bombardier was also offering a separate deal to maintain its new cars after the warranty expires, Sullivan confirmed. The work would have been done by Bombardier at the CTA's 54th Avenue maintenance yard on the Pink Line. That option "would have enabled some additional local hires working out of our facility,'' Sullivan said. "But the concept was ultimately not accepted.'' The discussions about the potential partnership had not been formally presented to the CTA board. Sullivan said the agency made a decision to back away because of a number of factors. They included the defective rail cars, the need to get the problems fixed so the cars could be used and the potential cost of the deal — no final price had been agreed to. Emanuel was on board with the talks until the revelations over the defective parts made headlines, according to sources close to the top CTA management and CTA Law Department officials involved in the negotiations between the transit agency and Bombardier. A Bombardier spokeswoman declined to answer questions about the specifics of the talks, saying only that it's common for the company to make pitches to customers for additional services like the option the CTA considered. "We are here to help our customers in any way we can with services that include overhauling parts and spare-parts agreements,'' said Bombardier's Maryanne Roberts. The company first presented its idea in 2010, when Richard Daley was mayor. CTA board Vice Chairman Jacquelyne Grimshaw said she learned informally about the repair yard project around that time but was unaware it had progressed so far with the new administration. "No one has told me it has fallen through," Grimshaw said. "If it's dead, it was obviously done through Forrest (Claypool) or Rahm.'' As small problems with the new Bombardier rail cars spiraled into bigger problems, CTA broke off the negotiations on the overhaul facility, Sullivan said. Asked when that occurred, she said, "It was recently — I don't know the exact date.'' The Tribune reported on March 8 that Bombardier had installed defective parts made in China on the first 54 of the new rail cars. The flaws in the wheel assemblies, which potentially could have led to derailments, prompted the CTA to take the cars out of service in December. Bombardier said it has since hired new parts suppliers and improved its quality control and oversight of the CTA contract. Production of new cars at its Plattsburgh, N.Y., plant resumed March 28, according to Bombardier. The CTA expects to reintroduce the new cars next month, transit officials said. Some CTA veteran rail managers said they are glad the maintenance deal with Bombardier collapsed, even though it could have made Chicago the Midwest's high-speed rail maintenance center. The plan was marred by logistical complications that were raised by CTA rail staff and largely ignored by CTA top management, according to one of the CTA officials close to the Bombardier talks. "We were concerned that all these legitimate concerns would be pushed aside because of politics and (the prospect of new) jobs,'' said the CTA official. The rail managers who were critical of the plan said the 63rd Street yard is too far from downtown, making it a hassle to reach from some of the CTA rail lines, and does not have enough space for a test track where trains could be evaluated. Meanwhile, Bombardier has in recent weeks rehired Avis LaVelle, a public relations consultant and longtime City Hall insider who also represented the company in 2006 and 2007 when it was negotiating the rail car contract. "My firm was engaged to increase Bombardier's visibility, put out positive information and ensure that people understand we build a quality product and that safety is the primary objective,'' said LaVelle, who worked for Mayors Harold Washington and Richard M. Daley and was appointed to the Chicago Park District Board by the current mayor. jhilkevitch@tribune.com dkidwell@tribune.com |