Firms in Fierce Battle to Win Rail Contract

In a competition steeped in hype, grit and patriotism, four corporate giants with global connections are waging a fierce behind-the-scenes battle over one of the most coveted public works contracts in California.

On Monday, the competition spilled into the public arena as three of four teams competing to manufacture rail cars for the Green Line pleaded their cases before the Metropolitan Transportation Authority.

At stake is one of the largest public-works projects in the nation and the possible creation of a transit manufacturing industry in Los Angeles.

The MTA’s staff had recommended that the contract go to Siemens Duewag Corp., which had bid $205 million and promised to build one of the nation’s first rail car plants in Los Angeles to manufacture the 72 cars and two prototypes.

But the firms competing against the German-owned Siemens company each insisted Monday that their proposals would do the most for the local economy, pumping in more dollars and employing more workers.

Morrison Knudsen Corp. of Boise, Ida., whose bid was $18 million lower than Siemens’, promised a $33-million investment locally if it were selected. An official of a Canadian firm, Bombardier Inc., vowed that his plan would create 400 long-term jobs by setting up a manufacturing plant in Pico Rivera--although the MTA says the local facility had not been mentioned in the firm’s formal proposal.

Meanwhile, the president of Siemens Duewag defended his plan, saying that it would employ 11% more U.S. workers than the others and that the company would build its manufacturing facility in a riot-torn Long Beach neighborhood.

“We are into the salesmen period--each team is trying to put the best light on their particular proposal,” said Laurence Weldon, a vice president with the MTA’s Rail Construction Corp. vehicle acquisition project. “These are the things people say. There’s no way we could validate all these claims.”

The high-stakes drama comes at a crucial time for the region, which is still locked in a deep recession and where politicians are anxious to create jobs.

The MTA staff recommended that the contract go to Siemens after five months of evaluating each team’s proposal. But instead of settling the issue, the recommendation triggered an all-out war among the competing firms and prompted conflicting claims about their commitments to California. It also came in the wake of a decision last year by county transit officials to withdraw a huge contract from Sumitomo Corp., a Japanese firm, because of an outcry over jobs going overseas.

Morrison Knudsen officials were “up here arguing 18 months ago that we should scrap the Sumitomo contract because our economy needed these cars built here,” said Long Beach City Councilman Evan Braude. “Now Morrison Knudsen (officials) don’t mention anything about where the cars should be built. That’s because more than half their contract calls for the work to be done in Italy.”

On Monday, MTA officials announced that Morrison Knudsen had lodged an official protest of the Siemens recommendation--an action that officials said will not delay the awarding of the contract.

Officials from Morrison Knudsen say that their work would be cheaper and that they were unfairly evaluated.

“The (MTA) has a public responsibility, and a responsibility to the taxpayers to assure that public procurements under its auspices are accomplished at the lowest possible price to the taxpayers,” wrote Tom Smith, president of Morrison Knudsen’s Rail Systems Group in his protest letter to the MTA.

The multimillion-dollar decision expected to be made Wednesday comes at a time when the MTA is scrambling to pass its budget, grappling with a $258-million shortfall and fighting over which rail lines will be constructed.

The contract now being awarded calls for the construction of 72 trolley cars. Fifteen rail cars already are being manufactured for the start-up of the Green Line, which will run between Norwalk and El Segundo.

Of the 72 new cars, 34 are slated for the operation of the Green Line, 31 for the Pasadena Line, and the other seven for a rail corridor that has not yet been determined, Weldon said. But as Weldon pointed out, the MTA has not yet decided which rail lines to fund.