NEW METRO Reaches Settlement with Spanish Rail Car Company
December 17, 2010
The Metropolitan Transit Authority announced today that it has reached a settlement with CAF USA, Inc. (a subsidiary of the Spanish Firm Construcciones y Auxiliar de Ferrocarriles, S.A.) over two disputed contracts for the construction of light rail cars for its North and Southeast Corridor lines. Under the agreement, the contracts are canceled and CAF will forego any additional payments for unpaid work and lost profits. In addition, CAF will refund $14 million to METRO. The agreement was ratified by the METRO board this morning.
“This is $14 million more for public transportation than we had yesterday,” said METRO Chairman Gilbert Garcia. “More importantly, it’s another step forward from old legacy issues to the safe, reliable and affordable public transit and mobility services that our customers and taxpayers deserve.”
In September, the Federal Transportation Administration (FTA) found that CAF and prior METRO management had violated federal procurement law and Buy America requirements regarding the contracts, putting $900 million of federal transportation grants for the rail lines in jeopardy. METRO’s new management ordered CAF to stop work on the rail cars and immediately swung into action to protect access to federal funds.
“We’re building a new METRO based on clear goals, measurable objectives and absolute transparency,” said METRO CEO George Greanias. “And we require our employees and vendors to meet those standards.”
METRO initiated a mediation process with CAF that took place recently, leading to the settlement announced today. Today’s settlement allows METRO to move forward quickly to protect the $900 million in federal funding for the rail lines.
“Today’s action is the fastest and fairest way to a better transit system for Harris County,” said Greanias. “By avoiding costly and protracted litigation with CAF and cooperating with our partners at the FTA, we can move forward in the most fiscally responsible way.”
When the FTA announced its determination, METRO’s new management acted to minimize delays during settlement discussions by laying the groundwork for a new procurement process for the rail cars. METRO expects to put the cars out to bid in January.
Download CAF Settlement Agreement (PDF)
