Corporate Collision Looms at Tri-Rail
$100 million-plus locomotive purchase runs into charges of bid steering, higher costs
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A South Florida transit agency that oversees Tri-Rail is accused of mishandling the bidding and purchase of 10 new locomotives for the three-county train system.
In a formal written protest, GE Transportation alleges that the South Florida Regional Transportation Authority used bid guidelines to steer a $100 million-plus contract, which the company claims will cost taxpayers an additional $1 million per locomotive.
Even before the SFRTA board officially awards the contract -- it's scheduled to do so at its Feb. 25 meeting -- powerful state politicians, business groups and even environmentalists have blasted the agency in a series of scathing letters.
"Large procurements of these types should be open, transparent and highly competitive," Senate Ways and Means Chairman J.D. Alexander wrote to SFRTA on Jan. 24.
"It concerns me that there are major locomotive manufacturers who expressed interest in the bid, but were excluded from qualifying. ... Such a sweetheart deal would be an outrage to Florida taxpayers," wrote Alexander, R-Lake Wales.
The deficit-ridden Tri-Rail commuter train system relies on millions of dollars in annual government subsidies, despite serving Florida's most densely populated urban corridor running through Miami-Dade, Broward and Palm Beach counties.
GE Transportation, an Erie, Pa.-based division of General Electric, alleges that SFRTA's bid and performance requirements relied on outdated and inefficient technology. GE Transportation executives urged the agency to revamp the bidding and qualification process to achieve long-run savings.
The Florida Chamber of Commerce joined GE Transportation in complaining to SFRTA executive director Joe Giulietti.
In a June 11 letter, Chamber president and CEO Mark Wilson wrote:
"One shortfall in government spending today is the drive to purchase cheaper products that have lower capital cost, yet much higher operating and maintenance costs. ... We believe to the maximum extent possible, Tri-Rail should consider life cycle costs."
Sen. Mike Fasano, R-New Port Richey, said Tri-Rail's "request for proposals" gave "no quantitative value to life cycle costs."
"The life cycle costs of these locomotives account for over 75 percent of the total cost of ownership," Fasano stated in an April 20 letter to Giulietti.
GE Transportation said a rival lower bid would cost Tri-Rail $1 million in additional lifetime operational expenses for each of the competitor's locomotives.
The Southern Alliance for Clean Energy questioned SFRTA on environmental grounds and called for longer-range vision in awarding contracts.
Susan Glickman, head of the alliance, said newer "Tier 3" locomotives, such as the ones produced by GE Transportation, would run far cleaner than competing models.
"Replacing 10 old pre-tier locomotives with Tier 3 compliant engines is equivalent to taking approximately 538 cars off the road per day. Over the life of the Tier 3 locomotive, a reduction of 5,800 tons of nitrous oxides, 289 tons of particulate matter and 75,200 tons of greenhouse gases will be achieved," Glickman stated.
Fasano blistered Tri-Rail, bluntly declaring, "I do not support the purchase of obsolete, high-polluting, gas-guzzling Teir 2 locomotives."
With politicians, business organizations and environmentalists buttressing the challenge by GE Transportation, the Tri-Rail-SFRTA controversy may provide more ammunition to critics of taxpayer-supported train systems.
Citizens groups have sprung up in Central Florida to oppose new commuter-rail ventures, including the proposed SunRail in Orange County. Efforts to raise the sales tax in Hillsborough County to kickstart a light-rail line there failed. A similar tax-boosting campaign is getting under way in Pinellas County.
But beyond alleged operational inefficiencies, outdated technologies, endless government subsidies and copious bureaucratic red tape, the Tri-Rail bidding squabble points to potentially deeper problems.
MotivePower Inc., an apparent unsuccessful bidder, accuses the SFRTA of favoring Brookville Equipment Corp. of Brookville, Pa.
"The fundamental basis of [our] protest is that Brookville's bid failed to comply with non-waivable requirements of SFRTA," the Boise, Idaho-based MotivePower stated in an Oct. 7 letter from its lawyers.
In a 46-page exhibit, MotivePower, a subsidiary of Wabtec Corp. of Wilmerding, Pa., details a host of alleged problems in the bidding process and reputed technical shortcomings in Brookville's products.
"SFRTA's erroneous determination regarding Brookville's service-proven qualification provides Brookville with an unfair competitive advantage enjoyed by no other proposer," MotivePower stated.
"Any reasonably diligent review of Brookville's bid could yield only one conclusion: Brookville has simply failed to demonstrate that at least five of its seven proposed subsystems ... satisfy the requirements."
Yet on Oct. 29, SFRTA posted a notice of intent to award the contract to Brookville, "the apparent low bidder." The contract calls for the purchase of 10 locomotives, with an option for 13 more.
A project manager of ASFRTA pegged the "base order" cost for 10 locomotives at "just under $50 million, including training, manuals, test equipment and spare parts."
Adding the option of 13 more locomotives brings the price tag to nine figures.
In a written appeal to SFRTA board member and Miami-Dade Commissioner Bruno Barreiro on Dec. 2, GE Transportation general manager Brett BeGole said the pending contract with Brookville was for $109,983,000.
Citing safety issues and prevailing industry practices, SFRTA defended its vetting process and its decision not to factor in life cycle costs.
Agency officials say the new engines will meet Tier 3 standards, and will provide the most reliable, cost-effective performance.
SFRTA denies any allegations of favoritism, saying it gave interested parties "almost four months to raise any questions or concerns regarding procurement."
But with the awarding of the contract just two weeks away, a head-on collision may lie ahead.
Contact Kenric Ward at email@example.com or at (772) 801-5341.