MTA’s rail car reasoning

It is in the nature of politicians to keep making the same mistakes over and over again, especially if they’re the kind of mistakes favored by the lawmakers’ key financial backers. So the award of an important rail car contract Monday by the Metropolitan Transportation Authority board to a company that submitted the best bid for the job — but isn’t the most politically connected — was a rare and encouraging event.

Rail cars are a touchy subject in Los Angeles. That’s because in 2009, the MTA board awarded a $300-million contract for 100 cars to AnsaldoBreda, an Italian company with a terrible track record. On a previous 50-car contract, AlsaldoBreda had delivered cars years late and up to 6,000 pounds overweight. But labor leaders were inspired by the company’s too-good-to-be-true promises to build a solar-powered factory near the Los Angeles River that would provide high-wage jobs to hundreds of local union workers. And where their union contributors lead, the politicians on the MTA board often follow. The board ignored warnings about AnsaldoBreda’s competence and approved the deal.

The result was an embarrassment all around. Apparently realizing that it couldn’t deliver on its promises, AnsaldoBreda essentially surrendered the contract.

Comes now a new contract for 235 rail cars, on which labor leaders made no secret of their preference. Siemens Industry Inc. promised to open a Los Angeles factory and invest $5 million in local job-training programs for rail workers. Yet it also submitted a dramatically higher bid than the other two players — Siemens wanted $940.6 million, compared with low bidder CAF USA Inc.’s $785.6 million and Japanese company Kinkisharyo International’s $890 million. After completing a 16-month analysis of which company could supply the safest, most reliable cars at the best price, as well as the competitors’ local hiring plans, MTA staff recommended Kinkisharyo, and the MTA board gave the Japanese company the nod. Maria Elena Durazo, executive secretary-treasurer of the L.A. County Federation of Labor, AFL-CIO, was not happy, nor were other labor leaders, contending that the contract will ship jobs overseas to Japan rather than growing them here.

Governments have a duty to taxpayers to award contracts to the most responsible low bidder, yet local hiring has economic benefits that accrue to taxpayers, and sometimes the low bidder isn’t locally based. So it makes sense to give preference to contractors that plan to open L.A. factories. When it comes to Kinkisharyo, though, there doesn’t appear to be much difference between its hiring plans and Siemens’. An MTA analysis concluded that Kinkisharyo would create 348 U.S. jobs if awarded the rail car contract, compared with 391 by Siemens. The difference in economic benefit is vanishingly small: $138.8 million for Kinkisharyo and $140.6 million for Siemens. It appears to have been the right call by the board, and that’s refreshing.