Beleaguered Rail Agency Tentatively OKs Reform of Contract Process

The controversy over the decision to grant a Japanese company the job of building driverless trains for the Metro Rail Green Line prompted the Rail Construction Corp. on Monday to tentatively approve a proposal that will reform the contracting process.

“This proposal is based in part on what could graciously be described as a public fiasco,” said Rail Construction Corp. Director James T. Potts.

The proposal would more tightly limit the instances in which contracts for commuter rail projects could be awarded on the basis of a “negotiated bid” rather than through a “competitive bid.” Under negotiated bids, the contracts can go to companies that have not made the lowest bids. These decisions often are criticized as subjective because staff engineers are allowed to grade each bidder on a variety of factors.

Sumitomo Corp. of America was awarded the contract to build the cars for the Norwalk-to-El Segundo Green Line on the basis of a negotiated bid, even though its bid was $5 million more than that submitted by its American competitor.

The proposal will limit negotiated bids “to only very special cases” and force the majority of the bids to be competitive and price-based, Potts said.

“If the Green Line trains had been competitively bid, we would have gotten a lower price,” Potts said. “But the policy in the past was too loosey-goosey.”

The Rail Construction Corp., a subsidiary of the Los Angeles County Transportation Commission that is charged with building rail projects, unanimously “approved in principle” the new policy and will vote on the matter within a month.

In the past, staff engineers subjectively decided which bidders were minimally qualified. Each qualified bidder then was graded on such factors as experience, technical skill, commitment to the project, understanding of the project and sophistication of design. The number of points they earned in this grading would be divided into their bid to determine “dollars per point.” The company with the lowest dollars per point obtained the contract.

In some cases, the commission staff negotiates bids on its own, often without the Rail Construction Corp. board knowing about it. Then the staff comes to the board with a final, often controversial, recommendation.

Critics also say some bids--including the Green Line contract--were awarded prematurely. As a result, the rail agency voted Monday that virtually all bids be forwarded to the board before they go to the LACTC.

“The board should have the opportunity to raise questions before the contracts go out to the bidders,” said rail board member David Anderson. “We shouldn’t be put in the position of raising questions after the procedure.”

The furor over the Japanese company obtaining the contract last month has not abated. The Los Angeles City Council has called on Mayor Tom Bradley and other commission members to delay finalization of the contract.

In other action Monday, the Rail Construction Corp. delayed voting on a controversial proposal to tunnel under Hollywood for the downtown-to-North Hollywood Red Line. The agency previously contended that the tunneling project would have no significant environmental impact, so a full environmental impact statement was considered unnecessary.

But about 20 residents and teachers of the Los Feliz Elementary School complained about the plan. The commission and the rail agency have proposed combining all tunneling for the Hollywood leg of the Red Line into one contract.

All dirt from a total of four tunnels would be extracted through a single hole at Barnsdall Park, at Hollywood Boulevard and Vermont Avenue.

Teachers at the elementary school, less than 100 yards from the park, said the dirt and dust from the project could affect students.

The rail agency has directed its staff to conduct discussions with the school district and the school’s staff. The matter will be reconsidered Jan. 17.

Times staff writer Mark A. Stein contributed to this story.