Rail car bid in doubt, firm makes new offer

On the eve of a key vote on whether to grant a $300-million rail car contract to an Italian company offering to build its manufacturing plant in Los Angeles, the new chief executive of the Metropolitan Transportation Authority appeared Wednesday to dim the company’s chances.

In a memo that might weigh heavily on some MTA board members as they make their decision today, he recommended seeking bids from other firms because of concerns about the company’s past performance.

But the company, AnsaldoBreda, moved quickly to salvage the potential deal to build 100 cars for the agency’s light rail lines. Late Wednesday, AnsaldoBreda Inc. President Giancarlo Fantappie said in a letter to MTA chief Art Leahy that the company would provide a $300-million “financial guarantee,” ensuring the fulfillment of the new contract.

The potential rail plant -- offered by AnsaldoBreda as leverage to get the contract -- has been a central component of Mayor Antonio Villaraigosa’s plan to jump-start a clean technology corridor downtown and bring “green jobs” to Los Angeles at a time when unemployment is topping 12%.


In March, AnsaldoBreda’s contract options were on the verge of expiring because of staff complaints that the 50 cars already being built under the firm’s base contract are 5,000 to 6,000 pounds overweight, incompatible with MTA’s other passenger cars and three years late.

Villaraigosa, who as chairman of the MTA board helped broker a two-month reprieve for the company, believes the $300-million performance guarantee could change the dynamics of the vote. The mayor would support the contract if it had “an iron-clad guarantee that the cars will be delivered on time and on budget,” his spokesman said.

AnsaldoBreda’s offer Wednesday capped a vigorous marketing and lobbying blitz to clinch the 100-car contract. The company, which currently builds cars in Italy and assembles them in Northern California, has begun negotiating with city officials to lease a prized vacant 14-acre parcel east of downtown -- offering to pay $15 million in rent up front.

Over the weekend, it aired radio ads inviting workers to apply for “one of 2,000 new manufacturing and construction jobs that pay as much as $55,000 with benefits.” And the firm held a “job fair” co-sponsored by the Los Angeles County Federation of Labor.


The federation has been pressing board members to support AnsaldoBreda. Maria-Elena Durazo, the influential executive-secretary of the labor federation, said if AnsaldoBreda loses the deal Thursday she would be “extremely disappointed.”

Before AnsaldoBreda offered the guarantee, Leahy said he based his recommendation on the company’s performance in Los Angeles.

Federal rules, he noted, bar the agency from favoring a local company if federal money is used to help pay for the product.

And after vetting the company’s record on the 50-car contract, Leahy told board members in a memo Tuesday night that he could “find little reason for recommending exercise of the [100-car] options.”


Leahy said the problems “lead me to be concerned about our ability to rely upon them.” Under the new contract “they promised to bring the cars in on time, but the history of their performance -- makes one wonder about that,” he said.