Parker, Greanias confident Metro will ‘get it done’

FTA releases investigation

Jon Boyd, Sep 09, 10.

Acting President and CEO George Greanias and Houston Mayor Annise Parker both expressed confidence that Metro would overcome its legacy and current issues with the Federal Transit Authority, though Greanias admitted the light rail schedule will probably be delayed, as reported in the Houston Chronicle (via Off the Kuff):

The Metropolitan Transit Authority today retracted its acting president’s statement that the agency could complete construction of three rail lines by October 2013, saying a delay of up to a year is expected.

“Following additional consultation with project managers, it is now clear that meeting the October 2013 completion date is not feasible,” Metro said in a statement.

George Greanias, Metro’s acting president and CEO, had said Wednesday that he was sticking to Metro’s original schedule calling for completion of the lines by that date.

On Wednesday, Mayor Annise Parker and her new Metro leadership prepared to confront the daunting financial, legal and logistical challenges posed by a federal finding that the agency’s rail car procurement violated federal laws.

“There’s a path forward” to salvage Metro’s light rail expansion plans, Parker said. “It’s very rocky, it’s steep, but we at the new Metro can get it done.”

In a letter addressed to Greanias and Metro Board Chair, Gilbert Garcia, FTA Administrator Peter Rogoff informed Metro it would need to cancel its contract for 105 light rail cars, even while affirming the importance of the light rail projects to Houston transit riders, as reported in the Chronicle:

While violations of these requirements could nullify the ability of the FTA to participate in any projects tainted by such violations, in the case of Houston Metro, the Administration believes that the commuters of Houston should not be denied needed transit improvements due to the actions of prior Metro management. The Administration still believes that the North and Southeast Corridor projects have merit and we stand behind our Fiscal Year 2011 budget request of $150 million for the two projects.

Reacting to Rogoff’s letter, there is reason to be optimistic, writes Charles Kuffner:

Basically, for all the bad things the FTA determined Metro did, they still believe that that the North and Southeast Corridor projects have merit, and that they are prepared to work with Metro to keep these projects moving forward if Metro cancels the contract with CAF and re-bids it according to Buy America rules. To say this could have been a hell of a lot worse for Metro is to understate. The FTA must have a lot of faith in George Greanias and his ability to not be Frank Wilson for them to have declined to cut Metro off at the knees. I think we can finally close that chapter and say that the New Metro is fully up and running.

Some findings from FTA’s investigation
What follows are summaries of material from the Report of the FTA investigation (via the Houston Chronicle).

FTA started its investigation of the Metro procurement process of 103 light rail cars on April, 23, 2010, specifically regarding the award of the contract to Construcciones y Auxiliar de Ferrocarriles (CAF), according to an FTA document linked by the Houston Chronicle.

The FTA Report of the Investigation explains the Buy America law:

FTA’s Buy America requirements are twofold: (1) the cost of the components and subcomponents produced in the United States must total at least 60 percent of the cost of all components in the rolling stock; and (2) final assembly of the rolling stock must occur in the United States. The same rules apply to grants funded by ARRA.

To ensure compliance with its Buy America requirements, FTA grantees must include a Buy America provision in their procurement documents.34 Such notice must require, as a condition of responsiveness, that the bidder or offeror submit with the bid or offer a completed Buy America certificate in accordance with 49 C.F.R. 661.12. METRO’s Procurement Manual also required the inclusion of FTA mandatory clauses, including the Buy America Clause, in the solicitation for all FTA-funded contracts.

Bidders or offerors must sign one of the two forms of certificate set forth at 49 C.F.R. 661.12—the Certificate of Compliance or the Certificate of Non-Compliance. By signing a Certificate of Compliance, a bidder or offeror “certifies that it will comply with the requirements of 49 U.S.C. § 5323(j), and the applicable regulations of 49 C.F.R. 661.11. By signing a Certificate of Non-Compliance, a bidder or offeror “certifies that it cannot comply with the requirements of 49 U.S.C. § 5323(j), but may qualify for an exception to the requirement.” A bidder or offeror “is not permitted to change its certification after bid opening or submission of a final offer. Where a bidder or offeror
certifies that it will comply with the applicable Buy America requirements, the bidder, offeror, or grantee is not eligible for a waiver of those requirements.

FTA charged Metro with flaws in the competitive bidding process and a failure to convey the requirements of the Buy American program.  Metro had a two-step bidding process.  The first Request for Proposal (RFP) tested the applicant’s ability to respond to technical requirements of the procurement.  One of those technical requirements was the Buy American program. CAF, along with at least four other applicants, submitted Certificates of Compliance.  This means the applicant is willing and able to comply with all federal requirements.  A Certificate of Compliance was a necessary condition of making it through step one of the bidding process, therefore, all applicants eligible to submit bids for step two had all certified compliance with Buy American.

The FTA investigation found that Metro began distancing itself from the Buy American requirements.  First, Metro submitted a second RFP, saying it would not carry all of the federal requirements, contrary to the Certificate of Compliance required in the first round.  FTA asserts that Certificate of Compliance implies compliance with Buy America rules. 

Based on a FTA special pilot program for public-private partnerships (Penta-P), Metro contracted with Washington Group, to procure 103 rail cars with an option to buy 75 more. (Later, Metro severed its arrangement with Washington Group, and Parsons took over the job.)  In 2009, Metro made two requests to waive the Buy America requirement for two pilot cars to be constructed in Spain, both rejected by FTA, “CAF is bound by its Certificate of Compliance.”  In other words, the Certificate of Compliance is a pledge to abide by the rules, and a waiver is a request to be exempted from a rule.  It was a condition in Metro’s original RTP. 

December 4, 2007, FTA wrote the first of at least three letters to Metro, and copied them on a letter to Siemens, informing them that its light rail procurement would need to comply with the Buy America program.

Metro attempted to enter a separate contract with CAF by saying that the two pilot cars would be locally funded, adding that the original 103 cars would be constructed in the United States. 

FTA also charged Metro with allowing CAF to change its bid without allowing other applicants to do the same.

 

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