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MTA delays decision on Italian rail-car maker; 'despicable' lobbying alleged

July 23, 2009 |  2:52 pm

Los Angeles County transportation officials today delayed a decision on whether to extend the contract options of an Italian rail-car maker that has pledged to build a plant in downtown Los Angeles if it gets the $300-million deal.

Los Angeles County Metropolitan Transportation Authority chief Art Leahy requested the two-month delay, saying he was encouraged by a new guarantee offered by AnsaldoBreda to pay any penalties for delays and performance problems. The firm would back up the new potential contract with a letter of credit of up to $300 million -- drawn down in $50-million increments.

During a discussion by the MTA board, member Zev Yaroslavsky, a county supervisor, charged that the firm's lobbyists organized a "incessant" campaign against a competitor, Siemens Transportation Systems, by focusing on that company's dealings in Iran.

Yaroslavsky then read from 2008 and 2009 reports written by Finmeccanica, AnsaldoBreda's parent company, and AnsaldoEnergia, another subsidiary, detailing recent work in Iran. The firm's executives had said the company's work in Iran ended in 2002.

"I don't trust your company," Yaroslavsky said. "Your lobbying campaign on this has frankly been despicable."

Leahy said considerable progress had been made in the last few days toward a plan to fix the company's first 50 cars and on the financial agreement for the contract options that would set what the firm's lawyer called "severe penalties" for delays and performance problems.

Leahy said agency staff members also need to research federal rules that set a five-year window on the amount of time in which the agency can exercise the company's contract options.

The firm is currently building 50 light-rail cars for the MTA. But agency officials have complained that the firm’s 2003 base contract is three years behind schedule, and that the cars are about 6,000 pounds heavier than specified. AnsaldoBreda executives have disputed MTA’s calculations but submitted a plan to reduce the weight of the cars. They have blamed some of the delays on changes requested by the agency and the time it has taken to test the cars.

AnsaldoBreda currently builds the cars in Italy and assembles them at a plant in Pittsburg, Calif. But when MTA officials began to favor seeking new bids for an extended contract to build 119 additional cars, the company offered to construct a manufacturing plant in downtown Los Angeles.

The cars would serve the Gold Line, the Green Line and the new Exposition Line. Officials also plan to overhaul 69 Blue Line cars.

Leaders of the Los Angeles County Federation of Labor, which is backing AnsaldoBreda because of its pledge to hire union workers, have contended that the city could miss out on creating several thousand jobs if the board turns down the company.

A study by the Los Angeles County Economic Development Corp. found that building the plant could create 970 full-time jobs for a year. If the facility then produced 75 cars annually and refurbished 36, the corporation estimated that 661 people could be directly employed at the plant.

-- Maeve Reston at L.A. City Hall