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How Metro nearly cost itself $900 million

It’s an impressive feat, for some sense of the word.

In the first months of the procurement process, documents show, [former Metro CEO Frank] Wilson intended to use local rather than federal funds to buy the light-rail vehicles, possibly in the hope that this would avert the need to comply with federal requirements.

“FJW (Wilson) stated … since Metro is purchasing the vehicles there will be no FTA involvement,” Metro official John Coulter said in an e-mail to a colleague, Navin Sagar, on June 29, 2007.

The use of local funds to buy the cars, however, wouldn’t have exempted the purchase from Buy America rules because Metro intended to use the vehicles on the federally funded North and Southeast rail lines.

Nevertheless, Metro’s initial request for proposals didn’t include a Buy America provision, and Metro told bidders they wouldn’t have to follow federal rules other than those in the Americans with Disabilities Act.

On Dec. 4, 2007, in the first of at least four similar warnings or advisories, the FTA told Metro it must follow Buy America rules and federal procurement guidelines.

Yet Metro continued with the procurement based on the original request for proposals without Buy America language. Of the six firms that submitted initial technical proposals, Metro invited five to submit pricing offers.

It’s kind of amazing that no one on the inside ever blew the whistle on this. Must have been some seriously heavy discipline in there, which goes a long way towards explaining why morale was reportedly so low.

It’s hard to understand why Wilson thought he could do this when he was repeatedly told by the FTA that he couldn’t. He’s not talking, and I rather doubt he will. What is clear is that the board didn’t challenge him on this – David Wolff has been a staunch defender of Wilson’s, and he’s unlikely to change that tune. I’ll say again, it’s a measure of the respect the FTA must have for George Greanias and Gilbert Garcia, as well as a measure of their belief in the merits of the projects in question, that the agency wasn’t completely disqualified from getting the New Starts grants at all. It sure is hard to see how CAF changes the FTA’s mind about requiring Metro to cancel their contract. I hope that sometime after CAF sues Metro over the loss of their contract that Metro cancels any further buyout payments to Wilson. Let him sue to recover them, maybe being deposed will finally get him to explain his motives here.

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4 Comments

  1. John says:

    Kuff

    could not agree more, how is Wilson getting a huge payout when he deliberately went against (I am assuming) what the White administration wanted and down a path that would have lost us the Federal money. Stop the payments and let him sue so he can explain himself

    So was White ever made aware of this, why can’t the board admit what they did and did not know. Right now we have made an initial payment (I think it was $40mm) which someone approved of and is essentially money that was flushed down the toilet.

  2. I read about this in the Spanish papers while I was vacationing recently in Barcelona. FWIW, it’s a bit ironic that it’s Siemens, a German company, complaining that Houston didn’t comply with the “Buy American” provisions. I’ve not yet read mention of any manufacturers of these rail cars in the US; the companies discussed in the media reports I’ve seen all seem to be foreign concerns.

    Also, I also have yet to see any indication that Wilson received any particular quid quo pro, though admittedly I just got back into town and haven’t been following it closely. Perhaps he did act improperly, but for the life of me I can’t understand his motivation. Part of me wonders if some of this wasn’t partisans in the Obama Administration seeking to punish red Texas. Folks in D.C. don’t see the local politics – to them it’d just be dissing Cornyn and Hutchison.

  3. Metro’s FTA issues date back to 2007, so it’s not an Obama thing. It’s all on Frank Wilson.

  4. Dear Grits,

    Houston Metro’s existing 18 Siemens Avanto cars were built in Sacramento, California by the German company. That is where Siemens builds light rail cars for the US market including those for Sacramento RTD, Salt Lakes City’s UTA, San Diego’s Metropolitan Transit System and Portland’s TriMet. Not all the components of those cars are American-made, but the FTA stipulates a US-content percentage, something like 60%.

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