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Cap Metro gets new contractor for long-anticipated commuter line

Thursday, December 10, 2009 by Austin Monitor

Last night the Capital Metro Board of Directors voted to approve a contract with Herzog Transit Services, Inc. for the operation of the agency’s commuter rail system – the MetroRail – and the maintenance of the right-of-way of the agency’s rail system. The vote came only hours after the agency announced that it had terminated its five-year, $12 million contract with Veolia Transportation.


Under the terms of the new contract. Herzog will operate and maintain Cap Metro’s commuter rail – including providing passenger service from Leander to Austin, managing cars and equipment fleets, running the line’s dispatching center, and taking care of Right-of-Way maintenance on the 162-mile alignment of the Giddings/Llano rail line – for a five-year period. Final negotiations concerning pricing and execution will end within 60 days in an amount not to exceed $61,049,355. This includes a 10 percent contingency to support future service expansions and capital construction projects that will be programmed in future budgets.


The board also approved a contract with Watco Companies, Inc. to operate Capital Metro’s freight line for five years and nine months for an estimated $34 million.


In early November, Cap Metro staff went into contract negotiations with Veolia to come to an agreement about the remaining work that needed to be done in order to complete the rail system, namely a hazard analysis/risk assessment dealing with reprogramming the software that controls the signal system. According to Cap Metro Interim CEO/President Doug Allen, during those negotiations, Veolia “asked us to make contract concessions that we couldn’t make because they put the agency at risk financially, including hiring a dozen new workers. They said it was a take-it-or-leave-it proposition.”


After Cap Metro came back with a counteroffer that Veolia then refused, Allen contacted Herzog on Nov. 23.


According to Cap Metro staff, the new contract with Herzog will result in savings of $3.1 million for the agency when compared to their original Veolia contract, and $10.7 million when compared with their modified proposed contract.


Fiscal benefits aside, the change does raise two major questions for the transit agency. One, will it affect the proposed launch date for the already oft-delayed MetroRail line, which was set for the first quarter of 2010? And two, how will it affect the employment status of those already working on that line?


According to Cap Metro Executive Vice President Elaine Timbes, the answer to the first question is “no.” In a presentation before the board of directors, she said that the termination of the Veolia contract and the execution of the new Herzog contract wouldn’t delay train operations. She said that the agency’s contract with Herzog begins immediately and that the 60 days are just there for finalizing the deal points.


“The contract is executed,” she said, “and Herzog has a comprehensive transition plan for the next two or three days to make sure we don’t miss a beat.”


A good part of those days will be spent answering question number two: whether or not those already working on the Red Line will still be working under this new management. Chairwoman Margaret Gomez raised this issue with Timbes at the end of her presentation, asking her if there were concerns among staff about unemployment.


Timbes assured Gomez that Herzog told her and Cap Metro staff that they were “committed to the Veolia employees not experiencing any hardship. Herzog will be accepting applications tomorrow morning, and they are going to do whatever they can to expedite the applications.”


But Timbes told In Fact Daily that the hiring of those workers wouldn’t entail a simple transfer. “You can’t transfer among two organizations,” she said. “They all have to go through a hiring process. They have to complete an application; there are certain tests required by the Federal Railroad Administration. They have to pass those tests. You can’t skirt that issue.”


“What you can do is expedite that process,” she continued, “and what Herzog is doing is working through the weekend. They’ve lined up the testing locations to ensure that the transition goes quickly.”


“Tomorrow morning,” Doug Allen told In Fact Daily, “Herzog people will be out in our rail division attempting to hire whoever’s interested in working with them, those who are operating the trains and doing the maintenance.”


Though Allen said he has known for some time that Cap Metro would be signing the contract with Herzog (“The deal came together in the last week or so,” he said), he chose not to mention it at this past Monday’s City Council Comprehensive Planning and Transportation Committee meeting, where he gave a presentation on the problems associated with MetroRail and some of the lessons Cap Metro has learned.


During that presentation, Allen said that some aspects of the system, such as purchasing the railcars and building the stations, were completed on time. But other components, which Allen called “systems components” — the computer dispatch system, signal system, and crossing gates, among others — didn’t work properly and eventually led to postponements.


According to Allen, these technical problems caused such massive delays because much the rail line’s timeline and budget were set before the project was fully defined.


“When the proposal was first brought up in 2003 to do a commuter rail line, the original concept was a fairly simple demonstration project using existing, used equipment, traditional commuter rail locomotives with all the trains going inbound in the morning and later in the day all the trains going outbound, so there was no bi-directional movement,” he said. “There wasn’t as complex a dispatch system or signal system that we ultimately ended up with.”


Extra elements, including a permanent maintenance facility, were added to the project piecemeal after a $90 million price tag had been set. As the project increased in complexity, said Allen, additional staffers were not hired to handle the increased workload.


One of the motivations for fixing the budget and timeline before the true cost and scope of the project were known, according to Allen, was political.


“There was a desire to go to the voters by November of 2004,” he said.

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