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Contract for 35 locos for new Chicago-St Louis causes protest

 

Caterpillar protests Illinois' award of $1.3 billion high-speed train contract to rival

High-performance passenger locomotives that Illinois plans to buy for its new Chicago-St. Louis high-speed rail line will not go 125 miles per hour as required unless they are going downhill, according to a formal protest filed this week by a subsidiary of Caterpillar Inc., one of the losing bidders for the contract, expected to be worth $1.3 billion.

In December, an intense competition for a seven-year agreement to supply 35 diesel-electric locomotives went to Siemens Industry Inc., a Washington-based subsidiary of the German conglomerate Siemens AG.

The closely watched joint purchase by five states building high-speed rail systems was led by the Illinois Department of Transportation, which plans to buy the bulk of the first 35 train engines.

With options to buy 225 additional locomotives, the contract eventually could be worth many billions of dollars more. Also at stake are several hundred jobs, which could be located mostly in California or the Chicago area, depending on whether the contract ends up getting rebid.

Alleging a “blatant disregard” for the contract's specifications, Electro-Motive Diesel Inc., a unit of Caterpillar, says in its protest that IDOT either failed to catch an obvious error in Siemens' calculation of its locomotive's theoretical top speed, or looked the other way.

“For whatever reasons, IDOT may have overlooked Siemens's creative but non-compliant approach,” according to the protest. If the requirement was waived, the department has shown “a clear partiality for one offeror over others, thereby unfavorably skewing the procurement process and breaching the public trust while compromising the integrity of the procurement process in violation of Illinois law,” the protest says.

La Grange-based Electro-Motive alleges that Siemens hid the flaw in its design's insufficient horsepower by using different, more favorable mathematical variables than the ones specified by the states to calculate the engine's top sustainable speed.

"To be fair, the Siemens locomotive can achieve 125 MPH, but only while operating downhill," according to Electro-Motive's protest. "The highest speed that the Siemens locomotive can achieve and sustain is 121 MPH under ideal conditions assuming no grades or curves," the company says, adding that it "is likely to be several miles per hour lower than 121 MPH in real world conditions."

“I don't understand how they could do that,” said Karen Torrent, legislative director of Chicago-based Environmental Law and Policy Center, a high-speed rail advocacy group that has been closely watching the locomotive bidding process. “We don't need any more delay in getting these locomotives online. It's important for these procurements to go smoothly.”

An IDOT spokeswoman declined to comment, saying it was “premature.”

FEDERAL FUNDS

Illinois and other states building high-speed rail systems are designing them for top speeds of 110 mph, but a panel of national experts that set standards for the procurement decided on a 125 mph requirement to allow for future improvements in high-speed rail.

Under Illinois contracting regulations, IDOT has no specific timetable for ruling on a protest, except to say a decision “will be made as expeditiously as possible after receiving all relevant information.” The bidding can be canceled, revised or put out for bid again. But if the protest is upheld, the contract cannot go to the protester without a rebid.

According to Electro-Motive's protest, Siemens proposed a smaller engine than necessary, which allowed the firm to price its bid lower than Electro-Motive and the other bidder, a joint proposal by Chicago-based GE Transportation and MotivePower Inc., a unit of Wilmerding, Pa.-based manufacturer Wabtec Corp.

Electro-Motive proposed a 20-cylinder diesel engine, four cylinders more than Siemens proposed, according to Gary Eelman, vice president of passenger locomotive sales.

“If we didn't have to build a locomotive that went 125 mph we could have cut a lot of money out of that contract,” he said. “We worked very hard to make sure we had an engine big enough and beefy enough to pull trains at 125 mph.”

MotivePower's GE engines also had 16 cylinders, but in a much larger design that would have generated more than enough horsepower, he added.

The federally funded contract is worth about $800 million for manufacturing the first 35 locomotives, but Mr. Eelman said that with spare parts and other support services it is worth $1.3 billion to $1.6 billion over seven years in 2014 dollars. It also would create “well over 250 new jobs” at Electro-Motive's plant if it emerges as the eventual winner, he added, plus an untold number of jobs at “hundreds” of Midwest suppliers.

In 2010, Peoria-based Cat acquired Electro-Motive, which originally was a unit of General Motors Corp.

Siemens, MotivePower, GE Transportation and officials from Amtrak and the other states involved — California, Michigan, Missouri and Washington — either did not return calls and emails or declined to comment.

 

HSR. IDOT - Multi-State Procurement Protest - Feb 2014 Original

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