Delayed rail cars should prompt review of T’s contract procedures

WHEN, IN early 2008, the MBTA decided to spend $190 million on an untested Korean firm to build 75 desperately needed commuter-rail cars, there were more red flags than at a May Day parade at the Kremlin, circa 1982.

The firm, Hyundai Rotem, had yet to open a US plant, a federal requirement for the contract. It hadn’t navigated the complicated US safety requirements that foiled many other overseas firms seeking to enter the American market. Moreover, the T had a nagging history of choosing untested manufacturers for its equipment, with long delays having plagued its procurement of new Green Line cars. In this case, on-time performance of the contract was especially important, since aging commuter trains were chewing up maintenance resources and fraying the nerves of commuters with service delays.

Yet T officials reassured their board that Hyundai Rotem could meet the technical requirements. When a board member suggested waiting for more information, then-Transportation Secretary Bernard Cohen responded that time was of the essence. He declared, according to the official minutes of the meeting, that “for the MBTA to meet on-time performance standards, the sooner this contract is approved the better.’’


It was a foolish, costly decision. Hyundai Rotem is now running at least a year and a half behind on the contract, with potential delays spanning much longer. Current T leaders are clearly frustrated in their dealings with the Korean firm, and caught in a terrible bind: Either cancel the contract and start over, or grit their teeth and hope for the best. They’re hoping for the best - four test cars are nearly complete - and sticking with the firm, which is probably the best path.

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But the Patrick administration, which oversaw the initial blunders, needs to review the process by which this contract was awarded to make sure mistakes will not recur. Among the questions should be:

■Who was responsible for the reassuring evaluation of Hyundai Rotem’s ability to deliver? What was it based on? Are the officials involved still working for the T?

■Did the fact that the father of the T’s then-chief of operations, Richard Leary, was a consultant to Hyundai Rotem play any role in the decision? Leary sent letters recusing himself from the decision-making process, and his father was not involved in the bidding. But it’s entirely possible that procurement officials, who reported to Leary, felt that it would please their boss to choose the firm associated with his dad.

■Was Hyundai Rotem selected mainly because it turned in the lowest bid? If so, the T should make clear that, while the level of a bid is surely a factor, officials are also empowered to consider potential costs associated with long delays or poor workmanship. When building T cars, which are expected to last through decades of reliable performance, the full cost of a contract has to be measured over the long term.


All too often, government officials pay no price for poor decisions that leave taxpayers on the hook and impede the delivery of services. Avoiding corruption shouldn’t be the only performance standard for top decision-makers at state agencies; when a big, glaring mistake gets made, heads should roll. In this case, most of the senior officials have already moved on, and the composition of the board is evolving.

Since the contract was approved, legislative reforms have mandated that T board members have more relevant expertise. Hopefully, this will make the board less dependent on the advice of the professional staff, and better able to ask relevant questions of T managers. In this case, unfortunately, the questions were pretty obvious, and the board erred badly in following the flawed advice of the T staff.