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Hyundai Rotem sues T over railcar bid process

A Chinese firm was awarded the $566.6 million contract to build Red and Orange line cars.Dina Rudick/Globe Staff/File 2012/Globe Staff

South Korean manufacturer Hyundai Rotem has filed a federal lawsuit against the Massachusetts Bay Transportation Authority, accusing the agency of conducting a “flawed and unlawful” bidding process when it recommended awarding a $566.6 million contract to build new Red and Orange line cars to a Chinese company.

In the lawsuit filed Tuesday, Hyundai Rotem said the bid of CNR MA, a Chinese-owned railcar and locomotive manufacturing company, was “unreasonably low.” The suit asks the court to block the contract with CNR MA and force the state to instead award it to Hyundai Rotem.

The Massachusetts Department of Transportation, which is also named in the lawsuit, officially awarded the contract to CNR MA in October.

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Joe Pesaturo, a spokesman for the MBTA, said in a statement the agency believes the lawsuit has no merit.

“Hyundai Rotem’s bid was substantially higher than the successful bid and did not present the best value for the taxpayers of the Commonwealth, and so the MBTA did not award the contract to Hyundai Rotem,” he said.

The South Korean company’s contract with the MBTA for new commuter rail cars — a project beset by years-long delays and mechanical issues — is soon coming to an end.

But Hyundai Rotem was among the four companies that made it to the final round of the bidding process to build 284 Red and Orange line cars.

Hyundai Rotem officials claim that MBTA’s evaluation of CNR’s bid was “unreasonably high, arbitrary, capricious, and lacked any rational basis,” based on the Chinese company’s inexperience in North America.

CNR MA has no experience building North American railcars.

“The MBTA admitted in its evaluation that CNR did not demonstrate familiarity with the American safety standards when interviewed by the MBTA, raising serious questions” about whether they can deliver “sufficiently reliable and safe” cars, the lawsuit states.

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A spokeswoman for CNR MA said the company has seen the lawsuit, but would not comment on it. CNR MA is named as a defendant, along with the Department of Transportation board of directors, the governor’s office, and former governor Deval Patrick.

Harry King, a spokesman for Hyundai Rotem, said in a statement the company remains convinced the selection process was seriously flawed.

“Nothing that has happened since the contract was awarded in October has changed that conviction,” he said.

The lawsuit, which accuses the state of unlawful favoritism, also alleges that Patrick and former state transportation secretary Richard Davey acted improperly when they visited the Chinese firm while on a trade mission during the bidding process, saying the officials “tainted the integrity of the entire procurement process.”

“Despite Patrick’s and Davey’s denials, it defies all logic to believe” they did not discuss the deal during the trip, the lawsuit states.

Hyundai Rotem officials also have asked the court to force the governor’s office, the MBTA, and the Department of Transportation to release public records that they say would give more details about the meetings in China.

A Department of Transportation spokeswoman in October said the governor did not discuss the procurement process during the meetings, and that he did not play a role in choosing the winning bidder. Davey has said he considered the meeting in China “totally appropriate.”

Hyundai Rotem’s lawsuit was filed before the transportation department has responded to formal protests filed by the losing bidders on the Red and Orange line contract: Hyundai Rotem, Kawasaki Rail Car of Japan, and Bombardier of Canada. The state agency is scheduled to issue responses to the challenges on Feb. 9.

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But Hyundai Rotem officials point out in the lawsuit that the agency has already issued a “notice-to-proceed” to CNR MA, “thus making a mockery of HRC’s pending administrative appeal and not even paying lip service to due process under the law.”

Michael Verseckes, a Department of Transportation spokesman, said he does not expect the lawsuit to affect the process of reviewing the bid protests.


Nicole Dungca can be reached at nicole.dungca@globe.com.