Houston MTA settles LRT contract disputes

Houston’s Metropolitan Transit Authority said Friday it “has reached a settlement with CAF USA, Inc. (a subsidiary of the Spanish Firm Construcciones y Auxiliar de Ferrocarriles, S.A.) over two disputed contracts for the construction of light rail cars for its North and Southeast Corridor lines.”

Metro said that, under the agreement, the contracts are canceled and CAF will forgo any additional payments for unpaid work and lost profits. CAF also will refund $14 million to Metro.

Metro’s Board of Directors approved the agreement at its meeting on Friday.

“This is $14 million more for public transportation than we had yesterday,” said MetroChairman Gilbert Garcia. “More importantly, it’s another step forward from old legacy issues to the safe, reliable and affordable public transit and mobility services that our customers and taxpayers deserve.”

The Federal Transportation Administration in September found that CAF and prior Metro management had violated federal procurement law and Buy America requirements regarding the contracts, putting $900 million of federal transportation grants for the rail lines in jeopardy.

Metro says it subsequently ordered CAF to stop work on the rail cars and immediately swung into action to protect access to federal funds. Metro initiated a mediation process with CAF leading to the settlement. The settlement allows Metro to move forward quickly to protect the $900 million in federal funding for its LRT expansion plans.