MBTA to pay up to $148M more to speed delivery of new subway cars
The new spending could bump the total cost of the contract to more than $1 billion. Members of the MBTA Board of Directors voted to amend a contract with Chinese company CRRC, which is producing new trains for the Orange and Red Lines, potentially pushing the project's total cost to over $1 billion. The new amendment adds up to $148 million more to the cost, with the majority of that money tied to achievements of designated milestones such as the full completion of the order by 2027. It also reduces accumulated penalties for overdue delivery by $90,653,000, leaving a remaining total of $37,718,000 in liquidated damages and creating an incentive for CRRC to "earn back" some of these funds. The MBTA had considered switching to a new provider but determined that doing so would likely force the system to wait until 2030 to begin receiving new cars and require a new contract worth more than $1bn.
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Members of the MBTA Board of Directors voted Thursday to amend a contract with a Chinese company producing new trains for the Orange and Red Lines, potentially pushing the total cost of the long-delayed project to more than $1 billion. CRRC originally won the contract to produce a total of 284 new rail cars in 2014. While the company is the world's largest rail manufacturer, it was the company's first US contract and required them to establish a facility in Springfield.An update in 2017 increased the order to 404 total cars, of which 130 have been delivered so far. The Orange Line cars were scheduled to be delivered by January 2022 and the Red Line cars were due to be finished by September 2023. MBTA officials said the COVID-19 pandemic, significant tariff increases, hiring in Springfield and other issues have roiled CRRC's production schedule. Prior to Thursday's vote, the total value of the contract was $870,522,758 and completion was expected in 2029. "We felt that was too long," General Manager Phil Eng told the board. The new amendment to the deal adds up to $148 million more to the cost, with the majority of that money tied to achievements of designated milestones including the full completion of the order by the end of 2027. The board's approval also reduced the accumulated penalties for overdue delivery by $90,653,000, leaving a remaining total of $37,718,000 in liquidated damages and creating an incentive opportunity for CRRC to "earn back" some of that accrual.One member of the MBTA Board of Directors abstained from voting on the agreement. All other members voted to approve it. During his introductory remarks, Eng told the board that the MBTA had considered switching to a new provider but determined that doing so would probably force the system to wait until 2030 to begin receiving new cars and require a new contract worth more than $1 billion.Allowing the CRRC contract to continue into 2029 also risked creating a situation in which the full order would not be delivered, Eng said. "How do we ensure that we get the cars sooner? As soon as possible? How do we do it in the most cost-effective way? We're making tough decisions that probably should've been done long before we got to this point," said Eng, who took over in April 2023. Eng, who also spoke to the board Thursday about recent incidents along MBTA tracks, described the acquisition of new trains as a priority for improving reliability. "We're investing in the track. If we don't invest in rolling stock, the track work is not going to be as important to us," said Eng. Since October, CRRC has been delivering new married pairs at a rate of two per month, Eng said. "We're continuing to see that when we put these cars into service they perform well and they're giving improved reliability," said Eng. The Red and Orange Line cars being replaced are between 31 and 55 years old.
Members of the MBTA Board of Directors voted Thursday to amend a contract with a Chinese company producing new trains for the Orange and Red Lines, potentially pushing the total cost of the long-delayed project to more than $1 billion. CRRC originally won the contract to produce a total of 284 new rail cars in 2014. While the company is the world's largest rail manufacturer, it was the company's first US contract and required them to establish a facility in Springfield. An update in 2017 increased the order to 404 total cars, of which 130 have been delivered so far. The Orange Line cars were scheduled to be delivered by January 2022 and the Red Line cars were due to be finished by September 2023. MBTA officials said the COVID-19 pandemic, significant tariff increases, hiring in Springfield and other issues have roiled CRRC's production schedule. Prior to Thursday's vote, the total value of the contract was $870,522,758 and completion was expected in 2029. "We felt that was too long," General Manager Phil Eng told the board. The new amendment to the deal adds up to $148 million more to the cost, with the majority of that money tied to achievements of designated milestones including the full completion of the order by the end of 2027. The board's approval also reduced the accumulated penalties for overdue delivery by $90,653,000, leaving a remaining total of $37,718,000 in liquidated damages and creating an incentive opportunity for CRRC to "earn back" some of that accrual. One member of the MBTA Board of Directors abstained from voting on the agreement. All other members voted to approve it. During his introductory remarks, Eng told the board that the MBTA had considered switching to a new provider but determined that doing so would probably force the system to wait until 2030 to begin receiving new cars and require a new contract worth more than $1 billion. Allowing the CRRC contract to continue into 2029 also risked creating a situation in which the full order would not be delivered, Eng said. "How do we ensure that we get the cars sooner? As soon as possible? How do we do it in the most cost-effective way? We're making tough decisions that probably should've been done long before we got to this point," said Eng, who took over in April 2023. Eng, who also spoke to the board Thursday about recent incidents along MBTA tracks, described the acquisition of new trains as a priority for improving reliability. "We're investing in the track. If we don't invest in rolling stock, the track work is not going to be as important to us," said Eng. Since October, CRRC has been delivering new married pairs at a rate of two per month, Eng said. "We're continuing to see that when we put these cars into service they perform well and they're giving improved reliability," said Eng. The Red and Orange Line cars being replaced are between 31 and 55 years old.