A report released yesterday by the General Accounting Office criticizes Metro's purchasing procedures for 294 rail cars it is buying from an Italian firm, citing inadequate testing of new rail cars, lax enforcement of contract requirements and overgenerous payments made prior to delivery of the cars.
The first two cars, ordered from Breda Costruzioni Ferroviareie S.p.A., arrived last April. "Serious technical problems were found in the two cars," which arrived 22 months behind schedule, causing a delay in the opening of two more stations on the Metro system, the report said, adding that Breda's ability to meet its delivery schedule for the rest of the cars "is in doubt."
The report recommended closer oversight and on-site inspection of Metro's rail car acquisition and testing procedures by the Department of Transportation's Urban Mass Transportation Administration, especially in light of the local transit authority's expected request in December for further federal funding to pay for the last 34 cars on order from Breda. Federal funds are paying for almost 85 percent of the $275 million car purchase from Breda, the report noted.
Metro officials took issue with several points of the report and in a written reply stated, "If there was any procurement that had the total attention of the Metro staff, its board of directors and UMTA, the transit car procurement was one."
The federal Department of Transportation, in its response to the report, stated that the on-site inspections recommended by GAO are "beyond the role of the Department."
The DOT response added, "While we agree with GAO that Metro might have given more attention to periodic status reviews in their rail car procurement, we believe they are aware of the need to improve in that area of management."
The GAO report said Metro's decision in 1981 to increase its initial order of 94 rail cars to 294 was taken before it had received any cars from Breda and with only limited testing of the cars.
Metro had also failed to get "quality-assurance plans" from Breda during construction of the cars. These quality-control plans would allow Metro to be sure--while the cars are being made--that all components fit the machinery of the city's rail system.
GAO questioned Metro's ability to ensure that the cars will meet all specifications laid out in the contract unless it has these "quality-assurance plans."
Metro was also faulted for excessive payments to Breda during the cars' construction and prior to delivery amounting to more than half the total cost.
The report recommended that Metro prepare a comprehensive test plan to ensure safety, reliability and compatability of the cars with its rail system--a plan that GAO says is now lacking. The testing plans Metro currently uses do not meet industry-wide test standards, the report said.
In its detailed response, Metro said that it increased its order from 94 cars to 294 at that time to take advantage of an option in its contract with Breda that gave Metro better prices than if it had waited. Metro also said the order was made then to keep its procurement of new cars on schedule.
Regarding advance payments, Metro replied that they were designed to "reduce the contractor's negative cash flow and thus reduce actual cost to Metro." A comprehensive test plan has been prepared and submitted to Breda, and test procedures are being prepared, Metro's reply said.
Metro officials promised to strictly enforce delivery dates in the contract in the future but said that stricter contract provisions with Breda to get more control over the rail cars' acquisition "would be more costly and with questionable benefits since contractors would protect themselves against potential liability by increasing their bid price.