A large, Tokyo-based multinational company should receive a more than $20 million contract for new Virginia Railway Express passenger cars, the railway’s Operations Board recommended Friday.
The board also asked rail system officials to re-examine options for how it can provide WiFi service to its riders.
The passenger car contract was awarded to Sumitomo Corporation of America, a New York based subsidiary of the Japanese corporation, for an amount not to exceed $23.1 million. The company will build eight new rail cars as part of an effort to replace aging “legacy” cars, more than 40 years old, in the VRE’s fleet.
The VRE has already approved a plan to replace 20 of its aging cars at a price of $36 million over the next four fiscal years, with the bulk of the funds coming from the state and federal funds and $2.5 million coming from VRE.
The contract to Sumitomo is $2 million above VRE officials’ asking price. But, according to agency documents, VRE officials had little choice — the company was the sole bidder on the contract.
CEO Dale Zehner asked board members to approve a recommendation that would deplete the agency’s capital reserve fund of $1.5 million to pay for the higher price.
Zehner said VRE officials hoped to find a company that could handle the entire process within the U.S., but there were no takers on what is considered a relatively small order. The weakness of the American dollar compared to the Japanese yen forced the price tag up, among other factors, he said.
While the new cars would be manufactured in the U.S., much of the engineering work would take place in Japan, he said.
He also said that pouring money into the aging fleet wasn’t a good idea and that there is a demand for the new cars.
“You feel like you’re back in the ‘50s or ‘60s,” Zehner said of the aging rail cars.
The cost overrun is problematic because of VRE’s looming “800-pound gorilla” in meeting ever-increasing demand as costs go up, said board member Paul Milde, a Stafford County supervisor.
“Our bigger problem here is accommodating increased ridership … and adding capacity to the new system,” Milde said.
The railway’s average ridership was up10 percent over December 2010 to 18,379, new statistics show. December was also a good month for the train service, with 96 percent of trains on time.
Board member Chris Zimmerman, an Arlington County supervisor, questioned the steep increase in price. He asked whether VRE officials tried to “piggyback” on larger orders from others around the world.
Zehner said that VRE could not find another company that made trains to the agency’s specifications, and whose timeline coincided with the goal of having the eight new cars delivered by February 2014. The small order was one reason why the agency didn’t receive more bids, he said.
Milde also directed Zehner to re-examine putting WiFi on trains, something more and more riders have come to expect. Zehner said in a Web chat with riders earlier this month: “While, I was optimistic for WiFi in 2011, in 2012, the priority for WiFi is dropping. During out last survey, most riders said they wouldn’t use it if it wasn’t free. Also, I am not convinced that we can provide uninterrupted service at this time.”
Zehner said Friday that he’s not convinced VRE trains need WiFi. “Is it really necessary?” he asked. He said WiFi comes with a high price tag, and more high-end devices – phones and tablets – connect by cell signal. Milde said, however, that Stafford County residents often can’t connect in the more rural area.
Zehner said he would look at options and bring a more detailed plan back to the board in the next few months.
The operations board is an advisory body to the Northern Virginia Transportation Commission (NVTC) and Potomac and Rappahnock Transportation Commission (PRTC). Those bodies make final decisions on VRE matters.