Expressing sorrow over the lack of easy options, overseers of MBTA voted on Thursday to once again modify a contract for new Red and Orange Line trains. They agreed to pay more money and waive penalties against the manufacturer, which is already behind its original schedule by several years.
The T negotiated a contract “reset” with Chinese firm CRRC that now requires the final new vehicles to be delivered by the end of 2027. This represents another delay to the troubled project, but it sets an earlier deadline than the current pace of work would predict.
Under the updated terms, the MBTA will pay up to $148 million more to cover higher-than-expected costs linked to the COVID-19 pandemic and supply chain disruptions. This increases the total contract value to over $1 billion.
The agency also agreed to forgive about $90 million in penalties that the manufacturer faces for delays so far. Another $37 million in damages would remain, but the updated contract would set incentives that could effectively dismiss those charges as well if CRRC meets new targets.
MBTA officials described the renegotiated contract as a way to establish a clearer schedule and make progress towards a modernized subway fleet. This is especially important considering that some of the trains on the Red and Orange Lines are over 50 years old.
“The cost of continuing to maintain and keep those Red Line cars running is at some point going to be not only too expensive, but getting parts for cars of those age — in many cases, we’re making the parts ourselves. Manufacturers don’t have them any more,” said MBTA General Manager Phil Eng during a meeting with reporters. “That’s the other reason why we couldn’t wait for six years or so to go with a new procurement. We really need to start decommissioning the Red Line cars and putting these into service.”
Board members who approved the deal said Thursday they were not enthusiastic about the changes, but saw few other options.
“I’m not totally comfortable with every aspect of this,” said board member and Quincy Mayor Thomas Koch, who voiced discomfort with the original bidding process. “But recognizing where we are, what the alternatives are, it’d be irresponsible of me to do anything but to vote for this to keep this moving.”
“I don’t think we have any choice but to approve this reset,” added fellow board member and Framingham Mayor Charles Sisitsky. “It’s unfortunate that we’re in this position, but we’ve heard a number of reasons why this happened. The alternative is either to find another manufacturer or start all over again, and we need these cars as soon as possible. If this is the only way we can ensure getting it, I think we just have to hold our nose and vote to approve the reset.”
The board voted 8-0 in favor of the amended contract, with member Robert Butler abstaining.
The project to replace the aging Red and Orange Line fleets with all-new CRRC trains has been plagued with disruptions since the Patrick administration awarded the first contract in 2014.
Officials have pushed back the completion date multiple times, especially after the pandemic constrained available supplies, and federal tariffs significantly curtailed CRRC’s prospects in the United States. The Springfield facility where workers complete assembly of the trains has been reportedly plagued with its own issues. And although MBTA officials insist the new vehicles are more reliable than the decades-old trains they replace, they have still been afflicted by multiple engineering and performance mishaps.
Previous agreement stipulated that CRRC had to give 152 new Orange Line cars by the end of 2021 and 252 new Red Line cars by September 2023. Right now, the T only has 112 Orange Line cars and 18 Red Line cars, which is less than a third of what was agreed upon.
MBTA officials said that without any changes, the final vehicles wouldn't come until 2029. The new contract sets new deadlines of September 2025 for the last Orange Line cars and December 2027 for the last Red Line cars.
Eng, who started at the T about a year ago, said that these are things that should have been dealt with long ago.
Last year, Gov. Maura Healey asked for an independent team to investigate the upheaval. The group found that despite the problems with CRRC, it would be more disruptive for the T to switch to a different manufacturer at this stage.
Gonneville said that a new procurement process would take up to five years before the MBTA actually received a first vehicle, and each vehicle could potentially cost $1 million more than a negotiation with CRRC. The recommendation ultimately was that it was best for the MBTA and its customers to reset with CRRC.
The T gave CRRC a $565 million contract in December 2014, then later added another $305 million and tacked on more Red Line cars to the procurement.
At the time, CNR MA, which later became known as CRRC, significantly underbid other competitors to win the contract, with Hyundai Rotem bidding $720.6 million, Bombardier bidding $1.08 billion and Kawasaki $904.9 million.
Gonneville said the updated price tag is roughly what MBTA engineers initially estimated the project would cost before the 2014 contract award.
A pair of CRRC MA executives, Wang Zhaofu and Bao Yujun, told the MBTA board on Thursday that their company is committed to getting delivery back on track and would make improvements to the manufacturing process.
Zhaofu said through an interpreter that in order to meet the new production schedule, they realized their plan needed to include optimization of their production processes, enhanced production training, an increase in the number of second-shift production workers and weekend production, and support department workers.
A complicating factor seems to be out of the control of both CRRC and the T. In 2018, the U.S. increased tariffs on Chinese goods, which MBTA officials said affects early work on the Red and Orange Line cars in China.
The 2019 National Defense Authorization Act also prohibited American transit agencies from using federal funds to buy vehicles from Chinese companies, but there were exceptions for agencies already under contract with CRRC. According to Gonneville, this left the firm with only four potential clients in the country: the MBTA, Philadelphia’s SEPTA, the Chicago Transit Authority and the Los Angeles Metro.
Under the updated contract, some additional work in the early stage of manufacturing will take place in Changchun, China before the “shells” are delivered to Springfield, where they will be completed.
Eng explained that since the autumn, CRRC has been providing two connected sets of cars every month without encountering any significant reliability problems.
“If they did not perform those two actions, the conversation about our recommendation would be different,” he said.
