(The following story by Theresa Conroy appeared on the Philadelphia Daily News website on February 25.)
PHILADELPHIA — A Philadelphia Common Pleas judge yesterday granted an emergency restraining order preventing the SEPTA board from awarding a $236 million contract for new rail cars.
Judge Matthew Carrafiello’s order will stop SEPTA from giving the nod at tomorrow’s board meeting to United Transit Systems (UTS), a consortium of the Korean Rotem Co. and Nissho Iwai American Corp.
The SEPTA staff has recommended that UTS – the lowest bidder and the recipient of influential backing – get the contract to build 104 new rail cars.
The contract would create 140 factory jobs at the old Philadelphia Naval Yard.
Dick Sprague and William Lamb, attorneys for losing bidder Kawasaki Rail Car Inc., request-ed the temporary injunction in a hastily arranged hearing yester-day.
Sprague argued that the recommendation to hire UTS, or “Ro-tem,” its parent company, had been “rigged.”
“One of our claims, which we will be able to prove when we get to a [hearing for a] preliminary injunction, was that, from the beginning, this thing was rigged to favor Rotem,” Sprague said.
Sprague said the bid specifications for the job had been changed in “mid-stream” in 2002 to accommodate UTS’ lack of specific experience in manufacturing stainless steel railcars “which comply with” federal regulations. Instead, Sprague told the judge, SEPTA opened the process to companies that have “prior experience” with federal regulations.
UTS, he said, should have been knocked out of the process from the beginning because it failed to meet the original requirements. Kawasaki, a Japanese company, meets the more stringent requirement, he said.
Kawasaki’s bid was for $251 million, $14 million more than UTS’ proposal.
SEPTA attorney Penny Ellison said the language amendment had not been changed to favor UTS, but merely to clear up an “ambiguity” in the request for proposal documents.
“It is a huge contract of immense importance to SEPTA,” she said. “… The last thing we want to do is spend $250 million and not get railcars that meet their specifications.”
Ellison said that if the language had not been changed in the contract, a strict reading would have knocked all bidders out of the process – including Kawasaki.
“We went the conservative route,” she told the judge. “It’s a balancing, it’s a very delicate balancing.”
UTS has received support from Gov. Rendell and Mayor Street, who both want to add manufacturing jobs to the city.
The firm also is aligned with members of the local Korean community and some high-powered lobbyists, including former Street administration Chief of Staff Stephanie Franklin-Suber, former SEPTA general manager Jack Leary and state Republican party chairman Alan Novak.
Carrafiello scheduled March 15 for a hearing to consider a preliminary injunction.