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Rewarding Failure 

Streetcars that are too wide, long, and heavy (136 @ $3.5 million per). Bus engines that don't fit and are scrapped (20 @ $116,000 a pop). Manhole covers that take 10 engineers and three months to design (cost: $243,000). Muni's management has produced su

Wednesday, Dec 9 1998

Page 2 of 5

The Breda streetcars have other problems. Government records say the vehicles' sliding doors break down constantly. Also, because the doors are on the outside of the car, there is a dangerous 5-inch gap between the door step and Muni platforms. The emergency brakes are so suspect that safety inspectors have reduced the allowable train speed from 50 miles per hour to 30 miles per hour. Excessive weight and faulty engineering cause high- and low-frequency noises that irritate, even enrage, entire districts of the city.

Why would Muni buy these pigs in the poke, and keep on buying them, long after the agency knew they were wrong for its system?

When it comes to managing billions of dollars of capital projects, Muni bureaucrats report directly to Booz Allen Hamilton Inc. A globally connected consulting firm, Booz Allen is a major player in public works management from Washington, D.C., to Kuala Lumpur; the firm is charging Muni about $30 million for consulting on the Breda streetcars and the Alcatel guidance system.

Under its contract with Muni, Booz Allen handles capital procurements from start to finish. The firm writes specifications and bid proposals, and influences the selection of contractors. It manages the nitty-gritty work on a daily basis; in large part, Muni officials sit back and sign off on Booz Allen invoices. And the more time a project takes, the more Booz Allen bills -- at $200 an hour.

There are a dozen major streetcar manufacturing companies in the world. In 1991, Muni advertised for a company to manufacture 35 customized streetcars. Booz Allen Hamilton created the streetcar design specifications, and guided Muni through the bidding process.

It was a very strange process.
A German, a Japanese, and an Italian firm all sought the contract. The Japanese company, C. Itoh & Co. Inc., put in the lowest bid -- about $150,000 per car less than Breda, the next lowest bidder. Price, of course, is not the only factor evaluated in deciding whether to purchase technology as complicated as that used in rail cars. Muni's bid specifications deemed a proven track record in making streetcars and the ability to meet certain technical specifications to be as important as price.

Public records show that Breda's bid was higher than C. Itoh's, and that Breda had less streetcar manufacturing experience than the Duewag Corp., the German firm in the running for the contract.

C. Itoh's low bid was disqualified on a minor technicality. (To this day, city officials are at a loss to explain exactly why the low bidder lost.) With C. Itoh out of the way, city bureaucrats wrote that the remaining two bids, by Breda and the German Duewag Corp., were so close in terms of price and technical promises that either could be chosen. Only after a series of meetings between the two remaining bidders and Booz Allen Hamilton did a victor emerge. In December 1991, Muni awarded the streetcar contract to Breda -- paying $2.5 million for each of the 35 custom-designed streetcars.

This was the beginning of a very good deal for Breda. Muni soon ordered another 42 cars at premium prices -- up to an additional $355,000 for each car. Eventually, Muni ordered 101 additional streetcars (for a total of 136) at an average of $3.47 million for each car -- or 30 percent more per car than was originally bid. At this price, the Muni Bredas may well be the most expensive streetcars on the planet.

After the first contract was let, the subsequent streetcar purchases were never put out to competitive bidding. In government-speak, the 101 additional streetcars were "sole-sourced," or simply added onto Breda's original contract. The lack of competition showed: Each batch of Bredas cost more, per car, than the last.

While San Francisco ended up paying nearly $3.5 million apiece for its streetcars, San Diego was buying light rail cars from Siemens-Duewag for a bit over $1.5 million each. (The federal government's National Transit Database shows that the average cost of a new light rail car in America is currently $2.381 million, or $1 million less than San Francisco pays.)

There were other odd fiscal facets of the Breda contract, including Muni's subsidization of a Breda factory at Pier 80 in San Francisco (see sidebar). But the real question is not why Muni is paying so much to Breda, but why it keeps buying Breda streetcars at all.

According to public records, the "custom" design of the Breda streetcars contained large and small errors that did not become apparent until the cars were test run on the rails in San Francisco. Some flaws were fixed, after expensive modifications. To address the weight problem that generates neighborhood-disturbing rumbles and eats Muni's track, for example, Breda is retrofitting its 38-ton cars with "softer-riding" suspensions.

Breda officials declined to be interviewed for this article. In an interview last week, Cruz said he was unaware that the Breda cars are too long, but that the Bredas' weight problems were being addressed. Attempts to obtain more detailed comment this week from him were unsuccessful.

But if Muni keeps using the Italian rail cars, San Francisco will have to learn to live with some Breda problems. Muni can do little to further reduce the soul-jarring whine that emanates from the heart of the Breda motor.

And there is no way to amputate two feet of length from a Breda streetcar. And so there is no way that $472 million of streetcars will ever fix the subway problem they were supposedly designed to solve.

Ten years ago, Muni planners dreamed of transit utopia. Sleek carbon-steel street-cars would speed through the underground in multicar trains that would come and go automatically, guided by omniscient central control.

Today, however, lone or paired streetcars straggle, very occasionally, into packed subway stations, and waiting thousands crush one another in the rush to load the steel cans.

About The Author

Peter Byrne


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