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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 3 of 5

What went wrong?
Simply put, Muni tried to swallow more than it could digest. Along with building an entirely new fleet of streetcars, Muni set about revolutionizing its signal system by acquiring Alcatel's automatic train control software. If it worked, the control system would be a wonder. In practice, it has been a disaster.

In the Alcatel system, a cable is laid down the middle of Muni's underground tracks. Each streetcar is equipped with a transponder (basically a radio that sends and receives signals from the cable). Using these signals, software running on a simple personal computer keeps track of and -- in theory -- drives trains in the subway from afar. The driver becomes peripheral, even as computer peripherals become the driver.

This supermodern technology was meant to replace the 20-year-old electromechanical relay signaling system -- a system that controlled tunnel traffic lights, which were obeyed by train operators. The relay system had worked just fine in the Muni Metro, and could have been upgraded relatively cheaply. Instead, Muni chose to graft Alcatel's expensive wares onto Muni's humancentric signal system -- which turned out to be a very bad idea, indeed.

There are a number of technical reasons why the Alcatel signal system has never worked properly. Public records show that the system contained design flaws, and that there were manufacturing flaws in some of the equipment used. But it is also now clear that the Alcatel system installed in San Francisco had never been proven in practice, anywhere in the world. To this day, the system remains an experimental product.

So why did Muni buy an experimental guidance system -- especially when the agency's own proposal explicitly states that the system had to have been operated successfully elsewhere?

Booz Allen Hamilton is responsible for "selling" Muni on Alcatel. After designing Muni's bid requirements for a train control system, Booz Allen insisted that only Alcatel Canada Inc. could do the job. This insistence, at times, bore at least the appearance of bias.

Alcatel's competitors were pre-emptorily disqualified because they would not promise there would be no disruption when the new signal system came online. AEG Westinghouse's bid, for example, was thrown out because the company would not swear that its software could simultaneously control the Boeing and Breda cars during the changeover from old to new signals.

Alcatel, on the other hand, solemnly vowed that the transition would be painless. But Alcatel would not guarantee that its software could keep track of 40 trains at one time, another bid requirement. At this point Alcatel could have been disqualified, too. But rather than toss Alcatel, Booz Allen wrote a report -- after bids were opened -- that recommended an easing of the 40-trains-at-once standard.

Another requirement for getting the job involved past performance: The software had to have been successfully proved in service for two years. Booz Allen Hamilton insisted that a train control system Alcatel was installing in London, England, for the Docklands Development Corp.'s new light railway met this requirement.

Muni and Booz Allen failed to mention to federal officials one unusual fact: The Docklands Railway was almost a toy railroad, when compared to the Muni Metro. At the time, the Docklands system used a driverless train moving a maximum of only 5,000 passengers an hour. At rush hour, Muni has to move 20 times that many riders.

On the basis of Booz Allen's lobbying for Alcatel, the Federal Transit Administration allowed Muni to disqualify AEG Westinghouse's bid and to give the contract to Alcatel on a "sole-source" basis -- that is, on the contention that no other responsible company could provide the system.

Shortly after Muni hired Alcatel, Alcatel's Docklands system crashed. Docklands hired Booz Allen to help fix the system, but to this day, the Docklands train control software is rife with bugs.

And so, of course, is Muni's.
Booz Allen was able to direct the contract toward Alcatel because -- as with the Breda streetcars -- Booz Allen designed the specifications and micromanaged the selection process for the contract.

With the Breda bids, one of the two major contenders was disqualified on a minor technicality. With the Alcatel bid, the winner was allowed to promise more than it was capable of delivering.

Years later, the Alcatel system failed its most crucial test -- guiding a mixed fleet of Boeing and Breda streetcars through the Market Street tunnel while the transition between signal systems was made. When Emilio Cruz was interviewed by Rescue Muni, a nonprofit watchdog group, about why Muni hired Alcatel, he said, "We were sold a bill of goods."

Alcatel representatives did not respond to phone calls seeking comment for this article.

A spokesperson for Booz Allen Hamilton confirmed that the Breda streetcars are too long for the Muni Metro and are overweight. The spokesperson confirmed that Booz Allen drew up the specifications for the Breda cars according to Muni's parameters and oversaw the specifications for the Alcatel system, which still does not work properly. When asked why there were problems with measurements for the streetcars, the spokesperson replied, "Those reasons are lost in the dawn of time." The spokesperson also said, however, that the streetcar contract could have been put out to bid after problems cropped up with the Breda vehicles, but "Muni asked us not to."

The Alcatel goods came at a very high price.
Alcatel was awarded a $34 million contract for a project that Muni had initially estimated to cost $25 million. With options and cost overruns, the job is now costing $80 million. (Muni chose to pass millions in cost overruns from the Alcatel project directly on to local taxpayers, rather than seeking more federal funding, which would subject the failing project to closer federal scrutiny.)

Muni has handed a series of nice breaks to the North American subsidiary of Alcatel Alsthom Cie General Electricite, a $30 billion multinational corporation located in Paris, France. Instead of suing Alcatel -- as the mayor threatened -- Muni has twice rewritten the terms of the original contract to suit Alcatel's technical and scheduling needs. Muni is withholding $5 million in Alcatel payments -- but that's small restitution for trading a reliable signal system for one that may never work.

About The Author

Peter Byrne


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