Metro has been looking for a manufacturer for the past two years to build its next group of rail cars. The Washington Post reports that last week, Metro chose Hitachi Rail. The contract could be worth $1 billion. In addition to building 256 rail cars, with the option to purchase up to 800, the Hitachi contract includes some provisions that motivate the manufacturer to build the assembly plant for the cars in the Mid-Atlantic area, which would provide several hundred jobs in the region.
The new cars will be designated as the 8000-series, and while Metro and Hitachi are continuing to negotiate the details of the contract, Paul J. Wiedefeld wrote a letter to board members to let them know that Hitachi had been chosen as the likely builder of the cars.
Dan Stessel, a Metro spokesman, said “The 8000-series rail car procurement process remains active, and we are unable to comment further at this stage of the process. We are excited to share information with Metro riders as soon as the contract is awarded.”
The state of U.S.-Sino relations played a role in Metro’s search for a manufacturer. In January 2019, Metro met with the China Railway Rolling Stock Corporation (CRRC), which expressed interest in bidding on the new business. Although critics of CRRC have said the company is heavily subsidized by the Chinese government, enabling it to offer very competitive bids, CRRC had won contracts for rail car building for systems in Philadelphia, Chicago, Boston and Los Angeles.
Concerns about CRRC and China in general include cyberattacks that U.S. national security officials have traced to Beijing, and that rail cars could be equipped with spying technology and an avenue to launch cyberattacks. CRRC has dismissed these accusations. Nevertheless, when Congress learned that CRRC was discussing new rail cars with Metro, many in Congress were shocked.
As a result, U.S. Democratic Sens. Tim Kaine and Mark Warner, both of Virginia, along with two other senators, wrote legislation that said transit agencies cannot partner “with any companies in countries that aren’t recognized by U.S. trade treaties and agreements,” according to the Post.
Metro was specifically mentioned in the legislation, and was told not to choose a China-based company for building new railcars. In December 2019, this legislation was signed by President Trump.
Another twist to the story is that the Alliance for American Manufacturing told Metro the agency was trying to work around a federal “Buy America” provision that means if federal money is used in the project, at least 70 percent of final construction of the cars and contract work must be done in the U.S.
Metro responded by saying that it would use annual funding for it’s work in Virginia, Maryland, and Washington, D.C., to fund the build of the 8000-series cars, and therefore bypass the federal money and the federal requirement. Metro pointed out one reason for this is their proposed contract with Hitachi could potentially mean the build of the assembly plant in the Mid-Atlantic, creating hundreds of jobs. Metro added that a provision of the contract requires that eight percent of contract value must stay in the Mid-Atlantic region, creating a ripple effect of additional jobs in other states.
The Federal Transit Administration cried foul at this argument, saying that “it’s a far cry from what ‘Buy America’ rules require.” FTA Deputy Administrator K. Jane Williams sent a letter to Wiedefeld last month telling him he should support the “Buy America” provisions “to support the nation’s economic recovery from the Covid-19 public health emergency. Given the significant level of annual federal financial support of [the agency], and the considerable benefit to workers when FTA Buy America requirements apply, I strongly encourage [the agency] to require bidders to comply with FTA’s Buy America requirements, regardless of the source of funding, for this particular procurement.”
One question is whether the Hitachi contract would qualify under the rules of the Buy America program. Hitachi is already building cars for the Baltimore Metro Subway Link, and has an assembly plant in Miami-Date County, constructing cars for that county’s transit agency, as well as other transit projects in the U.S.