Metra suspends railcar RFP, pursues other options

Publication Date
Tuesday, August 09, 2016
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Metra today announced that due to changes in the availability of capital to fund its $2.4 billion modernization plan and promising new alternatives, the agency is temporarily suspending its current search for a vendor to build 367 new railcars.

Metra has identified modernization of rolling stock as one of its highest capital priorities due to the age of its fleet and the fact that the condition of cars and locomotives is so essential to providing high-quality, reliable and comfortable service.

The good news is that even without immediately pursuing its own contract to purchase new cars, Metra anticipates being able to acquire some of the 367 new cars sooner than expected and at a substantial savings. Metra’s peer railroad Virginia Railway Express (VRE) has a remaining option to purchase 21 railcars from Japanese rolling stock manufacturer Nippon Sharyo at an estimated cost of $2.5 million per car. Because VRE uses the same type of railcars as Metra, the agency recently reached out to VRE about acquiring this option, since VRE may no longer need its full order.

The cost of the entire Metra purchase of 367 new railcars had been estimated at approximately $1.2 billion or $3.3 million per railcar. This is $800,000 more per car than the expected cost of each VRE car. If Metra is able to acquire the railcar option from VRE, it could result in savings of approximately $17 million, with delivery of the first set of new railcars in early 2018.

“The most important thing we can do right now is be flexible and creative in our efforts so that we can continue to achieve what we set out to do – invest in infrastructure and enhance service and reliability for the benefit of our customers,” said Metra Chairman Martin J. Oberman. 

The projected availability of capital funding for the entire purchase has changed since Metra’s modernization plan was first proposed. The fact that the state of Illinois has put on hold more than $300 million in funding that had been previously budgeted in Metra’s capital program is likely to result in the need to spread out over a longer period of time the acquisition of the remaining 346 cars and the planned acquisition of new locomotives.

To overcome this problem and meet the need to update its fleet, Metra is aggressively investigating whether it can acquire and rehabilitate a number of later model cars from other commuter railroads that may no longer have a need for them. This approach may well result in lowering the need for as many new cars, while providing upgraded and completely renovated cars for Metra’s customers at a lower overall cost.

In order to pursue these alternatives, Metra has decided to suspend the current request for proposals (RFP) and to proceed at a later date once it has pursued all other alternatives to complete the modernization plan.

“Metra’s railcars and locomotives are the oldest of any of our peer railroads and the Metra Board has made it a priority to invest in our fleet,” said Metra Executive Director/CEO Don Orseno. “We are committed to finding cost-efficient ways to get new or newer cars to add to our fleet while we continue to rehab about 40 railcars and 20 locomotives each year.”

“It makes greater financial sense for Metra to buy the VRE cars and pursue other options now,” Oberman said. “At the end of that process, we can resume our search for new cars with a better handle on how many we still need and, hopefully, with a better handle on our funding issues.”