HOUSTON—
The Metropolitan Transit Authority is scrambling to recover from a $900 million dollar mistake.The Federal Transportation Administration told METRO officials Thursday that the Houston transit group violated federal law when applying for grant money it was set to receive last spring. According to the FTA, the old METRO board violated METRO and FTA policy when it hired a Spanish company to build 103 new rail cars. That purchase violated the FTA's "Buy American" law for cities wishing to receive federal dollars, officials said.
City of Houston leaders are trying to look at the $900 million mistake as a start to getting the troubled METRO Authority back on track.
"It really represents an important step in closing the books on the old METRO and opening a new chapter in what we've come to call the New METRO," METRO CEO George Greanias said.
The FTA dropped the bomb on Houston by calling mistakes made by the old METRO administration, "alarming and disturbing."
"Today's decision by the FTA confirms my instincts that there were serious problems at METRO and confirms my decision to replace the majority of the METRO board and ask them to bring in new leadership to run the organization," said Houston Mayor Annise Parker, who cleaned house at METRO after taking office at the beginning of the year.
The mistake to hire the Spanish rather than an American company to produce METRO's new rail cars was made under former CEO Frank Wilson. However, current municipal leaders have not said definitively if Wilson will face penalties to his several hundred-thousand-dollar buyout that was based partially on the success of this newly failed grant.
"We can spend a lot of time speculating on what happened. [It] seems to me the FTA report should be the definitive document. Going beyond that document doesn't strike me as particularly useful," Greanias said when asked who is at fault for this mishap.
Meanwhile, the mayor said METRO will recover from this derailment by re-bidding for the rail cars. This time, the city will be buying American.
"In awarding its contracts, METRO should support our local and national economy to the maximum amount possible," Parker said.
METRO said it will take another 20 months to re-bid the contract, get the grant and bring the rail cars to Houston. The good news, according to METRO, is that the FTA still supports METRO and is willing to help Houston speed up the grant process.
METRO has already spent $40 million with the Spanish company and has not said how it will end that contract. The organization plans to add five new rail lines by 2014. Construction on certain lines has seen minor delays, but METRO said they are not related to the rail cars.
