The Harris County Metropolitan Transit Authority last week reached a settlement with CAF USA Inc., over two disputed contracts for the construction of light-rail cars for its North and Southeast Corridor lines. CAF is a subsidiary of the Spanish firm Construcciones y Auxiliar de Ferrocarriles SA.

Under the agreement approved last week, the contracts are canceled and CAF will forego any additional payments for unpaid work and lost profits. In addition, CAF will refund $14 million to Metro.

"This is $14 million more for public transportation than we had yesterday," said Metro chairman Gilbert Garcia. "More importantly, it's another step forward from old legacy issues to the safe, reliable and affordable public transit and mobility services that our customers and taxpayers deserve."

In September, the Federal Transportation Administration found that CAF and previous Metro management had violated federal procurement law and Buy America requirements regarding the contracts, putting $900 million of federal transportation grants for the rail lines in jeopardy. Metro's new management ordered CAF to stop work on the rail cars and sought to protect access to federal funds.

Metro expects to put the cars out to bid in January and to qualify for the federal grant next year.

FTA administrator Peter Rogoff said in a Sept. 7 letter to Metro that "FTA will be prepared to resume its financial analysis and our negotiations for full funding grant agreements, pending your development of a sound and viable plan for a new LRV procurement."

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