National Railroad Passenger Corporation
60 Massachusetts Avenue, N.E., Fourth Floor
Washington, D.C. 20002-4285 www.amtrak.com

FOR IMMEDIATE RELEASE
Contact: Karina Van Veen
(202) 906-3860
ATK-01-196

AMTRAK STATEMENT ON THE BOMBARDIER LAWSUIT

Today, in a stunning demonstration of irony, the Bombardier Corporation filed a lawsuit against Amtrak for its own failure to meet the terms of its agreement with Amtrak to deliver high-speed trainsets on time or in compliance with contract requirements.

Bombardier’s Consortium partner in the project, ALSTOM, is not a participant in the lawsuit.

After five years of delays, performance failures and self-inflicted financial losses, it is no shock that the Bombardier is now attempting to shift the blame for the Consortium’s mismanagement of the high-speed trainset contract to Amtrak..

The facts are as follows:

The Consortium’s record of failure – including design, subcontractor oversight, production, and compliance with Buy America requirements – is staggering. Under terms of the contract signed in 1996, Amtrak has asserted or reserved its right to assert claims in excess of $250 million resulting from: 

* Trainset deliveries more than one year late, with continuing delays for the last five trainsets  
* Speed restrictions, because the trainsets do not meet contract specifications when operated on track that complies fully with all FRA requirements  
* Failure to meet Buy-America requirements  
* Failure to provide on-time and adequate maintenance  
* Failure to comply with warranty obligations

Amtrak’s claims represent only a portion of its actual revenue and other losses.

Amtrak’s contract with the Consortium is quite explicit. There is no ambiguity. There is an agreed-upon process that requires that claims first be submitted to Amtrak and then a dispute resolution board, which it has refused to do.

For more than a year, Amtrak has negotiated in good faith with the Consortium to solve our difference in a businesslike way. Amtrak has repeatedly indicated its willingness to continue to negotiate, but today Bombardier has unilaterally issued a press release declaring an impasse and announcing it will go to court.

None of the disputes involve the safety of the trainsets, which are the first trains in the world to meet the FRA’s tough Tier II safety requirements. Amtrak refused to cut corners or accept shoddy workmanship.

The Consortium narrowly won a highly competitive bid to manufacture and deliver the trainsets based in large measure on its promise to begin deliveries in the fall of 1999.

However, on September 1, 1999, the President of Bombardier Mass Transit – North America acknowledged its inability to deliver the trains as promised in the contract by November, 1999 because of its own need to conduct modifications and testing on the trainsets.

The Consortium then established a tentative delivery date for Spring 2000, which it also failed to meet.

Last year, the Consortium threatened to withhold delivery of the first trainsets unless Amtrak waived its claims related to trainset performance. Amtrak refused, the Consortium relented and the trainsets were delivered, although a year late.

Next, it said they would assert hundreds of millions of dollars in claims because Amtrak had disrupted trainset production. When asked to provide evidence by submitting a claim, it failed to do so.

Now it appears Bombardier is spinning a story through litigation that doesn’t remotely resemble the facts. It intends to win public relations points with the hope that Amtrak can be politically pressured to settle, thereby saddling Amtrak’s passengers and American taxpayers with the full financial burden of the Consortium’s failures.

The Contract signed by the Consortium provides a fair mechanism for the contractor to assert claims, for good faith negotiations, and for independent dispute resolution if the parties cannot reach agreement.

We have repeatedly advised Bombardier that Amtrak will fully respect these processes. Knowing the weakness of their position, Bombardier now wants to throw out the process it agreed to and head directly to court. Amtrak expects the Consortium to live up to the contract it signed, deliver the five remaining trainsets, and accept financial responsibility for the delays and mismanagement for which it has only itself to blame.

Amtrak also expects the Consortium to live up to its contract responsibilities to manage the day-to-day maintenance of the trains. Amtrak management has been forced to step in daily to do the Consortium’s work so that Amtrak’s customers are certain to receive high-quality, reliable service.

Amtrak will refute the Bombardier’s specious allegations in an appropriate forum. In the meantime, the Consortium can expect Amtrak to be ever more vigilant enforcing its rights and demanding delivery of the trains the manufacturers agreed to build.

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From Bombardier:

Bombardier Files Suit Against Amtrak

Montreal, November 08, 2001
Bombardier Corporation, a subsidiary of Bombardier Inc., filed suit against Amtrak today in the United States District Court for the District of Columbia claiming that Amtrak disrupted its ability to produce and deliver the high-speed trainsets and locomotives for the Northeast Corridor (Acela Express) in a timely and efficient manner. The Corporation seeks to recover at least US $200 million (Cdn $318 million) in damages, which include additional and unwarranted costs incurred during the execution of the Acela Express project. These costs have already been accounted for by the Corporation, as part of the total project costs.

Bombardier’s claim states that Amtrak did not provide track upgrades necessary for high-speed service. As a result, the trains had to undergo more than a year and a half of additional testing. “Track quality and train design go hand in hand,” said Jacques Laparé, President, North America, Bombardier Transportation. “Had Amtrak delivered the quality of tracks required for high-speed service, we could have avoided costly and time-consuming testing and the trains would now be running at full speed. Trip times would be reduced and passenger comfort would be increased.”

Bombardier’s complaint also states that Amtrak provided inaccurate information about the dimensions of tunnels, electromagnetic interference on the Northeast Corridor and track geometry. It further contends that Amtrak delayed decision-making on major technical issues as well as a series of design details, which in turn halted progress in critical areas and led to production modifications and design revisions.

“We ask that Amtrak take responsibility for its shortcomings on the Acela project, so that we can resolve outstanding issues. Bombardier Transportation has delivered all 15 locomotives and 15 of the 20 trainsets called for in the US $710 million
(Cdn $972 million) contract awarded in 1996, and expanded in 1998, and they are performing well,” said Laparé. “We believe the facts of this case will show that Amtrak disrupted our ability to deliver the Acela trainsets and locomotives on time and on budget, and caused major costs overruns.”

The 46-page complaint comes after repeated attempts by Bombardier to achieve a settlement through negotiations. “While we regret having to resort to legal action in this matter, we have reached an impasse in our discussions with Amtrak and see no other alternative to protect our rights and resolve this dispute,” added Laparé.

“We are proud to be associated with the development and realisation of the first high-speed train project in North America. We are delivering a very high quality product that obviously suits the needs of Amtrak, as indicated by the very positive comments, both public and private, that we have heard from Amtrak and its passengers,” concluded Laparé.

Bombardier Transportation is the global leader in the rail equipment, manufacturing and servicing industry. Its wide range of products includes passenger rail cars and complete rail transportation systems. It also manufactures locomotives, freight cars, propulsion & controls and provides signaling equipment and systems.

Bombardier Inc., a diversified manufacturing and service company, is a world leading manufacturer of business jets, regional aircraft, rail transportation equipment and motorized recreational products. It is also a provider of financial services and asset management. The Corporation employs 79,000 people in 24 countries in the Americas, Europe and Asia-Pacific and its revenues for its fiscal year ended Jan. 31, 2001 totalled $16.1 billion Cdn.
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For information:
Gilles Pagé
Director, Public Affairs and Communications
North America
(450) 441-3007

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What do you think? I think Bombardier signed a contract it couldn't fulfill and is now trying to get out of it's end of the bargain.

I remember reading years ago about the contract Bombardier signed with Amtrak and thought "wow, that's tough, but I guess Bombardier feels they can do it."

Now they seem to be backing out....