Management & Operations

Bombardier-Fluor team wins rail bid

Posted on January 1, 2004

The Florida High Speed Rail Authority (FHSRA) has selected the team of Bombardier Transportation and the Fluor Corp. as its preferred bidder to design, build, operate, maintain and finance the first phase of the state’s high-speed rail network connecting Orlando and Tampa. The Bombardier-Fluor bid is a 50/50 joint venture, with Bombardier providing the trainset technology and Fluor providing its infrastructure development, management and financial expertise. According to Lecia Stewart, vice president of high-speed rail for Bombardier, the contract is worth $4.3 billion over 30 years. “The capital value is $2.6 billion and the value of the long-term contract for operations and maintenance is worth $1.7 billion,” she said. “That’s a huge contract.” For the project, Bombardier hopes to use its JetTrain, which is powered by a turbine diesel engine and can reach speeds of 150 mph. This option has at least one key advantage over electrification. “If you were to electrify that corridor, you add about $250 million to the cost,” Stewart said. “And it doesn’t produce any higher speeds for you.” Even if speeds above 150 mph could be obtained through electrification, it would cut only a few minutes from the trip, she added. However, the FHSRA was still considering an electrified rail system as it entered negotiations with Bombardier and Fluor. One board member said he was concerned about the environmental impact of the JetTrain’s diesel engine in terms of noise and emissions. Stewart said Bombardier, which manufactures high-speed electric trains for use in Europe and the Northeast Corridor in the U.S., has alternative proposals in the event that the authority wants to pursue electric trains. One of the options is double tracking the system and putting in the foundations for electrification. “In the event that the Miami-Orlando portion is approved at a later time, you would maybe benefit from the higher speeds [provided by an electric train],” Stewart said. The Bombardier-Fluor bid won out over the Global Rail Consortium, a South Korean-based partnership of nearly 30 companies. The consortium filed a formal protest about three weeks after the announcement was made in late October. Global representatives contend that “biased staff analysis” by the FHSRA led to an erroneous decision. “These are often anticipated actions, and the reality is that negotiations are underway between ourselves and the Florida High Speed Rail Authority,” Stewart said, adding that the first negotiating session went “very well.” Stewart believes the strength of the Bombardier-Fluor team’s financial plan may have tipped the scales in its favor. “It calls for the state of Florida to appropriate $75 million per year,” she explained. “But the net cost is really only $46 million because of the operating revenue returned to the state. So it’s a very innovative approach to the financing, development and operation of a high-speed system.” If the authority and the Bombardier-Fluor team reach a contract agreement by May 1, 2004, revenue service is expected to begin in December 2009. Estimated ridership is 4 million per year in 2012. Based on the fare schedule contained within the plan, one-way fares would be $35 to $40. Regular riders could qualify for a $16 one-way fare. Although Florida Gov. Jeb Bush and other state officials have opposed the high-speed rail project, Stewart said the Bombardier-Fluor plan addresses their concerns. “The No. 1 issue was at no time did they want the state on the hook for subsidizing operations, and our proposal has the private sector taking that risk,” she said. “They wanted to see real equity in the deal, and we have that.”

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