METRO Approves Parsons Contract to Build Rail Lines
Wednesday, March 04, 2009 5:36 PM
In a historic vote today, the METRO board approved a $1.46 billion contract with Parsons Transportation Group to build four light-rail lines in Houston.
"Today is obviously a very significant milestone," said David S. Wolff, METRO's chairman of the board. "Our objective is to improve transit in Houston, beginning with the 2003 referendum. We have now finalized a new contract with Parsons...We are doing our very best to bring first-class transit to this city."
Wolff called the contract "extremely innovative" and said it keeps METRO on budget for building four light-rail lines: North, East End, Southeast and Uptown.
The four lines will total 19.95 miles of light-rail at an average cost of $73 million per mile. At left, is a photo of the new rail cars METRO is ordering from CAF USA.
The initial phase of the contract calls for spending $632 million and is expected to create 25,000 jobs. Overall, 60,000 jobs will be created by the time the nearly 20 miles of rail are completed.
"This is a tremendous economic engine that creates jobs," said Frank J. Wilson, METRO's president and CEO.
The $632 million in the initial phase of the contract includes spending on the following:
- $90 million in utility work on the North and Southeast Corridors.
- $390 million in total costs for the East End, including an overpass at Harrisburg for light rail
- Construction of a Service and Inspection Facility
- 29 rail cars from CAF USA at a cost of $3.15 million/car. The Main St. Line will get 19 cars; East End, 10 cars.
- $3 million for final alignment and station configuration on the Uptown Corridor
The contract also specifies that 35 percent of eligible program contracts be directed to local small businesses. That amounts to $335 million of work.
Parsons will be responsible for designing, building, operating and maintaining the four new light-rail lines. 
The contract builds in many innovative features to protect METRO, including:
- The ability to contract out work where the price is disputed.
- Advancing the work in phases, known as "multiple notices to proceed."
"It was important to get this capability and still be able to hold the price," explained Wilson in his presentation to the board. "We can change the contract and amend it to reflect the needs of the financial marketplace."
- Off ramps for cause/convenience, so if the worse-case scenario happens with Parsons, METRO can end the contract by paying a modest de-mobilization fee with no profit for Parsons.
- Incentives ($50 million) to meet certain goals and penalties ($40 million) if those goals aren't met.
"We think that's a good way to keep them focused and get the kind of product we want," said Wilson.
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