Bombardier out of running for New York subway contract

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Bombardier Inc. has been dropped from the bidding to supply a new fleet of subway cars for New York's Metropolitan Transit Authority in a setback for its North America rail business after winning a string of foreign orders this year.

"We are extremely disappointed as we spent considerable time developing an innovative solution that included world-class subway cars, an attractive delivery schedule, a competitive price, and the creation of U.S. jobs, many in New York State," Bombardier spokesman Eric Prud'Homme said in a statement on Tuesday.

Mr. Prud'Homme declined to discuss the reasons why Bombardier's bid was dismissed from the process. The contract is for the supply of up to 1,175 subway cars worth an estimated $3.2-billion (U.S.), with options on another roughly 500 cars.

Read more: Bombardier employee pleads innocent in bribery allegations

Bombardier is trying to get its rail unit back on track in North America after encountering trouble delivering on key contracts, notably the Toronto Transit Commission's streetcar order.

In April, 2016, it hired Benoît Brossoit, a senior executive from United Technologies Corp., to improve the unit's performance and competitiveness on the continent.

In a recent memo to Bombardier staff, Mr. Brossoit said the company's "poor performance and serious delays" on a separate New York subway contract sealed its fate on the larger deal, according to a report in Le Journal de Montréal.

Bombardier is between 12 and 24 months behind schedule in delivering 300 subway cars for another section of the city's subway system.

"Our actions exacerbated an already difficult transit situation in New York, and our client's decision shows that the market is no longer disposed to accept delays in performance and be impacted by our shortcomings," Mr. Brossoit was quoted as saying in the employee memo. "It's crucial that we re-establish our credibility."

New York's subway system is more than 100 years old and has plunged into "disarray," according to The New York Times.

Trains are unreliable and rush-hour malfunctions paralyze the city, the newspaper said of the situation in a recent report.

State Governor Andrew Cuomo in June signed an executive order declaring a state of emergency for the system and pledged $1-billion for improvements.

New York's decision to dismiss Bombardier's bid is significant because the Quebec manufacturer has a 35-year relationship with the transit agency. Bombardier has built, and is currently building, a combined total of some 2,000 subway cars for the city.

Kevin Ortiz, spokesman for the Metropolitan Transit Authority, declined to comment.

The decision comes at a time Bombardier's rail unit, known as Bombardier Transportation, is showing strong results financially, with both profit and revenue growing in its most recent quarter.

Bombardier Transportation has won several big rail equipment orders this year, notably in France, Britain and Malaysia. The train unit had an order backlog worth $32.7-billion at the end of June, 9 per cent higher than at the end of December last year.

The company is trying to win more rail signalling, systems and services contracts as a proportion of its overall business, which have higher profit margins than so-called rolling stock (the actual train cars). It remains hopeful that it will win other commercial work to help modernize New York's subway system.

Bombardier Transportation's office in Sweden is at the centre of a bribery investigation by that country's police that has resulted in charges against one Bombardier employee.

That employee, Evgeny Pavlov, on Tuesday entered a not-guilty plea as the prosecution began rolling out a case that alleges collusion with officials in Azerbaijan and side payments to a mysterious company controlled by associates of former Russian Railways boss Vladimir Yakunin.

Bombardier shares fell almost 2.8 per cent in Toronto trading Tuesday, to $2.46.