Despite ‘Chronic Quality Issues’ MBTA to Waive Penalties and Pay $148 Million More to Chinese Train Manufacturer

An MBTA Orange Line train stopped in Boston's Chinatown Station on March 8, 2022. Learner Liu/The Epoch Times

The Massachusetts Rapid Transit Authority (MBTA) previously criticized China’s state-owned train manufacturer CRRC for producing subway cars of poor quality and repeatedly delaying deliveries. Now, the MBTA has not only dropped its contractual claims against CRRC but also intended to make an additional payment of up to $148 million to cover rising costs caused by the pandemic and supply chain problems.

Under the contract signed in 2014, CRRC’s facility in Springfield, Massachusetts, was to build 152 Orange Line subway cars and 252 Red Line cars for the MBTA.

The delivery date for the Orange Line cars was scheduled for early 2022, and the delivery date for the Red Line cars was scheduled for summer 2023. Under the original contract, CRRC could be fined $500 for each day each car is delayed if CRRC caused the delay.

MBTA to Increase Payments to CRRC

At the end of 2022, the MBTA sent a letter to CRRC accusing it of poor product quality and delays in deliveries.

“Given the breadth, number and age of chronic quality issues that have remained unresolved, it becomes abundantly clear that CRRC MA’s Management has completely abandoned its core responsibility and commitment to lead, monitor, mentor, and support quality management … functions within CRRC MA,” MBTA Deputy Director Mark DeVitto wrote in the letter.

The letter listed 16 specific complaints, including “chronic workmanship quality issues with electrical assembly work, wire crimping, wire terminations, etc.,” and “failure to manage handling, maintenance, and storage requirements for critical equipment (gear units) in accordance with the manufacturer’s instructions.”

However, after a year-long review, the MBTA’s advisory board has recommended continuing to work with CRRC and revised delivery schedules.

At the March 28 board meeting, MBTA management updated the board on plans to renew the contract with CRRC, and CRRC executives, who were also in attendance, discussed their ideas for improving the manufacturing process.

According to the revised terms, the MBTA is set to cover up to an additional $148 million to mitigate extra expenses arising from the COVID-19 pandemic and supply chain issues, increasing the overall contract’s worth to over $1 billion.

The agency also agreed to waive about $90 million in penalties it had planned to charge the Chinese manufacturer for past delays. Another $37 million in damages would remain, but the updated contract would provide incentives that could effectively offset those charges if CRRC meets new targets.

Should the contract revision receive approval, CRRC is obligated to fulfill new delivery timelines, ensuring all Orange Line vehicles are supplied by September 2025 and all Red Line vehicles by the close of 2027, in both cases a delay of several years beyond the initially set deadlines.

“A new procurement was going to take up to five years before the MBTA actually received a first vehicle, and each vehicle could be potentially $1 million more per car than a negotiation with CRRC,” Jeff Gonneville, MBTA Deputy General Manager, told board members.

At the meeting, CRRC’s Massachusetts executive, Wang Zhaofu, promised the MBTA board that his company would improve production efficiency and quality assurance to get delivery back on track.

“To meet the new production schedule, we recognized our plan needed to include optimization of our production processes, enhanced production training including timely assessment of worker efficiency, an increase to the number of second-shift production workers and weekend production, and support department workers,” Mr. Wang said through an interpreter.

CRRC Trains Repeated Safety Incidents

Since their test run in August 2019, the new CRRC-built cars have experienced numerous failures, including doors suddenly opening while the train is in motion, derailed trains, and faulty brake components, among others. These failures have often resulted in the MBTA withdrawing all new cars for inspection.

For example, on Sept. 20, 2019, just six days after a new train was placed on the tracks, an automatic door on one of the cars suddenly opened during operation, triggering an automatic stop of that train. The new train was immediately withdrawn to replace the door component. Then, on May 19, 2022, a brake component failure on a new Orange Line car also caused the MBTA to stop all new trains.

CRRC was the lowest bidder when the parties signed the contract in 2014. The Massachusetts State House News Service reported at the time that one of the bidders, Hyundai Rotem, was skeptical of the fairness of the bidding process because then-Governor Deval Patrick and his transportation secretary met with CRRC representatives during the bidding process, while the Patrick Administration insisted that no details of the train purchase were discussed at the meeting.