Gov. Wilson Must Act to Salvage Costly Rail Car Project : Morrison Knudsen Corp. has failed to deliver on a $215-million contract. The regional rail authority should be authorized to rebid.

Caltrans has notified the Morrison Knudsen Corp. that it is in default of its $215-million contract to build the long-awaited and much publicized state-of-the-art passenger rail cars known as the California Car.

Although the move was designed to protect taxpayers from the weak contract negotiated in 1992 by the Wilson Administration should the struggling MK file for bankruptcy, it also was a declaration of failure and opportunity lost.

When the voters approved $2 billion in passenger rail bonds in 1990, $100 million was earmarked to build a generic passenger rail car. A common design would reduce costs and assure compatibility among systems statewide, and California would have an opportunity to encourage and showcase the development of a fledgling transportation industry.

Early in 1992, with great fanfare, Gov. Pete Wilson announced the award of a contract for California Cars to Morrison Knudsen.

The company had promised to create California jobs and help develop a transportation manufacturing industry. However, the contract included no requirement for new jobs to manufacture or assemble any of the rail cars in California. The aggressive schedule to deliver the cars was virtually unenforceable. And a payment plan was approved by Caltrans that put nearly $80 million in MK’s pockets before a single rail car was delivered. The taxpayers, not a bank, financed MK’s private business activities.

Twenty-four of the cars were to be built for Metrolink, to serve an increasing number of riders and to expand service throughout the San Fernando Valley and Southern California. These cars were scheduled to be here, carrying passengers, by yesterday. But we have seen delay after delay, excuse after excuse, concession after concession by Caltrans.

So there are no cars for Metrolink riders, and there won’t be for years to come--if they ever do. There are no new jobs in California, and there won’t be, since the rail car shells are being manufactured in Portugal and Brazil and are being assembled in New York. And after paying more than $100 million to MK, the state has received only a handful of intercity cars for Northern California.

Since the terms of the contract were released to the public only after it was signed in 1992, I’ve criticized, argued and done everything possible, including asking Gov. Wilson to force Caltrans to flex its weak contractual muscles, to hold MK accountable--with no response.

At a hearing of the Assembly Transportation Committee in February, shortly after Bill Agee was fired as MK’s chief executive officer, company officials confirmed that the company had critical financial problems. This prompted Caltrans to hire a bankruptcy attorney and declare MK in default of the contract. This was a legal move designed to let the state recover the money advanced to the company under the deal, should it seek bankruptcy protection.

Since 1992, when I raised red flags about this contract, what’s disturbed me most is that this tragedy was preventable. MK officials testified at the hearing that they knew on the day they signed the contract with Caltrans that they would never be able to meet the schedule to build and deliver the rail cars. Literally years will pass before Metrolink cars can be delivered.

Unfortunately, the train riders in Southern California, especially those in the San Fernando Valley, are suffering the most from this disastrous contract, which the state of California never should have signed. Since the Northridge earthquake, ridership on Metrolink has consistently risen. As more stations open, demand will continue to rise. Weekend service also is scheduled to start this summer, which will increase ridership even more.

During the peak commuting hours, Metrolink riders are already crowded. Without new passenger rail cars, it will only be a matter of time before overcrowding discourages those who are using mass transit. We need new cars, and MK can’t produce them.

It doesn’t take a rocket scientist to see that Gov. Wilson should immediately direct Caltrans to cancel MK’s contract based on its failure to perform and to authorize the Southern California Regional Rail Authority to rebid for the rail cars. Caltrans should be happy to pass the responsibility to the rail authority, and it’s time we put somebody in charge who cares about commuters, knows about passenger rail and has a real-world sense of urgency.

MK should be held accountable for the loss of use of the cars it was to provide and for the failure to produce the promised California jobs.

It’s a shame that a great opportunity, not to mention millions of taxpayer dollars, have been squandered. It will become a catastrophe unless Gov. Wilson bites the bullet and acknowledges the mess by acting to clean it up.