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Calif. company defaults on Port Authority contract
Saturday, January 19, 2002 By Joe Grata, Post-Gazette Staff Writer
A San Francisco-based company has declared bankruptcy and defaulted on a $7.6 million contract to design, deliver and install a signal and communications system for the light-rail operations and control center next to South Hills Village.
As a result, the Port Authority board's engineering-construction committee has recommended the contract be awarded to a Pittsburgh-based company, Union Switch & Signal, which unsuccessfully sought the work in the first place and which has a contract for another piece of the project.
Authority Chief Executive Officer Paul Skoutelas said yesterday the change in companies doesn't change the late 2003 target date for retrofitting the existing line with modern equipment or opening the reconstructed Overbrook route known as "Stage II."
"Having one company should be a benefit," he said. "It will help us make up lost time in the schedule. And we should have fewer concerns with interface issues," which can occur when different firms supply and install a sophisticated rail signal and communications system.
A year after the Port Authority awarded the $7.6 million contract to HSQ of San Francisco to prepare the control center, it awarded a $43.8 million contract to Union Switch & Signal to do work along the tracks and in light-rail cars.
Union Switch & Signal tried to win the first contract, too, but it bid almost twice as much as HSQ.
HSQ didn't start the work on time, fell more than a year behind schedule and failed to meet other deadlines and design requirements. HSQ and its parent company, Railworks, filed for Chapter 11 bankruptcy last September.
In order to change the HSQ contract to Union Switch & Signal, the Port Authority had to win approval from U.S. Bankruptcy Court.
The authority also will have to dig deeper; the contract will now cost $13.3 million.
Attorney Dennis Veraldi of Eckert Seamans Cherin & Mellott, chief legal counsel to the board, said the authority hopes to collect $3.8 million from the insurance company that provided HSQ's performance bond as part of the contract and likely will file claims against HSQ in bankruptcy court, too.
Veraldi said the problems with HSQ will add at least $1.9 million in extra costs to finish the work at the operations and control center.
In other business, authority board committees authorized using eminent domain to acquire 1.55 acres of property along Route 50 near the intersection of Thoms Run Road, Collier, to build a 136-space park-and-ride lot in the future.
The owners, Route 50 Convenience Limited Partnership, have turned down the authority's $210,000 sale offer.
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