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SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY

BOARD OF DIRECTORSSPECIAL MEETING

JULY 10, 2009

Los Angeles County Metropolitan Transportation Authority

Orange County Tranportation Authority

Riverside County Transportation Commssion

San Bernardino Associated Governents

Venhtra County Transportation Commssion

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BOARD ROSTERSOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY

Cou ntv Member Alternate

Ventura: Keith Millhouse (Chair) Brian HumphreyCouncil Member Commission Member

1 vote City of Moorpark VCTC

Los Angeles: Richard Katz (Vice-Chair) Jaime de la Vega4 votes Member, Deputy Mayor,

Metro Board of Directors City of Los AngelesCity of Los AngelesMayor Appointee

Michael Antonovich Robert T. BartlettSupervisor, 5th District Appointed by MetroCounty of Los Angeles

Don Knabe Beatrice ProoSupervisor, 4th District Appointed by MetroCounty of Los Angeles

Ara Najarian Maureen MichelineCouncil Member Transportation DeputyCity of Glendale Metro

San Bernardino: Paul Eaton Patricia Gilbreath*2 votes Mayor Mayor Pro T em

City of Montclair City of Redlands

Patrick Morris Diane Wiliams*Mayor Council MemberCity of San Bernardino City of Rancho Cucamonga

700 South Flower Street, 26th Floor, Los Angeles, California 90017-4101

*Alternates represent either member

Revised 1/09

Page 2

County Member Alternate

Orange: Art Brown Patricia Bates*Council Member Supervisor, 5th District

2 votes City of Buena Park County of Orange

Richard Dixon

Council MemberCity of Lake Forest

Riverside: Ron Roberts Robin Lowe*Council Member Council Member

2 votes City of Temecula City of Hemet

Daryl Busch Greg Pettis*Mayor Council MemberCity of Perris Cathedral City

EX-OFFICIO MEMBERS

Southern California Association of Governments:

Paul GlaabCouncil MemberCity of Laguna Niguel

San Diego Association of Governments:

rCURRENTL Y AWAITING APPOINTMENT)

Contact:Linda CulpSenior Transportation Planner

State of California:

Dale E. BonnerSecretary of Business, Transportation and Housing Agency

Alternate:Doug Failng, DirectorCaltrans - District 7

*Alternates represent either member

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SCRRA BOARD OF DIRECTORS SPECIAL MEETINGFRIDAY, JULY 10, 2009 - 10:00A.M.SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS (SCAG)818 WEST SEVENTH STREET, 12th FLOORSAN BERNARDINO CONFERENCE ROOMLOS ANGELES, CALIFORNIA 90017

AGENDA DESCRIPTIONSThe agenda descriptions are intended to give notice to members of the public of a briefgeneral description of items of business to be transacted or discussed. The posting of therecommended actions does not indicate what action will be taken. The Authority may takeany action that it deems to be appropriate on the agenda item and is not limited in any wayby the notice of the recommended action.

Southern California Regional Rail Authority Consent Calendar Matters to be approved in onemotion unless a Board Member requests separate action which it deems to be appropriate onthe agenda item and is not limited in any way by the notice of the recommended action. TheChairman reserves the right to discuss the items listed on the agenda in any order.

A person with a disability may contact the Board Secretary's office at (213) 452-0245 or viaemail yerooC£scrra.net at least 24-hours before the scheduled meeting to request receipt ofan agenda in an alternative format or to request disability-related accommodations,

including auxiliary aids or services, in order to participate in the public meeting. Laterrequests will be accommodated to the extent feasible.

SUPPORTING DOCUMENTATIONThe agenda, staff reports and supportin~ documentation are available from the BoardSecretary, located at 700 S. Flower, 26 Floor, Los Angeles, CA 90017, and on theMetrolink website at ww.metrolinktrains.com under the Board Agenda link.

PUBLIC COMMENTS ON AGENDA ITEMSMembers of the public wishing to address the Board of Directors regarding any itemappearing on the agenda, may do so by completing a Speaker's Form and submitting it tothe Board Secretary. Speakers will be recognized by the Chairman at the time the agendaitem is to be considered. When addressing the Board, please state your name for therecord. Please address the Board as a whole through the Chair. Please note comments toindividual Board members or staff are not permitted when addressing the Board. Aspeaker's comments shall be limited to three (3) minutes.

PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDAMembers of the public wishing to address the Board of Directors regarding any item not onthe agenda, but within the subject matter jurisdiction of the Board, wil be taken under Item3 (Public Comment), and will be subject to the same guidelines as noted above.


Special Board Meeting - AgendaTransmittal Date: July 7, 2009Page 2

Meeting Date: July 10, 2009

1. Call to Order

2. Pledge of Allegiance

3. Public Comment

REGULAR CALENDAR

4. Fiscal Year 2009-10 (FY10) SCRRA Budget UpdateThe Board, at its meeting of June 26, adopted the FY10 SCRRA Budget. There is a FY10 budget shortall projection arising from information received after budget actions bythe Member Agencies and the Authority, which require further budget recommendationsand actions. One component of shortall is the cost arising from the plannedtransitioning Train and Engine Crews from the current contractor to SCRRA employees.Another component discussed at the June 12, 2009 meeting is the greater thanexpected increase in the costs of insurance for FY10. The Board instructed staff onJune 26th to return to the Board with a strategy to address these projected costs in theFY 10 budget. There is no staff recommendation. The Board may receive and file thisupdate report. Staff will return to the July 24th meeting of the Board after consultationswith the Member Agencies and make a recommendation as to how to address theanticipated FY10 Budget shortall.Contact/Presenter: Drew Philips (213) 452-0297 Page 1

5. Contract No. H1635-09 - Orange County Communication Signals, Equipment andMaterial Recommendation to Deny Protest By Rail Signal Systems Corporationand Make Final Contract Award to RCL Wiring, LPSpecialized rail equipment including communication signals, equipment and material, isrequired for the Orange County Metrolink Service Expansion Project. As requested bythe Board and in accordance with the Authority's Protest Policy, the Chief ExecutiveOfficer (CEO) is presenting his recommendation on the resolution of a protest filed byRail Signal Systems Corporation (RSS), the second ranked and higher cost proposer,who protested a recommendation to award this competitively negotiated contract to RCLWiring, LP (RCL), the highest scoring and lowest cost proposer. The Chief Executive

Officer recommends that the Board:1. Deny the protest filed by RSS and authorize the Chief Executive Officer to send

RSS a protest resolution letter setting forth the basis of such denial, and2. Authorize a final award of Contract No. H1635-09 to RCL for a contract funding

authorization not-to-exceed a lower maximum contract price of $34,596,102 for atwo and one half year contract, which reflects an amended contract scopeeliminating Item Number 137 for certain Fiber Optic Sonnet work from the ContractMaterial List in the Schedule of Quantities and Prices.

Contact/Presenter: David Solow (213) 452-0245 Page 4

6. Transition of Operator Services I Amtrak Follow-UpAt its meeting of June 26, 2009, as part of its action to in-source the operating services,the Board of Directors also invited Amtrak to follow-up on its letter to the Board bysubmitting one or more concepts relating to the future provision of train and enginecrew services, and potentially other services, by July 10, 2009. It is recommended



that the Board of Directors provide direction to staff depending upon the Amtraksubmissions/presentation as may be received prior to the Special Board meeting of July10 and any recommendations from the Chief Executive Officer.Contact/Presenter: David Solow (213) 452-0245 Page 20

7. Approve a Categorical Exemption and Acquisition of 2704 and 2710 N. Garey,

Pomona, CA, 91767 (3.25 acres of vacant land with one small metal building) for aCentralized Train Control and Operations Support FaciltyIt is recommended that the SCRRA Board:1. Find that proposed project at 2704 and 2710 North Garey is categorically exempt

from the California Environmental Quality Act for the reasons stated in the record

and this staff report.2. Approve the recommended acquisition and authorize the Chief Executive Officer to

take all steps necessary to implement this property acquisition, which includetheexecution of agreements for the purchase of both the real property and its priorentitlements, development plans and drawings for a not-to-exceed all inclusive costof $3,180,000. This cost includes the $2,800,000 real property acquisition price,$280,000 for prior entitlements, development plans and drawings, and not to exceed$100,000 in closing costs.

Contact/Presenter: Darrell Maxey (213) 452-0250 Page 22

8. Chief Executive Offcer's Report

· Agency Update

· Operations Update

9. Board Member Comments(Le., Announcements, Requests to Staff, Direction for Future Agenda Items)

CLOSED SESSION10. Closed Session

(a) CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION -Pursuant to subdivision (a) of Government Code Section 54956.9 -Litigation arising out of the January 26, 2005 derailment involving anautomobile, two Metrolink trains and a Union Pacific work train in the City ofGlendale, known as Glendale Metrolink Derailment Cases, which has beenconsolidated for liability purposes under the lead case of Tutino v. SCRRA,et al., Case No. BC 332426, in the Superior Court of California, County ofLos Angeles, and related actions, including a writ action in the State Courtof Appeal, Second Appellate District, Division 3 - Case No. B200777; LosAngeles County v. Southern California Regional Rail Authority dbaMetrolink, Case No. BC393817; Wachs v. Southern California Regional RailAuthority dba Metrolink, Case No. BC333942; Ormiston v. SouthernCalifornia Regional Rail Authority dba Metrolink, Case No. EC041817

(b) CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED and EXISTINGLITIGATION - Pursuant to Subdivision (a) and (b) of Government Code



Section 54956.9 - Anticipated and existing litigation arislng out of theSeptember 12, 2008 collsion between a Metrolink train and a Union Pacificfreight train on the Ventura County Line, near Chatsworth, CA, including butnot limited to:

Fravola v. SCRRA, Veolia Transportation Inc., Connex Railroad LLC, MTA -PC043734; Magdaleno v. SCRRA, et al- PC043703; Jeremy Schneider v.SCRRA, a public entity also known as Metrolink, Connex Railroad LLC, VeoliaTransportation, Inc.- BC405966; Carolyn Rambo v. SCRRA, a public entityalso known as Metrolink, Connex Railroad LLC, Veolia Transportation, Inc. -BC405967; Albert Cox and Marianne Cox v. SCRRA dba Metrolink, VeoliaEnvironment, SA, Veolia Transportation Services, Inc, a division of VeoliaEnvironment, dba Connex, Connex Railroad LLC. - BC406161; Steven Lindellv. SCRRA, Veolia, Connex, and MTA - PC044349; Doug Smith v. SCRRA dbaMetrolink - PC044535; Gracilda Tejero Tiu, Jay Tiu, Pomino D. Tejero, andVictoria R. Tejero v. SCRRA dba Metrolink, Veolia Transport Service Inc.,Connex Railroad LLC, Estate of Robert M. Sanchez - BC407455; Kong Chaoand Caryn Chao v. Veolia Transportation, Inc.; Connex Railroad, LLC; Estateof Robert M. Sanchez, deceased - BC400547; SCRRA v. Connex - CV08-06987; Michelle Baker, et al . v. SCRRA, MT A, Veolia, Connex, Mass, Herzog,Bombardier, UPRR - BC404544; Janice M. Kish, et al v. SCRRA, MTA, Veolia,Connex, Mass, Herzog, Bombardier, UPRR - BC404545

(c) CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED L1GITATION -Significant Exposure to Litigation Pursuant to Subdivision (b) of GovernmentCode Section 54956.9 - Contract No. H1635-09 Orange CountyCommunication Signals, Equipment and Materials Procurement

11. ADJOURNMENT

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TRANSMITTAL DATE: July 7,2009

MEETING DATE: July 10, 2009 ITEM 4

TO: Board of Directors

FROM: Chief Executive Officer

SUBJECT: Fiscal Year 2009-10 (FY10) SCRRA Budget Update

Issue

The Board, at its meeting of June 26, adopted the FY10 SCRRA Budget. There is a FY 10budget shortall projection arising from information received after budget actions by theMember Agencies and the Authority, which require further budget recommendations andactions. One component of shortall is the cost arising from the planned transitioning Trainand Engine Crews from the current contractor to SCRRA employees. Another componentdiscussed at the June 12, 2009 meeting is the greater than expected increase in the costsof insurance for FY10.

The Board instructed staff on June 26th to return to the Board with a strategy to addressthese projected costs in the FY 10 budget.

Recommendation

There is no staff recommendation. The Board may receive and file this update report.

Staff will return to the July 24th meeting of the Board after consultations with the MemberAgencies and make a recommendation as to how to address the anticipated FY10 Budgetshortall.

Backaround

Subsequent to the transmittal of the proposed FY10 Budget to the Member Agencies inMay, three cost items were identified, as well as a potential reduction of revenues that willhave an impact on the approved FY10 Budget.

The first, as indentified above, are the costs of the transitioning operating train crews fromthe current contractor to employees of the SCRRA. These costs are currently estimated tototal approximately just over $1 milion should the SCRRA Board ultimately make thedetermination to bring Train and Engine crews in house.

The second is the unexpectedly high costs of Operating Liability insurance premiums.Though the budget had already anticipated an increase of over 100% in these costs, stafflearned after the transmittal of the budget that actual premium costs would cost an


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FY2009-10 SCRRA Budget UpdateTransmittal Date: July 7, 2009Page 2

estimated additional $1 million. However, SCRRA's Risk Manager was able to negotiate a$300 thousand reduction in the brokerage fees related to placement of policies resulting ina net overrun to the budgeted value of approximately $762 thousand.


The third unexpected cost element increase of the budget was the receipt of theAssociation of American Railroads (AAR) index of railroad cost growth which is usedcontractually per the shared use agreements with the freight railroads to inflate anddetermine the reimbursement rates of operation over their territories, as well as theirreimbursement to SCRRA for operation over member owned rights-of-way. Similar innature to the consumer price index, this measure of cost growth in the railroad industrygrew an unprecedented 13.28%, by far the largest increase in its value since the agencybegan tracking this index in 1992. The budget had estimated an increase of approximately3.0%, the long run historic average. The estimated impact to the FY10 budget of thisindexed increase is $464 thousand.

Finally, again subsequent to the transmittal of the Preliminary FY10 Budget, April and Mayactual fare revenue receipts have shown a precipitous decline from levels otherwiseforecast. This has caused staff to re-evaluate the expected total revenue value within theFY10 budget. The current estimate of revenue reduction is $2.0 million.

The combined estimated impacts to the budget of the elements described above totalsapproximately $4.3 million as detailed below:

The first item on this list represents a one-time expenditure item attributable to FY10 only.

Potential Resolutions

With the impending dissolution of the Equipment SILO/L1LO transaction with Commercialand Industrial Bank of Canada (CIBC), staff has identified lease proceeds of approximately$5.5 milion that wil no longer be necessary to protect against the loss of equipment andthe subsequent reimbursement of lease identified stipulated loss value (SLV).

Staff intends to recommend, after completion of the lease termination agreement that aportion of those proceeds be applied to: 1) the one-time expense of crew transition costs,and 2) the unanticipated increase in the costs of operating liabilty premiums.

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FY2009-10 SCRRA Budget UpdateTransmittal Date: July 7, 2009Page 3


The value of these two elements totals $1.839 millon leaving an estimated budget gap of$2.549 millon.

Staff has further identified, over a broad range of line items, potential additional reductionsto the budget of approximately $1.1 milion. Potential reductions to the FY10 Budgetinclude: a planned reduction in overtime expenses for Signal and Communication

maintenance due to a restructuring in labor scheduling; a reduction to payments to VTMIfor lower than budgeted actual mobilization costs; planned under-runs to the train crew andequipment maintenance contracts in an effort to capture historic pattern of minor variancesto budget; and the implementation of an attrition management program to review eachagency vacancy on a case-by-case basis.

The actions listed above leave a resulting current variance to the budget of $1.449 millionin stil to be identified savings requirements.

Working with Member Agency representatives, staff intends to pursue a two part strategyto address the cost over-runs and potential revenue decreases outlined above.

The first component wil be to return to the Board at its meeting of July 24, 2009 torecommend and seek approval of a specific course of action(s) in order to address the costover-runs and reductions to budgeted expenses as outlined above.

The second element will be to return to the Board after revenue results of the first quarterare known (period ending September 30, 2009) to determine the degree to which apotential revenue under-run wil impact the FY10 Budget. At that time, Staff, working withthe Member Agencies, wil make further recommendations to reduce expenditures orincrease revenues to ensure a balanced FY10 budget through June 30, 2010.

Budaet Impact

There is no current budget impact as a result of the Board receiving this report.

Prepared by: Drew Phillips, Manager, Budget

DA ID OLOWChi f Executive Officer

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MEETING DATE: July 10, 2009 ITEMS



SUBJECT: Contract No. H1635-09 - Orange CountyCommunication Signals, Equipment and MaterialRecommendation to Deny Protest By Rail SignalSystems Corporation and Make Final Contract Award toRCL Wiring, LP

Issue

Specialized rail equipment including communication signals, equipment and material, isrequired for the Orange County Metrolink Service Expansion Project. As requested bythe Board and in accordance with the Authority's Protest Policy, the Chief ExecutiveOfficer (CEO) is presenting his recommendation on the resolution of a protest filed byRail Signal Systems Corporation (RSS), the second ranked and higher cost proposer,who protested a recommendation to award this competitively negotiated contract toRCL Wiring, LP (RCL), the highest scoring and lowest cost proposer.

Recommendation

The Chief Executive Officer recommends that the Board:

1) Deny the protest filed by RSS and authorize the Chief Executive Officer to sendRSS a protest resolution letter setting forth the basis of such denial, and

2) Authorize a final award of Contract No. H1635-09 to RCL for a contract funding

authorization not-to-exceed a lower maximum contract price of $34,596,102 for atwo and one half year contract, which reflects an amended contract scopeeliminating Item Number 137 for certain Fiber Optic Sonnet work from theContract Material List in the Schedule of Quantities and Prices.

Required Notice On Ex Parte Communications Applicable to Specialized RailEquipment Procurements Pursuant to the Competitive Negotiation Authorized byCalifornia Public Utilties Code §130238 and California Public Contract § 20216:


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Contract No. H1635-09 Communication Signals, Equipment and MaterialTransmittal Date: July 7,2009 Meeting Date: July 10, 2009Page 2

EX PARTE COMMUNICATIONS WITH CONTRACTORSPursuant to Chapter 5.0 entitled "Ex Parte Communications with Contractors" ofthe SCRRA Ethics Policy, when procurement is authorized under Section 130238of the Public Utilities Code staff must notify Board members/Alternates in boldtype of the following communication restriction:

"No Board Member/Alternate responsible for awarding a contractthat is subject to the competitive negotiation provisions of Section130238 of the Public Utilties Code shall engage in any ex partecommunication with a potential contractor or representative ofthat potential contractor except in writing and provided that thecommunication shall be made public."

Alternatives

The Board may sustain the protest filed by RSS and direct staff to conduct a newsolicitation and request new proposals.

Summary of Recommended Protest Findinas

The Authority received RSS' protest dated April 22, 2009 (Protest) for the award ofContract H 1635-09 to RCL. The CEO designated Patricia Kataura, theController/Treasurer for the Authority, as the Protest Officer for this matter. Mrs.

Kataura has reviewed the circumstances and facts surrounding the various issues setforth in the RSS Protest and supplemental briefings by RSS counsel, as well ascomments submitted in briefings by RCL counsel to the Protest. After reviewing theProtest and conferring with Mrs. Kataura and General Counsel for the Authority, theCEO is making the recommendation to the Board that the Protest be denied in itsentirety, and that a final award be made to RCL in the amount of $34,596,102.

The CEO's recommendation is based upon the following:A. Based on RSS' Protest grounds, its Protest is untimely, which is anindependent sufficient ground for deniaL.B. RSS' Protest should not be upheld because Contract H1635-09 is not a

public works contract for a work of improvement requiring a mandatory100% payment bond.

C. RCL's substitute security is sufficient, if not better, than a payment bond.It provides equal protection for material suppliers, and does not present agreater risk to the Authority.

D. RCL remains, after review of the Protest grounds, the highest scoring andlowest cost most advantageous proposer on this RFP.

The state law cioverninCl this neClotiated procurement authorizes the Authority to selectthe most advantaCleous proposer. Before reviewinCl the backClround of the procurement

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and the basis of recommendation on the Protest and final award, a summary followsbelow settinq forth the conclusion that RCL remains the most advantaqeous proposer:

As a result of the Protest filed by RSS, the Authority has again reviewed RSS' proposal,its technical qualifications, financial resources, and evaluation scores received underthe procurement process, and confirmed that RCL remains the highest scoring andlowest cost most advantageous proposer.

RCL was the lowest cost proposer initially by approximately $2.5 milion below RSS.Additionally, RCL's overall maximum price has been reduced by $143,551 as a result ofthe latest round of negotiations, from $35,822,369 to a new not-to-exceed negotiatedcontract price of $35,678,818. Further, as a result of the Authority eliminating Line ItemNumber 137, the new not to exceed contract value will be for $34,596,102.

RCL is also the highest scoring proposer when it comes to technical qualifications. Itwas the highest scoring proposer with an overall score of 39.9 in the technicalcategories covering experience relevant to this project. RSS on the other hand, scoreda technical score of 35, the minimum needed to have its cost proposal reviewed. RCLhas significant experience providing similar services to other railroads, including Class 1freight railroads. RCL has contracts with Union Pacific, CSX, and the BNSF providing abroad range of signal and communication equipment. Additionally, where RSS claimsto have assembled and wired 102 signal enclosures in the last three years, RCL hascompleted in excess of 1200. Authority staff has also confirmed that RCL'sperformance for other customers has been satisfactory, and that RCL has not defaultedunder any supply contract for signal materials and equipment.

The Protest Offcer for this matter, Patricia Kataura, the Controller/Treasurer for theAuthority, has also determined that RCL appears to have the financial capacity andstabilty to perform as required under the Contract. RCL maintains a substantialrevolving working capital credit line of $70,000,000 that is available to fund its entirecustomer accounts receivable and on-hand inventory. During 2008, the highest amountborrowed under the LOC was approximately 61 % or $43,000,000. RCL also maintainsapproximately $33,000,000 of materials on hand to ensure availability of materials tomeet customer requirements. This represents about 15% of the approximate

$225,000,000 of RCL's annual material shipments to customers.

Backaround

On May 16, 2008, the Board of Directors approved by more than the required two-thirdsvote, the use of the competitive negotiation procurement process for the RFP at issueas permitted for specialized rail equipment under Cal. Pub. Util. Code § 130238 andCal. Pub. Contract Code § 20216. The signal materials will be used by the Authority forthe Orange County Metrolink Service Expansion Project, where Metrolink service inOrange County wil be significantly expanded to ultimately provide 30 minute service. Asauthorized by the Board, the procurement of railway signal and communication

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Contract No. H1635-09 Communication Signals, Equipment and MaterialTransmittal Date: July 7, 2009 Meeting Date: July 10, 2009Page 4

equipment for the Orange County work is specialized and unique and warrants anegotiated procurement process allowed by the Authority's Procurement Policies andstate law.

On or about September 19, 2008, the Authority posted and advertised a Request forProposal H1635-09 for Communications, Signals Equipment and Material (RFP) on theMetrolink website and advertised the RFP in several regional publications. Threecompanies, Balfour Beatty, RCL, and RSS, submitted proposals on or before theNovember 14, 2008 deadline for submission of proposals.

The RFP sought proposals from vendors for the supply of communications, signalsequipment, and materials that would be incorporated into the Metrolink Commuter RailSystem by the Authority's installation contractors who were already under contract tothe Authority. Specifically, the scope of work covered by the RFP included, but is notlimited to, assembly, wiring, and factory testing of signal instrument shelters at a faciltyapproved by the Authority (independent of the faciliy provided by the Authority forwarehousing of materials) in accordance with provided drawings, and maintenance ofinventory and of the warehouse facility in accordance with OSHA and accepted codes.

After evaluation of both the technical and cost proposals, it was determined that RCLwas both the highest ranked and lowest cost proposer. The technical and cost scoresfor RCL, RSS, and Balfour Beatty, were as follows:

Firm Technical Cost TotalRCL Wiring, LP 39.9 49.1 89Rail Signal Systems Corcoration 35 44.8 79.8Balfour Beatty Rail, Inc. 25.5 Not scored

At the time the proposals were submitted, RCL was the lowest cost proposer byapproximately $2.5 million with a cost proposal of $35,822,468.96, and was the highestscoring proposer with an overall score of 39.9 in the technical categories covering

experience relevant to this project. RCL's proposal was less than 10% higher than theEngineer's Estimate of $33,808,068.00. RCL's material prices were determined to befair and reasonable and in accordance with current market prices.

RSS on the other hand, was given a technical score of 35, the minimum needed to haveits cost proposal reviewed, and presented a cost proposal for $38,311 ,798.31.

On January 27, 2009, the Staff recommended that the Authority's Board of Directors(the "Board") authorize the Chief Executive Officer to award the Contract to RCL with acontract funding authorization not to exceed $35,822,369 for a two and one half yearperiod. On January 31, 2009, the Board voted to accept the Stafls recommendation.

Subsequently, RCL was notified of the Authority's intent to award.

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RCL satisfied all stated requirements for acceptance with the exception of theperformance and payment bond requirements. RCL reported that due to changed andchallenging market conditions that evolved over the solicitation period with the collapseof the financial markets, it could not obtain the payment and performance bonding. RCLnotified the Authority of its difficulties in obtaining such bonding, which was required tobe obtained only after notice of intent to award. Balancing the relevant interests, and toinvestigate the possibility of re-negotiated terms for alternative forms of security with thehighest scoring and lowest cost proposer, staff entered into new negotiations with RCLwhich resulted in substitute performance security provisions that were acceptable to theAuthority staff. The negotiated and recommended replacement performance securityfor the bonding provisions included a number of terms that will secure the performanceof the contract and protect the project should there be a default by RCL. Thereplacement performance security is comprised of the following:

1. An irrevocable letter of credit for the entire contract term for $2 million.2. Assignment of obligations to JM Fiber Optics, Inc., a locally based

subcontractor on the contract, that will perform under the contract shouldRCL default and SCRRA request this substitute performance.

3. Price / supply guarantees by RCL's Suppliers / Subcontractors to supply

and not increase unit prices of component parts to SCRRA or any otherparty assuming RCL's obligations under the Agreement, should RCLdefault.

4. RCL wil secure lien waivers from its Suppliers / Subcontractors to obtainclear title for material delivered and paid for during the performance of thisAgreement.

5. . 90 day retainage rights by SCRRA of 10 percent for each monthly invoice

biled during the entire term of the Agreement.

RCL's overall maximum price was also reduced by $143,551 as a result of thesenegotiations on substitute security, from $35,822,369 to a new not-to-exceed negotiatedcontract price of $35,678,818.

On April 8, 2009, the Authority issued a public notice of its intent to reaffirm the award ofthe Contract to RCL with the proposed modifications to the performance securityprovisions. Thereafter, Staff returned to the Board to advise it of the additionalnegotiations and recommended that the Board reaffirm the Board's action to authorizeaward to RCL. Prior to the stafls presentation of this item at the April 24, 2009 Boardmeeting, RSS submitted a formal bid protest on April 22, 2009, challenging theAuthority's modification of the bonding requirements provided for in the originalsolicitation documents, and appeared at the Board meeting with counsel on April 24,2009 and presented its position. The Board thereafter requested Staff to return at alater date, address the issues raised in the Protest and make recommendations on aProtest resolution, and if appropriate, potentially a recommendation on a final award,subject to the protesting party's right to be heard at the Board prior to any Board action.

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Recommended Protest Resolution

A. RSS' Protest Is Untimely

The Authority's Request for Proposal H1635-09 for Communications, SignalsEquipment and Material (RFP), provided for a materials contract procured under Cal.Pub. Util. Code § 130238 for the purchase of specialized rail signal equipment. Theterms and conditions of the RFP, including the Instructions to Proposers, SampleContract, and Technical Specifications, evidence that this is a procurement for

specialized rail signal equipment which will be installed by the Authority's previouslycontracted signal installation contractors. Indeed, RSS confirmed this sameunderstanding of the RFP when it noted the following on pages 4-5 of its submittedproposal in November 2008 to this RFP:

RSS is presenting this proposal as a prime contractor with supply ofmaterials through a vendor only relationship. ...The RFP H1635-09 is arequest to utilize the services of a signal and communications contractorthat is capable of being a conduit between the design of the SCRRAand the installation contractor. RSS believes the SCRRA is looking to

obtain the services of a contractor that has a strong history in theprocurement of materials and can aid the installation contractor intheir efforts. (Emphasis added.)

Yet, RSS disputes that the RFP is a materials contract, arguing instead that it is a publicworks contract for a work of improvement subject to a mandatory 100% payment bonddue to required installation work. RSS cannot characterize its protest grounds in such amanner as to avoid the fact that the Protest is indeed a substantive challenge to thecontents of the RFP (for example, the original requirement for a 25% payment bond andthe Authority's use of the word "installation" in Line Item Number 137 of the Schedule ofQuantities and Prices) and accordingly, is untimely.

Both the governing state law and the Authority's Protest Policy require a timely protestof any concerns based on the content of the RFP to be made before proposals aresubmitted. The Authority's Protest Policy (CON-17), Section 1.2, notes that for a protestto be considered, the submittal "(m)ust be submitted on a timely basis." 'Timely' isdefined in Section 2.0, which provides that "For protests associated with the content ofprocurements conducted under Cal. Pub. Uti i. Code §130238, a written document filedby the Protestor must be received by the Protest Officer within ten (10) calendar daysafter the request for proposal is first advertised."

Most significant to the analysis of whether RSS' protest is timely, is that the proposedcontract for this RFP called for a 25% payment bond of the total contract price. Yet, CalCiv Code § 3248 provides that a payment bond ".. .shall be in a sum not less than onehundred percent of the total amount payable by the terms of the contract." TheAuthority called for a 25% payment bond because it considered the bond requirement to

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Contract No. H1635-09 Communication Signals, Equipment and MaterialTransmittal Date: July 7,2009 Meeting Date: July 10,2009Page 7

be discretionary under a materials contract. In fact, the security provisions were re-negotiated and othersecuritywas substituted for the 25% payment bond term during thecompetitive negotiation process allowed under Cal. Pub. Uti i. Code § 130238 and Cal.Pub. Contract Code § 20216(g).

If RSS believed the RFP provided for a public works contract, then RSS should havechallenged the Authority's request of a payment bond that is less than 100% prior to thesubmission of proposals. RSS never raised this issue prior to the submission ofproposals and did not address in its Protest the fact that the Contract called for only a25% payment bond.

RSS also failed to bring any questions or concerns it had with the Authority's use of thewords "on-site installation" in Item Number 137 of the Schedule of Quantities and Pricesattached to the RFP. While the Authority disputes that the scope of work contemplatedby the Authority in this Item is for actual "installation" work-but rather technical andintegration support and services to the Authority's own signal installation andmaintenance contractors-if RSS believed that the Authority's use of the word"installation" in this Item evidences that the RFP is for a public contract for a work ofimprovement, this cannot be reconciled with the fact that the RFP called for only a 25%payment bond. Either the Authority was wrong in asking for only a 25% payment bondwhen the resulting contract was for a work of improvement due to required "installation"work in Item Number 137, or RSS was wrong to assume that this was a public contractfor a work of improvement. RSS should have sought clarification on the Authority's useof the word "installation" during the procurement process, but did not do so.

The time to challenge the contents and procurement method for this RFP ended onSeptember 29,2008, long before the Protest was submitted to the Authority on April 22,2009. The state law imposing this early deadline on protests on the content of the RFPdocuments is clear and is based on sound public policy. On this basis alone, theProtest is untimely and should be denied on this independent and sufficient ground.

B. The Protest Should Not Be Upheld Because Contract H1635-09 Is Not

a Public Works Contract For a Work of Improvement Requiring aMandatory 100% Payment Bond.

While the Protest is untimely and should be denied on this independent and sufficientground, as a courtesy, the Authority investigated, examined and evaluated the

remainder of RSS' Protest grounds, as follows below:

RSS Claim #1: "California law prohibits the award of the contract without apayment bond." 4/22/09 RSS Protest, pg. 5.

SCRRA Response: Contract H1635-09 is not a public works contract for a workof improvement. California law does not require a payment bond for non-public workcontracts. RSS' entire Protest is based on an erroneous assumption that the RFP at

10


issue must result in a contract for a work of improvement requiring a mandatory 100%payment bond. RSS takes the position that the RFP calls for the installation of signalequipment by RSS' proposed subcontractor, JM Fiber, to a work of improvement. Thisassumption is not correct, and is not supported by the contents of the RFP or anyapplicable case authority.

Cal. Pub. Util. Code § 130238(c)(6) provides that an award shall be made to thequalified proposer whose proposal wil be the most advantageous to the Authority withprice and all other factors considered. Cal. Civ. Code § 3247(a) provides that everyoriginal contractor awarded a contract by a public entity greater than $25,000 for anypublic work shall file a payment bond prior to commencing work on the project. For Cal.Civ. Code § 3247(a) to apply, the contract must be for a public work. Cal. Civ. Code §3100 defines "public work" as any work of improvement contracted for by a public entity.Under Cal Civ Code § 3106, a "work of improvement":

.. .includes but is not restricted to the construction, alteration, addition to,or repair, in whole or in part, of any building, wharf, bridge, ditch, flume,

aqueduct, well, tunnel, fence, machinery, railroad, or road, the seeding,sodding, or planting of any lot or tract of land for landscaping purposes,the filing, leveling, or grading of any lot or tract of land, the demolition ofbuildings, and the removal of buildings. Except as otherwise provided inthis title, 'work of improvement' means the entire structure or scheme ofimprovement as a whole.

As defined above, a "work of improvement" necessarily involves some type of physicalmodification to the property. Cal Civ Code § 3106 notes that a work of improvement

_ includes construction, alteration, addition to, or repair. A California Attorney GeneralOpinion supports this interpretation. Important to the Attorney General's analysis ofwhether a particular contract constituted a "work of improvement" under § 3106 waswhether the services made a "physical alteration to the land or its appurtenances" orinvolved the "physical work" of the contracting party. 63 Op. Att'y Gen. 501, OpinionNo. 80-213 (1980). In determining whether architects/engineers who enter intocontracts with the state to provide architectural/engineering services are required to filea payment bond pursuant to Cal. Civ. Code § 3247(a), the Attorney General noted that

A contract calling only for the preparation of plans and specifications, orfor consulting, and not involving any physical work on the project, isnot in our judgment, a work of improvement, and thus does not require theposting of a payment bond under section 3247. (Emphasis added).

After a thorough review of the RFP to ascertain the work contracted for under the RFP,the Authority has confirmed that the RFP does not call for any physical work to beperformed by RCL or its subcontractors that would be considered a work ofimprovement under California law.

11


1. The Board Items for this RFP, the RFP Documents, andResponses to Request for Clarifications Evidence that the Scope ofWork is for the Supply and Management of Signal Materials.

The voluminous RFP documents, including the cover page, Invitation to Propose Letter,Attachment A-1 / Scope of Services, the Technical Specification, and the SampleContract, do not require any installation work of the signal equipment to be done by thevendor. These documents evidence that the Contract at issue is for a vendor to delivermanufactured or "factory assembled" communication and signal materials equipment tothe Authority's warehouse in Anaheim, California. After the materials are delivered oraccepted by the Authority, the signal materials would be turned over to separate anddistinct previously contracted Authority "installation contractors" who would install thematerials and equipment into the field. RSS' proposed sub, JM Fiber, is not theinstallation contractor for the materials delivered under this Contract. The physical workof installation of these signal materials to the railroad is being performed by anotherSCRRA contractor.

Likewise, the related Board items for this RFP evidence this as welL. The May 12, 2008Board Report for this RFP identified that "evaluation criteria were developed to initiate acompetitive negotiation process to obtain needed rail signal equipment and material."The Board Report goes on to discuss that "After the signal equipment is manufactured,the Vendor must ship and deliver the signal equipment damage free, according to a pre-established schedule and sequence and 'just in time' so as not to delay any of theongoing signals and track installation work." No mention is made of the vendorperforming "physical work", i.e. installation work, on the railroad. Rather, the Board itemdistinguishes that the vendor will not be performing installation work, but will "beproviding engineering and technical support to Metrolink and its contractors during theequipment installation stage..." Other Board reports for this item contain similarlanguage.

A number of Responses to Request for Clarifications also confirm the Authority'sunderstanding and intent that the RFP was to cover the procurement of materials, andthat no installation work was to done on the railroad by the vendor. The Authority'sResponse No. 7 to Request for Approved Equal/Clarification No.4, Response No. 39 toRequest for Approved Equal/Clarification No. 26, Response No. 40 to Request forApproved Equal/Clarification No. 27, as well as Response No. 47 to Request forApproved Equal/Clarification No.6, and others, also confirm that no installation workwould be done by the vendor under this Contract, and that the vendor has noresponsibility for pre-assembled signal materials once it is delivered and released to theAuthority's installation contractor.

2. RSS' Protest Challenges RFP Language That is Less Than 3% of

the Entire Value of the Scope of Work. Further, JM Fiber is not theInstallation Contractor for the Fiber Optic Sonnet Equipment.

12


It is important to note that RSS points to only a minute fraction of the RFP in support ofits argument that the RFP contemplated a public works contract for a work ofimprovement. The RFP contains almost 1000 pages-the RFP document itselfencompasses 362 pages of text, 90 pages of Technical Specifications (Attachment A-2to RFP), 35 pages of the Schedule of Quantities and Prices (Attachment C to RFP) and677 sheets of technical drawings. The Schedule of Quantities and Prices includes aContract Material List with 147 items and is further broken down into 494 separateindividual line component parts. The Schedule of Quantities and Prices includes a UnitPrice Material List (UPM) with 161 separate line items for component parts. In total, theSchedule of Quantities and Prices contains approximately 650 separate lines of C&Smaterials and equipment on which the proposer was required to submit a price as partof its proposal.

RSS' Protest that this is a "work of improvement" is based on the language in two pagesof Fiber Optic Sonnet specifications of the 362 pages of RFP documents, and two linescontained on Line Item Number 137 of the Fiber Optic Sonnet bid items included in the650 lines of C&S parts in the Schedule of Quantities and Prices.

With respect to the Fiber Optic Sonnet Specifications 1.2 and 2.1 of Section 17202 asset forth in the Technical Specifications, RSS' understanding of the scope of work asdiscussed in its 5/4/09 Supplemental Response, is not accurate. Nowhere in thesesections does the Authority require the proposing vendor to be the installer of this signalequipment. Additionally, no where in these sections is the word installation used exceptin reference to the Authority's installation contractor, nor is installation workcontemplated by the vendor in these sections.

With respect to Line Item Number 137 of the C&S parts in the Schedule of Quantitiesand Prices, the Authority's use of the words "on-site installation" was not intended torequire the vendor or its subcontractor to perform signal "installation" work. Rather, theAuthority intended that the RFP require that the Fiber Optic Supplier (in RSS' case, itsproposed sub, JM Fiber), would provide on-site technical and "integration" support andtesting services to the Authority's C&S Installation and Maintenance contractors. Thesecurrent contractors are Mass Electric Company, and as of early 2009, Balfour Beatty.No on-site installation would occur through RSS' proposed sub, JM Fiber. This isconsistent with how the Authority has handled prior Fiber Optic installation and removalwork in the past. On similar ongoing Fiber Optic work for the Authority, the Authority'sinstallation and maintenance contactors are performing the C&S work, including all ofthe Fiber cable installation and termination work.

JM Fiber, as the proposed Fiber Optic supplier and integrator, is providing technical andtesting support and Fiber Optic Equipment "integration work". As explained by theAuthority's staff, Fiber Optic equipment "integration work" by JM Fiber is akin to an ITcomputer and softare technician making sure that when a new desktop computersystem is purchased and "set up", that the main computer, monitor, keyboard, printer,power strip, uninterrupted power supply and any accessories are all interconnected and

13


synchronized correctly and that the softare is loaded up, the clock and calendar are

accurate and the entire system is working properly. This integration and testing workdoes not fit the definition or historical practice of public works construction or any "workof improvement" contracted for in a public works contract.

Finally, the work under this Contract is being authorized by a Material Release Form.The Contract is set up in such a manner that all of the materials listed on the bidschedule and included in the technical specifications must first be requested via amaterial release, and accordingly, any item may be eliminated without penalty.

Accordingly, the recommendation in this Board item includes an action by the Authorityto remove Item Number 137 from this Contract to eliminate this issue raised by the useof the term "installation". While there is no merit to RSS' argument, the Authority will nothold up the award of this specialized rail signal materials contract based on this allegedambiguity. RCL's unit price for Item Number 137 is $792,472.80, and after adjusting forAllowance and Sales Tax, the Authority will deduct $1,082,716 from any possiblecontract award made to RCL. The new not to exceed contract value will be for$34,596,102.

3. The RFP and Proposed Contract Does Not Contain Typical Public

Works Contract Language and Terms.

In further support of the Authority's position that no installation work was contemplatedby the Authority under this RFP, it is also important to note what is not in the RFP thatsupports the Authority's position that no installation work on the railroad wascontemplated. Assuming that RSS is correct that this RFP contemplated installationwork that would be an addition or modification to the railroad, this RFP would havecontained a number of provisions related to that "physical work". Had the Authoritymeant this RFP to be a normal installation or construction type contract, the Authoritywould have included many provisions and related documents for working on therailroad, like Roadway Worker Protection Training, C&S Maintenance Manual Rulestraining, and Railroad Protective Insurance. Additionally, the Authority would haverequired a California contractor's license, which we are informed RSS does not have.The Authority's two signal installation contractors, Mass Electric Company and BalfourBeatty, have contractor's licenses. None of these provisions were included because theresulting contract was not for a work of improvement.

4. RSS' Cited Case Authority Is Inapplicable or DistinguishableFactually and Does Not Support that the Current RFPContemplates a Public Works Contract for a Work of Improvement.

As for the cited case authority in its 4/22/09 Protest and Supplemental Responses insupport of RSS' position that the RFP and resulting Contract is for a work ofimprovement, significantly, the case law presented by RSS does not discussprocurements done under Cal. Pub. Util. Code § 130238 and Cal. Pub. Contract Code §

14


20216(g). The cases are also inapplicable or otherwise distinguishable factually. TheAuthority's counsel has reviewed these cases, and could not agree that the cases couldreasonably support RSS' position. RCL's counsel alerted the Authority to this lack ofpersuasive support from the cited legal authorities as welL.

RSS Claim #2: "Under California law, a letter of credit may not besubstituted for a payment bond." 4/22/09 RSS Protest, pg. 8.

SCRRA Response: RCL's integration of materials pursuant to the specificationsprovided for in the Contract prior to delivering them to the Authority or its installationcontractor, does not constitute a "work of improvement" as defined by Cal. Civ. Code §3106. In that this is not a public works contract for a work of improvement, no

mandatory 100% payment bond is required. It is within the Authority's discretion tomodify its discretionary 25% payment bond in favor of other forms of security pursuantto Cal. Pub. Util. Code § 130238 and Cal. Pub. Contract Code § 20216(g). This issue issimilar to the arguments RSS raised in Claim #1, discussed above.

RSS Claim #3: "Competitive bidding laws would be violated by the waiver ofthe payment bond requirement." 5/4/09 RSS Supplemental Response, pg. 7.

SCRRA Response: No competitive bidding laws have been violated by theAuthority's substitution of the payment bond requirement with alternative forms ofsecurity. It is clear from this statement that RSS does not currently, and did not at thetime it submitted its proposal, understand the special procurement methods andstatutes used for this RFP. This RFP is not procured under the same rules as a publicworks or construction contract, but under special procurement rules reserved for transitand rail agencies. The Authority advised all proposers in the RFP that the solicitation isbeing conducted under Cal. Pub. Util. Code § 130238. Cal. Pub. Util. Code § 130238(a)states that:

The Legislature finds and declares that (1) because of the highlyspecialized and unique nature of all rail transit equipment, (2) because ofproducts and materials which are undergoing rapid technological changes,and (3) for the introduction of new technological changes into the

operations of the commission, it may be in the public interest to

consider, in addition to price, factors such as vendor financing,penormance reliabilty, standardization, Iifecycle costs, deliverytimetables, support logistics, and the broadest possible range ofcompeting products and materials available, fitness of purchase,manufacturer's warranty, and similar factors in the award ofcontracts for these vehicles and equipment. (Emphasis added.)

Cal. Pub. Uti i. Code § 130238(b)(6) goes on to further provide that "Award shall bemade to the qualified proposer whose proposal wil be most advantageous to the(commission)... with price and all other factors considered."

15


The Authority is expressly authorized under state law applicable to this procurement toexercise its discretion to negotiate terms, including performance or technical standardsand other criteria, to secure the most advantageous contract for the Authority. Cal. Pub.Contract Code § 20216(g) also states that:

For purposes of this section and Sections 20217,20229.1,20231.5, and20916.3 of this code and Sections 120224.4 and 130238 of the PublicUtilities Code, "competitive negotiation" means a procurement processused by an agency in lieu of a competitive sealed bid process whenconditions are not appropriate for the use of sealed bids, and that permitsthe consideration of price, technical experience, past penormance,management, or other factors in selecting the most cost-effectiveproposal for the manufacture and delivery of specified goods, transitvehicles, or equipment. (Emphasis added.)

While RSS takes issue with substitution of the bond requirement by the Authority withalternative forms of security after bid proposals have already been submitted, Cal. Pub.Contract Code § 20216(g) specifically allows the Authority to negotiate after thesubmission of proposals. This same section states that:

The process includes negotiations with manufacturers or providersafter the receipt of initial proposals during which penormance ortechnical standards and other criteria may be revised in order tosecure proposals most advantageous to the purchasing agency or tocure any deficiencies contained in the original proposals. (Emphasisadded.)

Under Cal. Pub. Contract Code § 20216(g), the Authority could negotiate with RCL afterthe receipt of initial proposals to secure the most advantageous proposal for theAuthority, and to cure any deficiencies contained in RCL's original proposaL. When theAuthority was informed that RCL could not secure the bonds requested in the Contract,staff negotiated with RCL to cure this deficiency so that it could secure the mostadvantageous proposal for the Authority. The Authority is expressly authorized to dothis under state law, and RSS has provided no legal authority to the contrary.

RSS Claim #4: "RCL has failed to disclose pending litigation potentiallyaffecting its financial condition." 4/22/09 RSS Protest, pg. 12.

SCRRA Response: Pursuant to requirements of the RFP, RCL was required to"List and disclose any bankruptcy, pending litigation, planned office closures or anyimpending mergers. Provide any additional information about the firm's financialcondition that may relate to its ability to complete the project." RCL was only required todisclose pending litigation involving RCL which was existing at the time the proposalwas submitted, and any additional information about RCL's financial condition that may

16


affect its ability to complete the project. RCL responded in its proposal that "There is nopending litigation against RCL." Based on RCL's Supplemental Response to RSS'claims, RCL's statement was appropriate. The two cases cited by RSS-RailroadControls L.P. v. New Orleans Gulf Coast Railroad, et al. and Automated Horn Systems,Inc. v. Railroad Controls, Ltd.-do not involve RCL, but Railroad Controls, and one casewas filed after RCL submitted its proposal. Add Section 3.0.

RSS Claim #5: "RSS is the only qualified proposer for this solicitation."4/22/09 RSS Protest, pg. 13.

SCRRA Response: While the Authority's evaluators gave RSS the minimumtechnical cutoff score of 35 points to have its cost proposal evaluated, RCL hasdisputed RSS' assertion that it meets the following evaluation criteria:

2. Demonstrted recent (last 3 year) of successfu experience 5assembling, wiring, factory testing, and shpping of at least 100signal enclosures for one or a combination of RF A reguated Class Ior Commuter Railroad on a "constained" delivery timetable.

The Authority is declining at this time to address this issue given that there a number ofother meritorious reasons to deny RSS' Protest. The Authority's decision to do sohowever, shall not be construed as an actual or implied waiver of the Authority's rightsand remedies under law and its Procurement Rules and Policies, all of which are herebyexpressly reserved.

RSS also seems to imply that the Authority is required to make an award to RSS in theevent it does not make an award to RCL. However, pursuant to Cal. Pub. Uti i. Code §130238(d) and the Authority's own procurement rules, it may, at its discretion "rejectany and all proposals and request new proposals." The Authority is not required toaward the Contract to RSS.

C. RCL's Substitute Security Is Sufficient, If Not Better, than a PaymentBond. It Provides Equal Protection For Material Suppliers, and DoesNot Present a Greater Risk to the Authority.

The negotiated and substituted security for the bonding provisions is sufficient, if notbetter, than any required payment bond based on the Authority's needs and interests.The $2 millon dollar irrevocable Letter of Credit to the Authority can be presented forpayment in the unlikely event of RCL' s default under the Contract. These funds wouldbe available to settle any unpaid claims by vendors of subcontractors who providedmaterials and equipment pursuant to the Contract. While RSS claims that $2 miliondollars is not sufficient to cover a $35,822,468.96 contract, RSS fails to note that theAuthority's monthly exposure will not exceed $2 milion to $3 milion monthly. The $2milion dollar Letter of Credit, in addition to retainage rights by the Authority of monthly

17


invoicing and mobilzation costs, is sufficient to cover the average monthly amount ofmaterial usage by the Authority.

RCL has also entered into an Assignment and Assumption Agreement with JM Fiber,RCL's proposed sub-contractor who will provide fiber optic materials and services underthe Contract. In the event of a default, RCL will assign to JM Fiber it's obligations underthe Contract upon the Authority's request. This agreement ensures that a supplier isavailable and willing to complete the Contract in the event of RCL's default, whether itbe through their own resources or by subcontracting out portions of the work. In light ofthe nature of the Orange County Metrolink Service Expansion Work, the Authority ismost concerned about an uninterrupted supply of signal materials. The assignment toJM Fiber ensures that another vendor could step in immediately in the event of a defaultby RCL. Without such an assignment, the Authority would be left to deal with a suretywho will need time to secure performance, which may cause an interruption to thesupply of materials. While RSS disputes that JM Fiber is an adequate vendor to replaceRCL, we find this statement lacks credibility because RSS also listed this same firm, JMFiber, as a proposed sub in its proposal submitted to the Authority for this RFP.

RCL has also provided the Authority with agreements between the principal suppliersand subcontractors representing more than 90% of the committed material costs,whereby the suppliers agree that any contracts entered into between RCL and thesuppliers for the purposes of providing RCL with the Contract materials will surviveshould RCL default on, or assign, the Contract. RCL will also deliver lien waiversevidencing payment to suppliers for materials invoiced to SCRRA. These lien waiverswill release supplier claims against the Contract materials prior to any payments madeby the Authority for these materials. These lien waivers wil eliminate the risk of supplierclaims against the Contract materials prior to payment by the Authority for the materials.

Finally, the Authority wil withhold ten percent of all invoice payments for ninety daysafter the due date. This wil accumulate in a short period of time to approximately

$300,000' of retainage withheld on the project through the project completion date.

These funds wil be available to offset any potential costs in the event of RCL's default.

The Authority has determined that this substitute security is sufficient to protect theAuthority and the supply of signal materials / equipment procured under this Contract.

D. RCL Remains the Highest Scoring and Lowest Cost MostAdvantageous Proposer on this RFP

In accordance with Cal. Pub. Util. Code § 130238(b)(6), "Award shall be made to thequalified proposer whose proposal will be most advantageous to the commission withprice and all other factors considered." As summarized above on page 3, RCL is theproposer most advantageous to the Authority, with price and all other factorsconsidered.

18

Contract No. H1635-09 Communication Signals, Equipment and MaterialTransmittal Date: July 7, 2009 Meeting Date: July 10,2009Page 16

Conclusion

For the reasons set forth above, the RSS Protest should be denied in its entirety asRSS has failed to demonstrate that this Protest is timely, or that on the merits, theAuthority should not award the Contract to RCL.

Budaet Impact

Communications and installation equipment and material wil be funded primarily withOrange County local funds but may also utilize a combination of other Federal andState funds.

A determination to adopt an alternative recommendation and re-solicit for proposals forthis materials contract will have an adverse budget and schedule impact, which is yetunquantified but could potentially be several million dollars, due to resultingconsequential delays to other awarded contracts, whose work may be impacted by anydelay in delivery and installation of specialized rail equipment and materials necessaryto complete the Orange County Metrolink Service Expansion Project.

Prepared by: Patricia Kataura, Controller/TreasurerDarrell J. Maxey, Director, Engineering & ConstructionBeverley Reiley, Senior Contract AdministratorRobert Ash, Manager, Contracts Administration & Procurement

DA I SLOWChi. Executive Officer

19

lelMETROLINKø



MEETING DATE: July 10, 2009 ITEM 6



SUBJECT: Transition of Operator Servicesl Amtrak Follow- Up

Issue

At its meeting of June 26, 2009, as part of its action to in-source the operating services,the Board of Directors also invited Amtrak to follow-up on its letter to the Board bysubmitting one or more concepts relating to the future provision of train and enginecrew services, and potentially other services, by July 10, 2009.

Recommendation

It is recommended that the Board of Directors provide direction to staff depending uponthe Amtrak submissions/presentation as may be received prior to the special Boardmeeting of July 10 and any recommendations from the Chief Executive Officer. .

Backaround

On June 26, 2009, the Board of Directors considered staff's recommendation to bringMetrolink's train and engine crews in-house at the expiration of the term of Contract No.OP123-05 with Connex Railroad LLC. This recommendation was made followingseveral months of evaluation of alternatives, one of which was to solicit proposals for asuccessor contract to the expiring Connex contract. For reasons more fully developed,in the staff report accompanying the June 26th recommendation, staff determined thatthere would be very few proposers who would be interested in providing train andengine crews and related management and supervision and could meet thequalifications likely to be required under a new competitive solicitation.

One such proposer could be the National Railroad Passenger Corporation (Amtrak).Previous discussions with Amtrak indicated that Amtrak would prefer to directly provideor to manage all of Metrolink's operating services (including train and engine crews,dispatching, maintenance of equipment, maintenance of track and structures, and signaland communications maintenance). Staff determined that this scenario would not be inSCRRA's best interests at this time.


Transition of Operator Services - Amtrak Follow-UpTransmittal Date: July 7,2009 Meeting Date: July 10, 2009Page 2

On June 25, the day prior to the Board's June 26 meeting, SCRRA received a letterfrom Joseph Boardman, President and Chief Executive Officer of Amtrak, reiteratingAmtrak's offer to "serve as an integrated operator and assign all current operations-related contracts to this entity for oversight and administration for the duration of theagreements." However, Mr. Boardman also indicated that "Amtrak is open toconsidering other partnership options, including serving as Metrolink's contractor fortransportation services," albeit under "different compensation and liability protectionterms than those acceptable to us as an integrated operator."

As a result of the receipt of this letter, the Board approved staff's recommendation tocommence activities required to bring the train and engine crews in-house, but alsoinvited Amtrak to make a more substantive submittal for the assumption of providingtrain and engine crews , and any scope that Amtrak may desire to make. The Board'sdeadline for the presentation is July 10, 2009.

As of this writing, Amtrak has not provided any specific information, although Amtrakwas provided with a copy of the current Connex contract and the budgetaryassumptions associated with the FY 09-10 budget immediately following the Boardmeeting of June 24th and a meeting between SCRRA and Amtrak staffs is scheduled forWednesday, July 8. At this point, a recommendation cannot be made. However, it isimportant to keep in mind the very short timeframe for the Board to make a finaldecision on alternatives to the provision of Metrolink train and engine crews, whichdrives the implementation timeline under any scenario.

At the Board meeting of July 10, staff wil provide an update to the Board on the resultsof the meeting on July 8, at which time the Board may provide direction as may beappropriate.

Budaet Impact

Staff has already provided an estimate of the budget impact of bringing Metrolink trainand engine crews in-house on July 1, 2010. It is not possible at this time to identify thebudget impact of any other scenario that Amtrak may contemplate.

Prep ed by: Steve Wylie, Assistant Executive Officer

DA D OLOWChi f Executive Officer

21

lêlMETROLINKø



MEETING DATE:

TO:

FROM:

SUBJECT:

July 10, 2009

Board of Directors

ITEM 7

Chief Executive Officer

Approve a Categorical Exemption and Acquisition of 2704and 2710 N. Garey, Pomona, CA, 91767 (3.25 acres ofvacant land with one small metal building) for a CentralizedTrain Control and Operations Support Facilty

Issue

Negotiations previously authorized by the Board for the purchase of one of the two

properties recommended as necessary for a new SCRRA centralized train control andoperations support facility are complete, and Board approval is required to complete theproperty acquisition at 2704 and 2710 North Garey from the property owner, GareyAvenue East, LLC, a private party.

Recommendation

It is recommended that the SCRRA Board:

1. Find that proposed project at 2704 and 2710 North Garey is categorically exemptfrom the California Environmental Quality Act for the reasons stated in the recordand this staff report.

2. Approve the recommended acquisition and authorize the Chief Executive Officer totake all steps necessary to implement this property acquisition, which include theexecution of agreements for the purchase of both the real property and its priorentitlements, development plans and drawings for a not-to-exceed all inclusive costof $3,180,000. This cost includes the $2,800,000 real property acquisition price,$280,000 for prior entitlements, development plans and drawings, and not toexceed $100,000 in closing costs.

Alternatives

The Board may:

1. Direct staff to continue searching for suitable properties that meet the required

criteria of the SCRRA; or

2. Continue negotiations with the property owner or with other property owners.


22

Categorical Exemption and Acquisition of 2704 & 2710 N. Garey, PomonaTransmittal Date: July 7, 2009 Meeting Date: July 10, 2009Page 2

Backaround

In 2007 and 2008, staff performed studies to determine the long term needs for SCRRAfacilties related to supporting its maintenance and operations support functions. Thesestudies determined that there were deficiencies in the size, space, condition, expansioncapabilities and geographic location of several existing faciliies. Furthermore thesestudies recommended that a faciliy improvement program be initiated to address thesedeficiencies and provide more suitable facilities with better provisions for long termexpansion and growth and changes in technology. The facilty studies also noted thatseveral existing SCRRA maintenance and operation support facilities were leased, and itwas desired to relocate out of leased facilities to reduce recurring long term operatingcosts and to allow for high value, specialized interior and exterior investments in traincontrol, security, IT and communication equipment that should not be installed in a leasedfacility. Finally the studies also noted that several SCRRA maintenance facilities werelocated on properties which were not compatible with the desired long term use.Accordingly, there was a strong desire to convert existing maintenance facilities to higherand better uses, i.e. convert maintenance equipment parking and storage near stations tostation parking or transit oriented developments.

The facility studies determined that two or more facilities, centrally located on SCRRA'sfive county member agency rail network were required. One of the two facilities (Facilty 1)was identified for maintenance support activities and the second (Facility 2) was identifiedfor train control and operations support. This staff report specifically addresses theacquisition of 3.25 acres at 2704 and 2710 North Garey for the Facility 2 train control andoperations support project. Negotiations to acquire a Facility 1 property are ongoing andindependent of the recommendations on this property recommendation for a Facility 2. Arecommendation wil be brought to the Board at a later date on a Facility 1 property.

As background, the criteria for the Facility 2 project are as follows:

Facilty 2- SCRRA Train Control and Operations Support Facilty (TCOSF):

1. A project site with adequate space to develop a custom designed 15,000 to 25,000square foot "secure and hardened" office type building and several smaller buildingsand shelters. This site to be located in a secure industrial, light manufacturing, oroffice park area.

2. The new TCOSF office building and project must be capable of accommodatingSCRRA's centralized command and control systems including 1) train control anddispatching, 2) new Positive Train Control (PTC) back office servers, 3) centralizedcommunication network control of SCRRA fiber, wireless and leasedcommunication networks and information technology (IT) systems. In addition thenew office building would be capable of housing administrative offices for operationsand security support personnel and would include meeting rooms, training rooms,and specialized space for locomotive engineer training simulators.

3. The project site must accommodate a 50 to 80 foot high wireless communicationstower within the site.

23

Categorical Exemption and Acquisition of 2704 & 2710 N. Garey, PomonaTransmittal Date: July 7,2009 Meeting Date: July 10, 2009Page 3

4. The project site must accommodate a highly redundant standby (backup) powersupply system and redundant communications systems.

5. The project site must provide ample parking (100 plus spaces) for employee andcompany equipment including parking space to accommodate meetings andtraining classes.

Both Facilties, 1 and 2:

1. Both project sites must be centrally located to the five County SCRRA system_andgood access to regional freeway system.

2. Both project sites must be adjacent to an SCRRA member owned rail corridor andreasonable (10 minute) walking distance from an SCRRA station. The rail corridorand station to be used for hands- on training exercises.

3. Both project sites must be adjacent or in close proximity to SCRRA's LA to Pomonafiber optic network backbone and major communication nodes.

4. Both project sites must be outside of relatively expensive and congested downtownareas.

5. Both project sites should be in close proximity to each other and in close proximity

to other existing SCRRA facilities to facilitate interaction, responsiveness, closecommunication and coordination among the various SCRRA functionaldepartments.

A site search was conducted in 2008 and early 2009 with the results that prospective sitesmeeting the criteria above were identified. The preferred sites were located in closeproximity to the existing North Pomona Station, and the Metrolink Operations Center andwere adjacent to the San Gabriel Subdivision and the Los Angeles to Pomona fiber opticnetwork backbone and communication nodes.

Location maps for the Facility 2 project site at 2704 and 2710 North Garey are attached.

An environmental consultant, Tom Dodson and Associates, was retained to assist with thestudies and analysis and in determining the appropriate environmental actions with regardto the acquisition of the properties and development of the two facility projects. The resultsof the analysis for Facilty 2, the Train Control and Operations Support facilty are

summarized below.

Environmental Analysis Background - Facilty 2, SCRRA Train Control andOperations Support Facilty (TCOSF)

The site being proposed for Facilty 2 TCOSF is an existing 3.25-acre parcel (approximate)of undeveloped land, with only one small metal building, located at 2704 and 2710 NorthGarey Avenue in the City of Pomona. In February, 2008, this property was previouslyapproved by the City for a two-story, 21,000 square foot professional building on the

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westerly half of the 3.25 acre property. The professional building was envisioned for

traditional office and medical office use. On the easterly half of the site, three adjacentwarehouse buildings totaling 28,424 square feet were approved. As presently entitled bythe property owner, the combined site provides approximately 165 parking spaces, 105 forthe previously planned office and 60 for the warehouses. Surrounding land uses includeindustrial to the west, south (including two SCRRA rail corridors with 5 tracks) and east,and multi-family residential to the north. The site is within a short 10 minute walk of theSCRRA Pomona Station and existing Pomona Metrolink Operations Center (MOC).Additionally the site is located adjacent to the SCRRA San Gabriel and PasadenaSubdivisions and a fiber optic backbone now under construction. A major SCRRAcommunication node, opposite the Pomona MOC is located approximately 1,500 to thewest and could be easily extended or relocated to the 2704 North Garey site. This site isalso located immediately adjacent to a property under consideration for Facilty 1 theCentral Maintenance warehouse and project.

The proposed SCRRA Facilty 2, TCOSFC project would include acquisition of the 2704and 2710 properties, construction of the these new SCRRA support facilties and use ofthe property

SCRRA would improve and use this site for a new 15,000 to 25,000 sq.ft. office structurewith administrative offices, classrooms and training spaces, backup or primary railnetwork dispatching work stations and backup or primary rooms for computer servicingdispatching, IT operations and communication facilities, including a 50 to 80 foot highwireless communication tower. A standby (backup) power generator system will beinstalled. Over hundred spaces for employee vehicle and company equipment parkingwould be provided. The proposed TCOSF project, including the new structures andsupport facilities, would be designed, permitted and buil on the subject property.

Environmental Analvsis

The proposed actions are a "project" for purposes of the California Environmental QualityAct (CEQA). Staff has reviewed the project to determine whether it falls within one of theCEQA exemptions. Categorical exemptions are identified in Section 15300 of the StateCEQA Guidelines as '~ list of classes of projects which have been determined not to havea signifcant effect on the environment and which shall, therefore, be exempt from theprovision of CEQA." Stafls review of the exemptions has concluded that this projectqualifies for the State CEQA Guidelines "Class 32 exemption" for infil developments (14California Code of Regulations 15332) for the reasons summarized here. In addition toSCRRA's independent analysis indicating that the project meets these exemption criteria,the reliance on this exemption is also supported by the fact that the City of Pomonadetermined that the same infill development exemption applied when the private property

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Categorical Exemption and Acquisition of 2704 & 2710 N. Garey, PomonaTransmittal Date: July 7,2009 Meeting Date: July 10,2009Page 5

owner's plans for development were approved. The City's prior exemption determinationsconcerning this site, which is wholly within the City of Pomona, are particularly relevantwith respect to its determinations on site characteristics and City general plan and zoningconsistency. The Class 32 exemption consists of "projects characterized as in-fildevelopment meeting the conditions described in this section.

(a) The project is consistent with the applicable general plan designation and all applicablegeneral plan policies as well as with applicable zoning designation and regulations.

(b) The proposed development occurs within city limits on a project site of no more thanfive acres substantially surrounded by urban uses.

(c) The project site has no value as habitat for endangered, rare or threatened species.

(d) Approval of the project would not result in any significant effects relating to traffic,noise, air quality or water qualiy.

(e) The site can be adequately served by all required utiliies and public services."

The proposed Facility 2 TCOSF project involves the acquisition and development of the2704 North Garey Avenue property to support uses that are compatible with the existingGeneral Plan Industrial (IND) designation and "Commercial Industrial" (C-IND) zonedesignation. The range of uses proposed by SCRRA includes administrative office uses,computer rail dispatch operations, training activities, communication facilities, including acommunication tower and installation of a standby (backup) power supply, employeevehicle and company equipment parking.

The criteria to be evaluated for the applicability of this exemption are those identified in thisInfil Development exemption category, which are set out here with facts showing theapplicabilty of the exemption to this project (Conditions a-e outlined above)

A. General Plan: The proposed project site is undeveloped and designated forIndustrial use on the General Plan and zoned Commercial Industrial (C-IND). TheCity of Pomona General Plan assigns the project site an Industrial use designation,which provides for "light manufacturing uses, research and development plants, andadministrative office buildings....." The site would be developed consistent with theCity of Pomona General Plan land use designation and Development Code

requirements. SCRRA plans to obtain permits from the City to operate at thislocation. SCRRA could construct an approximate 15,000 to 25,000 square footoffice structure on the site and approximately 28,000 square feet of other buildingsand structures to be fully consistent with the City's General Plan. Further, based ona recent meeting with the City, the site is considered generally suitable for the

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Categorical Exemption and Acquisition of 2704 & 2710 N. Garey, PomonaTransmittal Date: July 7, 2009 Meeting Date: July 10, 2009Page 6

administrative office uses, computer rail dispatch operations, employee andcompany equipment parking, warehouse storage and training activities.

B. Site Location and Size: The site is located within the City of Pomona and

encompasses approximately 3.25 acres. The site is surrounded by urban leveldevelopment on all four sides of the property.

C. Biolooical Resources: The property at 2704 and 2710 North Garey Avenue has

been graded and disturbed in the past by previous development. An inspection ofthe site revealed that it does not contain any native plant or animal habitat. This siteis occupied solely by ruderal, non-native weed plant species. This parcel of land isisolated from any native habitat and has no value for any state or federal listed plantor animal species. No habitat conservation or management plans encompass theproperty at 2704 North Garey Avenue.

D. Analysis for Any Sionificant Effects: Traffic Issues: The site previously has alreadybeen approved for office and warehouse uses and contains 165 parking spaces tosupport these land uses. The office, dispatch and training facility require fewerparking spaces, and installation of the proposed office and operations support useswould not cause significant effects on the local circulation system based on thereview of comparable uses conducted by the City of Pomona. Noise Issues: At the2704 North Garey Avenue property the existing noise environment is dominated byrail operations (immediately south of the property) and traffic on Garey Avenue(immediately adjacent to and west of the property) and Bonita Avenue (the nearesteast-west thoroughfare located about 200 feet to the north of the property). A multi-family residential development is located north of and adjacent to this project site. Aprofessional office and warehouse facility and related activities previously havebeen determined to not create a noise conflict with the adjacent multi-familyresidential uses. In fact, the proposed office and warehouse structures should

reduce some of the rail noise at the multi-family residences due to its locationbetween the two land uses. City General Plan and Development Code require anynoise sources to be controlled to a level that would not conflct with the adjacentmulti-family residential uses, No significant noise impacts with the adjacentresidential uses should occur from the types of uses envisioned for the property at2704 and 2710 North Garey Avenue. Air Quality: The proposed office andwarehouse uses do not include any stationary emission sources, except for thestandby power source (generator). Standby generators are operated only inemergencies and during periodic tests to verify operational readiness. Suchstandby power sources must be permitted by the South Coast Air QualityManagement District (SCAQMD) and must comply with emission limits and controlsin order to be permitted. Based on the analysis of available data, the SCRRA

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activities wil be transferred from other locations within the region and the proposedproject would not cause any significant effect on the air quality environment if theseoperations are shifted to this site. Water Quality: Mandatory City, state and

regional requirements to control runoff during construction and after occupancy wilensure that future storm water runoff water quality from the project site is notsignificantly degraded. With required implementation of best management practicesover both the short- and long-term (Storm Water Pollution Prevention Plan,SWPPP, and Standard Urban Stormwater Management Plan, SUSMP), waterquality discharged from the project site may actually improve relative to the existingcondition of the property.

E. Availabilty of Public Services and Utilties: The proposed project site is located on

one of the major arterial roadways within the City of Pomona. All public servicesare available to the site, and existing utilities (electricity, natural gas, water, sewer,cable, etc.) are either available on the property or from the adjacent roadway. Astandby or backup power generator wil be installed to provide power to the buildingand site in the event of a power failure. This backup power source is essential toensure safety of SCRRA rail operations. The proposed SCRRA uses at this site willbe adequately served by public services and utilities

Based on these facts and the record of the site analysis for SCRRA purposes, theuse of this site as proposed will not cause significant adverse environmental effectsand the proposed SCRRA use of this site would be consistent with in-fildevelopment criteria in this categorical exemption.

Budaet Impact

Funding of $3.18 milion for acquisition of the 3.25 acre property at 2704 and 2710 NorthGarey is included in the 2007 though 2010 fiscal year rehabiltation and renovation budget.Funding for TCOSF project site development and buildings wil be include'd in the PositiveTrain Control and program. The new facility will result in the reduction of current andprojected future annual lease costs of $100,000 to $200,000 per year.

re by: Darrell Maxey, Director - Engineering and Construction

ID OLOWExecutive Officer

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