Wabtec awarded sub contract to provide some components for new Viewliners. An interesting sidebar was buried statemet that Amtrak has option to purchase an additional 70 Viiewliners. Does anyone have independent confirmation of this option item?? Don Oltmann ?? o
Read in the below . +++++
http://finance.yahoo.com/news/wabtec-units-awarded-contract-components-132900891.html
Nothing unsual in the provision as most major contracts have such a clause…it is there so that additional purchase would be at the same price, the price being held for a specific amount of time. The idea being that if Amtrak bought 10 at $X.00 and wanted more, supplier would still charge $X.00 and not $2X.00 or $3X.00.
New info: Fleet plan dated Feb 18, 2011 had the following
Implementation of an ongoing program of acquisition of single level cars at an
Implementation of an ongoing program of acquisition of single level cars at an
average rate of 65 cars per year. The LDSL order is to be the first element, and
initial deliveries are expected in 2012. It will be followed by replacement of the
Amfleet II equipment. Previously, the Amfleet I equipment had been targeted as
the next fleet for replacement. The Amfleet II equipment is newer, but it has
substantially higher mileage. Amfleet II replacement will allow creation of a more
homogenous single level long distance fleet and will allow Amfleet I cars that are in
use on long distance services to be put to optimal
use.
The plan for 2012 has not been released but note the 65 vs 70 car is interesting.
Those option clauses do not just get put in the contract. They must be purchased. Government agencies use them to put off part of the purchase until a future fiscal year.
Agreed. My point was that they are put in contracts at time of wriiting and not an afterthought and not uncommon. And that the reason is to set a price maybe as far as 5 or more years in advance while giving the manufacturer advance notice.
Henry:
It was not a criticism, just a clarification for those who have not been exposed to options.
It would be a rare, not to mention foolish, manufacturing company that would agree to a conditional contract, extending over many years, not to have an escalation clause in a contract to cover unexpected costs. For example, if the contractor agreed to supply additional items at such and such a price over months or years beyond the original order time span, he could quickly lose his shirt if inflation took off during the interim, and he had not allowed for cost escalation.
The option for 70 Viewliners was part of the announcement for the placement of the original CAF order for 130 cars. I don’t believe the breakdown of the options was publicly discussed in documents, but it has been posted as consisting of so many baggage cars, 15 baggage-dorms, 15 diners, and so many sleepers as I recall. Routine procedure in large fleet orders whether it is for aircraft, trains, or buses. Very unlikely that Amtrak would exercise many of the options in the current situation, but it allows Amtrak to order a few more Viewliner baggage-dorms, diners, sleepers without having to rebid or renegotiate the contract.
The remainder of this fiscal year should see an order for 40 Acela coach cars in the near term. Then in August or September an order for 130 (or more) bi-level corridor cars for use in CA and the Mid-west, but those cars will be brought by the states, not Amtrak. Depending on the outcome of the 2012 election, we may see a follow-on order in 2013 from CAF for Viewliner coach and café/lounge/diner cars to begin replacement of the Amfleet IIs. More will be known when Amtrak releases the latest version of their Fleet Strategy plan.
My only point is that such a condition or phrasing is often negotiated into a contract. I don’t care what the details are, it doesn’t matter. And I am sure that it is negotiated, clarified, understood, paid for, escalated, depreciated, appreciated, restricted and unrestricted and agreed to by both parties and isdifferent for every contract.
my point is that all documents and announcements previously stated it is a goal of Amtrak to order an average of 65 single level cars per year into the forseeable future so Amtrak will have a constant stream of new cars each year. We do not know if this option for 70 cars will anticipate all delivered in one year.
Once the fleet strategy plan for 2012 is released then maybe we will know if Amtrak’s long range plans have been bumpted up ?? 70 cars per year vs 65 will mean 700 new Viewliner 2 vs 650 after 10 years. The 2011 fleet plan mentioned that Amtrak anticipated that the 65 per year could be bumped up or down. I woulld strongly doubt that the 70 car option will be same type of cars as the original 130 (65 per year ). /the fleet plan looked for common equipment thru out all future car construction and this sub contract appears to have all most 95% common equipment ??