Bombardier (a): The Procurement Decision of Light Rail Cars for the Los Angeles Metro Transit Authority

Abstract

The purpose of the case is to help students understand the complex nature of a visible and expensive organizational buying process. The goal is to help students appreciate the nature of the selling task, the complex interplay of different decision-making-unit members, and both the political and economic factors that often permeate such purchasing decisions. The A case (see also the B case, UVA-M-0471) documents the procurement-decision process used by Los Angeles to purchase light-rail cars for its subway system. The A case traces the bidding process and ends with the final award.

Excerpt

UVA-M-0470

Rev. Nov. 22, 2010

BOMBARDIER (A): THE PROCUREMENT DECISION OF LIGHT RAIL CARS

FOR THE LOS ANGELES METRO TRANSIT AUTHORITY

The 1993 bid for the completion of a metro subway line in Los Angeles attracted much attention and controversy. The proposed lines would extend south of the city from Norwalk to El Segundo and from downtown L.A. to Pasadena. The $ 200-million contract to build at least 74 light rail subway cars incorporating parts of the Green and Blue metro lines attracted four of the world's most prominent builders of subway cars. Bombardier, Inc., of Montreal, Morrison-Knudsen of Idaho, Siemens-Duewag, a German subsidiary, and Sumitomo, Inc., of Japan all vied for the contract which Siemens-Duewag would eventually win. Both Morrison-Knudsen and Bombardier protested the decision, but the Los Angeles Metro Transit Authority (LAMTA) remained firm in its decision. The managers of Bombardier still wonder why their bid was rejected since it was millions of dollars lower than the winning bid. Management hoped to learn from this experience and to better understand the complexities and subtleties of the Los Angeles decision.

Bombardier Company History

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Keywords: UVA-M-0470 business-to-business marketing, government and business, procurement, public administration, purchasing, international, Alternative Business Issue or Setting, diverse protagonist, nationality