Siemens gets upper hand in Metro contract talks with City of Helsinki

Secret memorandum seen by HS indicates the agreement has proven to be unexpectedly disadvantageous for Helsinki

Pekka Sauri

Matti Lahdenranta

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Negotiations between Helsinki City Transport (HKL) and the electronics manufacturer Siemens on the supply of an automatic guidance system for the Helsinki Metro have resulted in Helsinki taking on additional liability at a high price.
      A secret memorandum acquired by Helsingin Sanomat examining the outcome of the negotiations reveals that the agreement has proven to be unexpectedly disadvantageous for Helsinki.
     
HKL and Siemens discussed problems linked with the establishment of a new contract concerning the supply of an automation system for the Metro two weeks ago.
      After the talks, HKL managing director Matti Lahderanta said that Siemens is no longer able to supply the fully automatic metro that it had originally promised.
      Instead, the city would get a semiautomatic system at a discount.
      The new contract, which follows the lines of an agreement that was reached in negotiations involving Siemens and Deputy Mayor Pekka Sauri (Green) and Matti Lähderanta, puts Helsinki in a considerably less attractive position than originally intended.
      In addition to dropping the full automation aspect, Helsinki agreed in the talks to shift a significant amount of liability for the completion of work to HKL, and provides for economic liability to be footed by Helsinki taxpayers.
     
The memo notes that servicing Metro trains and making the necessary alterations to the trains to accommodate the new automation will now be the responsibility of Helsinki City Transport.
      Originally Siemens was to have been primarily responsible for maintenance, while HKL was supposed to deal with small-scale servicing.
      The present contract saddles HKL with all servicing and requires HKL to pay Siemens for supervising maintenance, the memo says.
      Another key problem involves numerous clauses in the contract whose ultimate monetary impact on the city is impossible to anticipate.
     
Lahderanta admits that the information in the memo is true for the most part. Some of the items were included in the letter of intent signed by the City and Siemens.
      “This is a very difficult situation. Whenever some decisions are made, we can say that this is a risk, and that is a risk. Now we have looked for a solution on how to move forward.”
      The letter of intent ties Helsinki’s hands in the ongoing negotiations on a permanent new contract, which is to be signed on February 15th.
      The letter of intent was signed by Sauri and Lahderanta, and the HKL board was merely informed of it.
     
One reason for the less-than-ideal outcome for Helsinki is that the tight schedule for the completion of the western extension of the Metro into Espoo has narrowed HKL’s capacity to negotiate with Siemens.
      Cancelling the present contract or starting lengthy legal proceedings against Siemens would delay the completion of the extension and would prove very costly for Helsinki.


Previously in HS International Edition:
  New Helsinki Metro perhaps only semi-automatic in operation (19.10.2011)
  Launch of Helsinki´s automated Metro system delayed (19.8.2011)
  Helsinki City Council decides to favour automation of Metro (18.5.2006)

Helsingin Sanomat