CINCINNATI Chief Prvcurement Ofc August 6, 2015, Virginia Verdeja Vice President, Sales CAF USA, Inc 11401 K Street NW, Sute 1003 Washington, OC 20005 Dear Ms. Verdeja, This etter isn response to CAF USA's projected delay in delivery of Cincinnati streetcar Vehicles. The City of Cincinnati streetcar project manager, Chris Ellerman, has previously communicated to CAF that the City is extremely concemed about the projected delay (see CINCAF 1050, 7/18/15). waite to underscore the seriousness ofthe situation and to put CAF on notice: the City of Cincinnat intends to take al steps necessary to hold CAF to its contractual obligations and without compromising vehicle construction quail. “The Contract acknowledges the critical importance to the Ciy of achieving vehicle delivery milestones in order to commence streetcar revenue service no later than September 2016. And a you are no doubt aware, infrastructure testing, staff training, and other startup activities ‘annol occur unt the vehicles arive ~ potential putting the project an hold and delaying the start of revenue service for every day the vehicies are late. Delays to vehicle delivery wil also, have adverse effects on other Cincinnati streetcar contracts including, but not imited to, the streetcar operator coriract, the City's cil construction contract, and the Ciy’s contract for inspection and engineering support curing vehicle production ‘As ofthe wring ofthis letter, CAF has not provided the City wth adequate assurances that. a required under the Centract, CAF is “makling] every effort to mitigate the delay and to maintain the Contract schedule’ (Section GP-2.45() ofthe Contract) The Contract requires that in the ‘event of any delay, CAF “shall work such hours including overtime operations andior extra shits as may be necessary to meet its performance obligations under the Contract at no ‘aitional cost [fo the Cty (Section SP-1 of the Contract). The City expects to see evidence that CAF is making “every effort to remedy this situation inthe corrective action plan requested bby Mr. Elerman in corespondence CINCAF 1050, {As stated inthe Contract, "time is of the essence.” If CAF does not meet its Contract milestones, the City wil exercise he ful extent of is remedies under the Contract to force compliance with Contract terms and hold CAF accountable forthe costs of such delay. These remedies include, Dut are not limited to, Iquidated damages and the withholding of all costs or damages to the City arising out of CAF's falure to meet its Contract obligations.‘On behalf of the City, am hopeful that we can continue the good working relationship the City hhas enjoyed with CAF up until this time. It's deeply frustrating, however, that CAF did not alert the City sooner tothe potential fr missing such a major Contract milestone. | hope that CAF takes this opportunity to demonstrate its commitment to is customers by immediately dedicating the resources necessary to get this project back ontrack Sincerely, Ned AL! Patek A Duhaney Chit Procurement Ofeer CC: Hany Black, City Manager Shelia Hil Chistian, Assistant City Manager ‘John Juech, Assistant City Manager “John Deatrick,Cincinnal Streetcar Project Executive Paula Boggs-tuething, City Sobcitor Andrew Garth Chief Counsel