Is it possible that the current contract does not allow for any competitors to operate as vendor? Isn't that something like anti-trust? I'm no lawyer and definately not any kind of expert on this, however, it sure sounds like there would be a huge conflict of interest to have to competing companies performing the same job. I imagine that Railstar would have been able to sue for breach of contract.
I do not believe the CHS wishes for the railroad to fail but I do believe they did jump in without knowing what they were getting into. It's nice they have been trying to get some historic motive power rebuilt that probably would have never had the chance but with the shortage of operable motive power at the loop has really hurt them. They really should, this winter, redouble their efforts to get all motive power up and running and to address the breakdown issue. I believe breakdowns are more harmful to the reputation of a railroad than shutting down - you have the issue of rescueing stranded passengers.
Just my thoughts on the issue. That and a buck-fifty might get you a cup of coffee.