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Business & Finance Aug 7, 2019 1:54 PM EST

SNC-Lavalin lowballed Ottawa City Council for winning light-rail bid, failed technical score

The latest documents provided by the city clerk also indicate SNC-Lavalin was the only one of six bidders who did not make the technical grade but was the lowest bidder, and by a long shot.

SNC-Lavalin lowballed Ottawa City Council for winning light-rail bid, failed technical score
Jason Unrau Montreal, QC

This article was published more than 1 year ago, information might not be up to date.

A day after SNC-Lavalin shareholders demanded more accountability from the Québec-based engineering firm, Ottawa residents learned their city council voted for SNC’s subpar and lowball $1.6 billion bid to build phase II of light-rail in the capital.

“When SNC failed the technical score, it gives me no comfort they can deliver the best product, or even a reasonable product,” councillor Diane Deans told 580 CFRA; she was among three councillors who voted against the proposal.

“And frankly price doesn’t matter if the thing doesn’t work.”

Documents released by the City of Ottawa last week confirm CBC city hall reporter Joanne Chianello’s original story following the March 6 vote: that SNC-Lavalin’s bid failed to score the minimum 70 percent technical rating.

In fact, the firm scored just 67.27 percent in this category while its competition ranked in the mid-80s.

When Deans and other city councillors asked whether SNC-Lavalin had met the technical requirements, an outside lawyer for the city told council such information was embargoed until after the bidding process.

In other words, after the vote on the staff recommendation of SNC Lavalin’s TransitNEXT bid that Deans and fellow councillors Rick Chiarelli and Shawn Menard would be the only dissenters.

Before that, council steamrolled Ward 14 Somerset rep Catherine McKenney’s motion to put off the vote until March 27 with the hopes of getting their questions answered.

On Wednesday, McKenney told The Post Millennial she would have changed her mind altogether on supporting the project as presented by city staff.

“Given what we know today, that SNC did not meet the technical requirements…no, I would not have supported the staff recommendation,” she said.

“In the future, I will never support delegating authority until I have assurances that we as council have every right to full disclosure.”

The latest documents provided by the city clerk also indicate SNC-Lavalin  was the only one of six bidders who did not make the technical grade but was the lowest bidder, and by a long shot.

While SNC-Lavalin’s cheaper bid was not confidential – Mayor Jim Watson had already called it “the best deal for taxpayers” – documents indicate SNC-Lavalin scored 97 percent for its financial submission; its closest rival ranked just 47 percent.

“It’s not even in the best interests of how we expend our revenues because things just end up costing us more, if in fact they don’t work,” said McKenney.

“Whether it’s tree guards, asphalt that we used to fill potholes … we cannot always go with the cheapest option. It’s not always the best and it will not always save the tax payer. In fact, it’s often quite the opposite.”

Council approved Phase I LRT for Ottawa, a.k.a. Confederation Line, in 2012 with high hopes it would be operable in winter of 2017 – Canada’s sesquicentennial year.

But Confederation Line remains closed, its construction fraught with difficulties, including a massive sinkhole that opened up downtown in the summer of 2016 after a tunnel roof collapsed.

There have also been derailments during the LRT’s testing phase involving a new brand of French Alstom train sets, designed for North America but whose proving ground is to be Ottawa.

The latest projection for the city taking the keys and opening Confederation Line is this September.

Meanwhile the city’s auditor is investigating the procurement process for Phase II, or the Trillium line that will service commuters in Ottawa’s south end and the international airport.

What the audit will turn up is anyone’s guess. City auditor general Ken Hughes’ review of Phase I released in June 2017 was “not to provide assurance that the Light Rail Transit (LRT) system will be completed on schedule. Rather, is the City doing what it should.”

And Hughes concluded the obvious: that “further unexpected construction delays may push back the opening day for revenue service”.  On top of inevitable delays, nearly a year after the report the SNC-Lavalin-led consortium – Rideau Transit Group – dodged a $1 million penalty.

But even CBC Ottawa’s Chianello cannot get to the bottom of what happened between the Rideau Transit Group and the city, a portent for things to come and another potential flaw in the contract’s terms.

The estimated cost of Phase II is pegged at $4.66 billion, already an overrun and more than double the $2.1 billion price of Phase I.  Both the Ontario and federal governments supported Phase I and have ponied up matching $1.2 billion in funds to pay for Phase II.

Given the enormous amount of money involved for the largest infrastructure project in Ottawa’s history, Deans is fed up with a process that kept elected officials in charge of the municipal purse in the dark.

“When city council can’t get direct answers to direct questions that is absolutely paramount info…then the public should be paying attention and I think they should be damn mad,” Deans said Tuesday after her suspicions about technical shortcomings were confirmed.

Just a day earlier amidst SNC-Lavalin’s $2.1 billion second-quarter loss, CEO Michael Sabia of Caisse de dépot et placement du Québec – SNC-Lavalin’s controlling shareholder – said the company requires “a wholesale, step-function change in the quality of its execution.”

“It’s a step up, a major step up, in discipline…in the capacity to overview project by project and to know where each one of those projects stands down to the decimal points. That’s what’s required,” Sabia told reporters.

Mayor Jim Watson did not respond to TPM queries about SNC-Lavalin’s Phase II bid or why he voted to support it without all of the facts before him.

According to a memo sent to council by City managers Steve Kanellakos, it is staff who maintain “sole discretion” in terms of bypassing some request-for-proposal requirements to advance a project.

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