Everything you wanted to know about the SNC-Lavalin LRT contract, but were too confused to ask

Everything you wanted to know about the SNC-Lavalin LRT contract, but were too confused to ask

Feb 12, 2020

Ottawa (Canada) Feb 12: Almost a year after approving SNC-Lavalin's controversial $1.6-billion bid for the Trillium Line extension, Ottawa city council is set to debate Wednesday whether to have an independent third party delve into the city's procurement process.
So how did the city actually end up awarding SNC-Lavalin the contract? Here are your questions answered, and then some.
What's the project about?
We're talking about the extension of the Trillium Line only; the Confederation Line is also being extended, but that's a separate contract.
The project will see, among other things, the north-south line extended 16 kilometres into Riverside South, eight new stations, a grade-separated crossing over Via Rail tracks and seven new Stadler diesel trains.
Who's involved?
All sorts of people, but here are the three main groups:
The bidders: Trillium Link and Trillium Extension Alliance are each international consortia; the third bidder, TransitNEXT, is a project-specific name for SNC-Lavalin.
The bid evaluation steering committee (BESC), a three-member team consisting of city procurement officer Simon Dupuis, Deloitte director Remo Bucci, who oversaw the financial bids, and Norton Rose Fulbright lawyer Geoffrey Gilbert.
The executive steering committee, which was comprised of five of the city's top bureaucrats: city manager Steve Kanellakos; transportation GM John Manconi; Steve Cripps, then director of rail construction; city clerk and then solicitor Rick O'Connor; and then treasurer Marian Simulik.
When did this all start?
We could go back more than a decade, but let's start in the late summer of 2018.
That's when the three finalists delivered separate technical and financial bids for the Trillium Line contract.
The evaluation bids were opened on Aug. 13, 2018, while the financial bids were opened on Sept. 24, 2018. Both were assessed for "completeness."
The city says it's not unusual for the financial bids to be opened before the technical evaluation is completed - which happened in October - in order to make sure all the mandatory information is included.
So who knew the prices, when?
That's an excellent question, and one that's tricky to answer.
After the completeness review, the prices of the bids were given to the BESC "in an anonymous fashion," according to auditor general Ken Hughes's November report on the procurement.
CBC asked the city almost two weeks ago when that "affordability assessment" was given to the BESC, but has not yet received an answer.
How did the technical evaluations work?
The technical proposals were first reviewed by "60 subject matter experts" to make sure the bids were technically compliant, according to the city.
What does "compliant" mean? Again, excellent question. The city's formal answer is that the bid meets the "technical aspects of the project agreement's output specifications."
The request for proposals (RFP) says that technical compliance is "only a tool to assist in the evaluation and scoring of technical submissions."
And just because a bid is technically compliant - or found not to have any "material deviations" - it doesn't automatically "pass any applicable minimum scoring threshold," according to the RFP.
So which parts did SNC-Lavalin fail?
Short answer: the technical evaluation of the written submissions, which detailed how each bidder planned to build and run the Trillium Line extension.
We know now that the evaluators had serious issues with SNC-Lavalin's bid, including that it didn't include a signalling or train control system, didn't address how to incorporate the city's existing trains into the expansion - an omission the team called a "fatal flaw" - and that the bid referred to equipment for an electric light rail system.
The Trillium Line is diesel.
The evaluators gave SNC-Lavalin a score of 63 per cent. The minimum passing score was 70.
On Oct. 3, 2018, the evaluators told BESC they had reached a "unanimous consensus that the proposal should not be considered further in the evaluation process."
But SNC-Lavalin didn't get thrown out?
No. Instead, the BESC called the evaluators back to review the scores of all three bidders and challenged them to defend their scores.
The evaluators did that, and everyone's score rose slightly - but still, SNC-Lavalin scored just 67 per cent.
And SNC-Lavalin still didn't get thrown out?
No. Instead, the BESC - led by Norton Rose Fulbright lawyer Geoff Gilbert - told the executive steering committee that one bidder scored below the 70 per cent threshold, although didn't say which one.
Gilbert advised them that, to avoid any possible legal action by the bidder, the city could allow the proposal to move onto the financial round, using a discretionary clause in the RFP.
The RFP also explicitly says that if a proposal fails to meet the minimum score, and the city chooses not to use its discretionary power, the submission will not proceed.
The city's executives decided to let SNC-Lavalin move ahead, without knowing it was SNC-Lavalin.
Doesn't Norton Rose Fulbright work for SNC-Lavalin?
Yes, Norton Rose Fulbright routinely represents the Montreal-based engineering giant in deals worth billions of dollars.
In the past two years alone, according to Norton Rose Fulbright's own news releases, the international law firm represented SNC-Lavalin in financial deals worth more than $7 billion.
The law firm even represented SNC-Lavalin in the criminal charges against the company related to business dealings in Libya.
But the law firm didn't represent SNC-Lavalin in the city's procurement process; it worked for the city. And the city says it was aware of Norton Rose Fulbright's relationship with SNC-Lavalin, and waived any conflict of interest concerns.
So SNC-Lavalin gets through the technicals. What about the price?
The financial evaluation was the next step.
And SNC-Lavalin did great in this round. The city has said that this bid was hundreds of millions of dollars cheaper than the other two bidders.
That meant that, although SNC-Lavalin got a low technical score, it came out with the highest overall score due its cheap price.
So when did council get involved?
On Feb. 22, 2019, the city announced SNC-Lavalin was the preferred bidder for the Trillium Line extension, with a price tag of $1.6 billion for both the construction and maintenance.
Council had to vote on the contract less than two weeks later at a March 6 council meeting.
At the meeting, some councillors wanted to postpone the vote, but Gilbert told them any delay would cause the project to be "plunged into chaos."
Coun. Diane Deans asked if all the preferred proponents had met the minimum technical score of 70 per cent.
She could not get an answer.
Councillors also asked whether there was any mechanism that would allow a bidder to continue on without scoring 70 in the technical round.
Again, Gilbert told councillors they couldn't have this information - and shouldn't even be asking about it.
In the end, council voted 19-3 in favour of LRT Stage 2, without knowing if SNC-Lavalin had met the technical threshold, and without knowing that the city executive team had the discretionary power to wave a bidder through the process.
Source: CBC News