Second review backs city defence of Stage 2 Trillium Line procurement

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Anyone looking for a smoking gun in the city’s controversial Stage 2 O-Train procurement won’t find it in a council-ordered “lessons learned” investigation by an outside firm.

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In a report recently made public, KPMG concluded: “There are no doubts raised around the fact that the City followed the procurement process rigorously, that the process itself was adequate and that the procurement successfully attained its goal, which was the conclusion of an agreement for the design, construction, finance and maintenance of Stage 2 — a complex undertaking.”

While council has some recommendations to consider for a future Stage 3 project, there was nothing in the KPMG review suggesting that the city’s Stage 2 contract competitions were out of step with industry practices.

The most eye-opening part of the city’s $4.6-billion Stage 2 procurement was the Trillium Line competition, which ended with SNC-Lavalin winning the $1.6-billion contract to extend the tracks to Riverside South and the Ottawa International Airport and maintain the system.

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Technical evaluators gave SNC-Lavalin’s bid a score that didn’t meet a minimum threshold and the bid was allowed to go through a re-scoring. Even then, the bid didn’t reach the scoring threshold, but the company came out with the top mark when its financial proposal was brought into the scoring matrix.

Thirty-four parts of SNC-Lavalin’s bid required fixes or responses before staff could recommend the contract award to council on March 6, 2019, though council didn’t know the details about the technical evaluation.

Today, SNC-Lavalin is building the Trillium Line expansion under the project name TransitNEXT.

There were no serious procurement issues flagged with the Confederation Line expansion, which is currently being constructed by Kiewit and Vinci under the project name East-West Connectors.

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It was an unlikely partnership between Mayor Jim Watson and Coun. Shawn Menard that led to the KPMG review. In February 2020, the council adversaries proposed hiring a consultant to offer some lessons as the city considers a third stage of LRT expansion in the coming years.

A Stage 3 project would extend the tracks to Barrhaven, Kanata and Stittsville, and, while the environmental assessment studies are done, there is no funding for construction. The full Stage 2 program — which includes LRT extensions to Trim Road in Orléans, and Moodie Drive and Algonquin College in the west end — isn’t scheduled to be complete until 2025.

Council is expected to receive KPMG’s submission and endorse the consultant’s recommendations during a meeting on July 21.

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Councillors had an early chance to ask questions and make comments on the report during the finance and economic development committee meeting last Tuesday, with Watson using the KPMG review to strongly defend the work of city manager Steve Kanellakos and staff who worked on the procurement.

“I believe they’re owed credit for their consistent professionalism and integrity in shepherding a challenging file, the largest procurement in our city’s history, which has stood up to two years of thorough external review and scrutiny,” Watson said during the finance committee meeting.

The city’s previous auditor general, Ken Hughes, also found that the Stage 2 procurement followed the rules set by council. Hughes recommended that the city improve reporting protocols to council during a procurement.

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KPMG made a similar recommendation. The consultants said the city should also have disclosure deadlines so the public can see the procurement documents after the contract competition is done.

Also like the Hughes audit, KPMG made a recommendation on making sure technical evaluators have both technical experience and experience on public-private partnerships (P3). Evaluators should also receive training on bid submission requirements and criteria, KPMG said.

Council, too, could benefit from receiving some P3 procurement training, KPMG recommended.

KPMG said there should be a limited role for council during a procurement so elected members avoid any appearance of interference. All the rules of the procurement should be worked out ahead of time through the project governance, the review found.

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Some councillors are still uncomfortable with how the Stage 2 procurement ended.

Coun. Diane Deans, one of a handful of members who have voiced deep skepticism about the process, said council was intimately involved in the defunct north-south LRT project more than 15 years ago, but with Stage 2 “the pendulum swung too far in the other direction.”

Menard said he remembered a tremendous amount of pressure on council to make a decision on the staff recommendation to approve the Stage 2 contracts.

During the finance committee meeting, Menard asked KPMG if council should have been told about SNC-Lavalin’s low technical score before being asked to approve the contract.

In response, KPMG’s Zyna Boubez said: “The process was followed as it should be.”

The city paid KPMG $157,175 for the report, not including taxes, after running a competitive tender for the work.

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