A rail manufacturer has challenged Metrolinx’s decision to issue a $528-million sole-source contract for vehicles to run on Toronto-area rail lines, claiming the non-competitive deal violates government procurement policies as well as international trade agreements.

In a letter to Transportation Minister Steven Del Duca, the president and CEO of Siemens Canada, a Germany-based corporation, said the company was “extremely disappointed” with the provincial transit agency’s decision last month to purchase 61 light rail vehicles (LRVs) from Alstom without allowing other companies to submit bids. Alstom is a French company.

“We believe the decision violates the government’s own procurement directive,” said Robert Hardt in the letter dated May 24.

In the document, which has not been made public but was obtained by the Star, Hardt also asserted that the deal “is inconsistent with public procurement provisions” in CETA, the European-Canadian free trade agreement signed in October.

“This decision effectively eliminates Siemens from competition for future light rail car procurement in Ontario, thus causing us irreparable harm,” Hardt said. “We are, of course, exploring all options available to us to respond to this decision.”

In an email, Metrolinx spokesperson Anne Marie Aikins said the Alstom deal had to be expedited because delays to the Bombardier light-rail vehicle order were jeopardizing the opening of the Crosstown and Finch LRTs, both scheduled to enter service in 2021.

“The purchase of Alstom vehicles is a contingency plan to address the emergency created by Bombardier’s failure to perform and deliver,” she wrote. “Single-sourcing in this type of situation is aligned with our procurement policies.”

Siemens met with Del Duca’s staff in June to discuss the issue, according to a transportation ministry spokesperson.

When Del Duca announced the deal with Alstom he framed it as a back-up plan in case the province’s troubled purchase with Bombardier falls through.

Metrolinx is currently in dispute resolution with Bombardier over the fate of that $770-million deal, which was for 182 LRVs to operate on the Eglinton Crosstown and other Toronto-area lines. The agency claims that the company has missed delivery deadlines and has breached the contract. Bombardier denies it’s in default.

According to Metrolinx’s procurement policy, the agency is supposed to issue competitive public tenders for goods valued over $25,000, and to award the contract to the lowest bidder. If the project is complex, the agency is supposed to publicly advertise a request for proposals. In the case of the Alstom contract, Metrolinx did neither.

The policy makes exceptions for “emergency purchases” however, which it defines as situations when an “immediate purchase… is essential to prevent serious delays (or) excessive costs.”

Alstom is already supplying low-floor LRVs for Ottawa’s Confederation LRT line and is the only company that already has a Canadian supply chain for the cars up and running, Aikins said.

Metrolinx argued in court in March that it needed a contingency plan. In a hearing over the Bombardier contract, the agency said it needed an urgent resolution to the dispute with Bombardier or else the opening of the LRT lines could be delayed. Bombardier countered that the company still had plenty of time to produce a fleet for opening day. The judge eventually ruled in favour of Bombardier.

Loading... Loading... Loading... Loading... Loading... Loading...

The price Metrolinx agreed to pay for the 61 Alstom LRVs works out to about $8.66 million per vehicle, and appears to be roughly in line with the company’s other recent contracts.

According to a report that went before Ottawa city council in 2012, the cost of 34 of the vehicles for Stage 1 of the Confederation line was about $10.1 million apiece. In a deal announced in June, Ottawa is buying 38 more of the vehicles for Stage 2 at about $7.89 million each.

Read more about: