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Bombardier wins sole source deal with TTC:
Toronto contract caused months of controversy
Lisa Wichmann
Toronto—Bombardier Transportation Inc. has won a controversial contract to supply the Toronto Transit Commission (TTC) with 234 new subway cars.
The decision—announced in August—capped off months of debate among city councilors, TTC officials and a Bombardier rival. In March 2006, Siemens Transportation Systems of Germany asked for a chance to bid on the contract, saying it could shave $100 million off the price of the cars by building them in China, according to the Globe and Mail.
At the time, the TTC had earmarked $705 million over five years for the contract. Siemens proposed supplying the cars for $535 million. Mario Peloquin, Siemens' director of business development for Canada, said the contract should be open to other bids.
But the deal was ultimately sole sourced because of a 1992 agreement between Bombardier and the Ontario government, signed when Bombardier bought an Ontario government-owned Thunder Bay, Ont. plant. The agreement required all future rail transit orders for Ontario customers to be built in Thunder Bay or the now defunct Bombardier plant in Kingston, Ont.
TTC chief general manager Rick Ducharme came out in support of public tendering earlier in the year, but the commission opted for sole sourcing of the cars, and Ducharme later resigned.
The TTC, in an August press release, said Bombardier’s proposal is now valued at $499 million. The price was reviewed by independent rail consultants to ensure it's in keeping with the worldwide and North American transit marketplace, the TTC reported.
Proponents of an open tendering process raised the ire of union representatives, who want the work to remain in Canada. Buzz Hargrove, president of the Toronto-based Canadian Auto Workers, weighed in on the issue on Labour Day.
"In Toronto, some councilors suggested the city should auction off a $700 million project for new TTC subway cars on the global market, instead of building the cars at Bombardier’s Thunder Bay facility," said Hargrove in a press release.
"German-based Siemens AG, a major suitor for the TTC contract, publicly announced plans to take the jobs out of Canada and build the cars in China, resulting in over 600 suppliers jobs and millions of tax dollars lost to the Toronto and Quebec economies...There is no reason why government officials should even consider spending taxpayers' money on goods and services outside of the country when they are available in Canada."
But the issue of sole sourcing—a common practice in the transit market—continues to be hotly debated. Earlier in the year, Bombardier received a sole source deal from the Montreal Transit Commission, to replace the subway's ailing cars. French competitor Alstom Canada, which has a plant in Quebec, argued the $1.2 billion contract should have been put to tender.
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