Ottawa

City followed rules in awarding LRT contract to SNC-Lavalin: auditor

Senior city staff followed the rules "to the letter" when they picked SNC-Lavalin as winner of the $1.6-billion contract to extend Ottawa's Trillium Line — even though the engineering giant had twice failed to meet the technical threshold for the project, the city's auditor general has found.

Investigation launched after CBC reported firm failed to meet technical score for $1.6B Stage 2 contract

Ken Hughes, Ottawa's auditor general, addresses the city's audit committee on Tuesday, Nov. 26, 2019. (Jean Delisle/CBC)

Senior city staff followed the rules "to the letter" when they picked SNC-Lavalin as winner of the $1.6-billion contract to extend Ottawa's Trillium Line — even though the engineering giant had twice failed to meet the technical threshold for the project, the city's auditor general has found.

"The job of the auditor general is to say what we found, not what someone wanted us to find," Ken Hughes told councillors Tuesday afternoon. "What we found is that the process was followed to the letter." 

However, Hughes recommended the city make its procurement process clearer in the future, including making the language in the request for proposals (RFP) public.

Hughes noted council had delegated the authority for the entire procurement process for LRT Stage 2 to city staff, requiring only that they come back with a recommendation. In taking that route, council appears to have delegated away its right to demand information on the process, he said.

In future, the auditor general said, council may want to demand staff report back more frequently, and make it clear what information can be shared "to avoid misunderstanding."

"For any request for proposals for large projects, the city has to increase the transparency," Hughes told reporters after the meeting. 

Audit launched after CBC story

CBC first reported back in March that, according to sources, the troubled Montreal-based engineering company had failed to score 70 per cent on the technical evaluations, but still won the contract to extend the north-south rail line.

At the time, the city refused to confirm whether that was the case. City officials also refused to say whether there was any language in the contract that would allow a finalist to progress through the procurement process despite failing to make the minimum grade.

SNC-Lavalin Group Inc. won the $1.6-billion contract for the Trillium Line extension despite twice failing to meet the minimum technical grade. (Paul Chiasson/Canadian Press)

But in August, the city finally admitted that SNC-Lavalin failed to score the minimum 70 per cent requirement not just once, but twice

At the time, city manager Steve Kanellakos also revealed that the RFP provided the city with the "sole discretion" to move a proponent along in the bidding process, even if it hadn't met the minimum grade — information that council didn't have back in March when it approved SNC-Lavalin's contract.

Discretionary clause a surprise

On Wednesday, Hughes told councillors the sort of discretionary clause the city used to wave SNC-Lavalin through the bidding process is common in contracts of this size.

And yet, despite having been a senior bureaucrat for years, Hughes said he'd never heard of this sort of discretionary power.

"I was surprised to hear that there was discretion clause," he said.

"That alone didn't negate the allegations that were being made, but it certainly meant that the bulk of the allegations that were being made were groundless because there was this discretion clause."

I would not have ever voted in favour of this project knowing that the winning proponent failed the technical requirement.- Coun. Catherine McKenney

But some councillors found no comfort in the knowledge the rules had been followed. 

"I would not have ever voted in favour of this project knowing that the winning proponent failed the technical requirement," said Coun. Catherine McKenney, who voted in favour of the contract back in March. "We can massage that nuance in any way we want, but I would have never, ever voted to approve that."

An Alstom LINT train pulls into Bayview station on the Trillium Line earlier this year. (Chris Rands/CBC)

Coun. Jeff Leiper argued council should have been told the discretionary power existed and was used, which would have allowed elected officials to ask more probing questions.

"It makes me feel a little tight my stomach," Coun. Theresa Kavanagh said of the realization that she'd voted on the huge contract without all the facts.

"I think that it would have been important to have a lot of this information available," she said. "It seems that the bottom line in this is that regardless of the technical scores, it's about the lowest bid wins and the bid." 

now