Is SNC-Lavalin technically incompetent? Hardly — but here's what the city needs to explain
James Bagnall, Ottawa Citizen
Updated: April 18, 2019
It’s difficult to know which is more bizarre — the idea that SNC-Lavalin isn’t qualified technically to manage a piece of the second stage of the city’s light rail transit project, or that City of Ottawa officials won’t offer a definitive statement that it is.
When the city revealed two months ago that TransitNEXT — a unit of SNC-Lavalin — was its preferred bidder for managing the $1.6-billion extension of the Trillium Line to the airport and beyond, few eyebrows were raised.
After all, SNC-Lavalin has deep experience with mass transit, including recent projects in Kuala Lumpur, Qatar, Washington, D.C. and Vancouver.
More relevant, it also has a 40-per-cent stake in Rideau Transit Group, the entity responsible for the first phase of Ottawa’s LRT project. While the launch of LRT service has been delayed several times, it’s not clear whether the blame lies with SNC-Lavalin, its partners, or both. In any case, SNC-Lavalin has acquired plenty of hands-on experience that will be useful in Stage 2.
Is it up to the job? A report from CBC suggests the Montreal-based engineering giant had failed to meet minimum technical scores in a detailed evaluation by procurement officials, which prompted the city’s auditor general Ken Hughes recently to add the LRT Stage 2 evaluation to his current list of investigations.
What is he likely to find? Most likely, very little of consequence — but there are a couple of twists. On the face of it, it stretches credulity that the city would have awarded such a large contract to a company allegedly incapable of meeting a basic technical standard.
Consider first that the city’s procurement staff launched the Trillium Line extension project by winnowing the field of potential contenders from five to three, based on technical, financial and other qualifications. TransitNEXT made the grade, as did Trillium Link (led by Spanish infrastructure firm Acciona) and Trillium Extension Alliances (fronted by Australian infrastructure specialist Plenary Group).
The finalists were invited mid-July 2017 to submit more detailed bids in response to a formal request for proposals (RFP), a document that in all likelihood covered hundreds of pages.
Over the next 18 months, teams of city evaluators applied several screens. The first involved mandatory requirements such as whether the bidders had previously done projects of similar size, and had the right mix of technical skills available locally. This is standard with government contracts, and all three passed. A failure to meet any of the mandatories, as these are known, would have resulted in being dropped from the competition.
Next, teams of technical experts evaluated how the bidders proposed to tackle dozens of project criteria, ranging from the quality of materials used to the aesthetics of the LRT stations.
The evaluators used a points system spelled out in the request for proposals. According to documents made available by the city, the contenders had to achieve a minimum of 70 per cent in each criterion “to receive a passing score.”
Chris Swail, director of O-Train planning, asserted “All three bids were technically compliant,” in response to queries by the Citizen.
The CBC in a recent report suggested that SNC-Lavalin failed to top the threshold and should not, therefore, have been permitted to move to the third phase of the competition, involving the financial aspects.
Who’s right? Here’s where things get complicated.
In the first place, scoring for many of the criteria is a subjective, rather messy exercise. That’s why the city used teams of independent evaluators to assess bidders’ responses. After completing their examination, members of each team compared scores and reached a consensus — a very common feature of government contracting.
The scores were then totalled up. In the the Trillium Line extension competition, a perfect technical score would have been 500 — a passing grade, 350. This would then be combined with the ranking, also out of 500, of each contender’s financial proposals. The total score determined the overall winner — a conclusion that would later be approved by city council.
The big question is, did SNC-Lavalin initially fail to achieve 70 per cent on the technical side of things, in which case should it have been dumped from the competition before proceeding to the financial bid analysis?
Much depends on the wording of the RFP, which will remain private for another few weeks as officials redact certain sections for reasons of corporate confidentiality. In general, however, it’s not unusual for those running a procurement — the city in this case — to reserve for itself the right to intervene and/or interpret matters according to its perceived interests, even to the extent of waiving the 70 per cent requirement or re-examining how certain criteria were judged.
“The evaluation process in general sets broader internal governance rules to be followed by the City, including discretionary rights that may be exercised.” said Swail.
Assuming the city intervened, and we don’t know that it did, it wouldn’t mean TransitNEXT is technically incompetent. This stage of the contest had more to do with ranking, given that all finalists were judged initially to be qualified to bid and also passed a series of mandatory requirements.
The language spelling out the city’s authority would likely have been in the RFP and understood by all three rivals. Swail added that the governance process set out in the bid documents was to ensure that “discretion is exercised fairly by the appropriate level in the City’s evaluation structure and for the right reasons.”
Certainly the city was keen to keep a close eye on costs, given that the LRT Stage 2 project was increasing in scope. City officials have said SNC-Lavalin was the only bidder to come in under the targeted budget, so the firm appears to have won the financial component of the competition by a significant margin.
So why has the city been so reluctant to publicly address the question of whether SNC-Lavalin topped the 70 per cent threshold in the detailed technical evaluation phase of the procurement?
Perhaps officials are concerned with how to sell taxpayers on any intervention that ultimately favoured SNC-Lavalin — no matter how clear and legal the city’s discretion to do so.
SNC-Lavalin is already in the news for the wrong reasons — a criminal trial relating to the company’s activities in Libya a decade ago is rapidly approaching — and questions about its technical competence would compound things.
City officials have said they stand by the “integrity of the procurement process in no uncertain terms”, but these are just words. If discretion was applied, they need to show how — and why. Otherwise, doubts about the result will persist.
https://ottawacitizen.com/news/politics/...but-heres-what-the-city-needs-to-explain
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