Hamilton LRT bidders had cold feet, worrying about the city and province's commitment

A leaked report about Hamilton's light rail transit (LRT) project shows bidders were already backing away from the project when it was cancelled last month, afraid the province and city didn't support it and they would end up losing money.

A recent two-page update between Metrolinx and Infrastructure Ontario obtained by CBC shows two of the three bidders weren't "actively engaging" in the RFP process over fears the city and province weren't committed to it.

They were also nervous about a lack of break fee in the RFP — an amount they'd be paid if the project was cancelled — and worries about losing money if there were delays receiving the vehicles.

Ei8ht Transit and CityLine Transit group weren't engaging in the RFP process. And EllisDon, the company that was supposed to build the system, had left the Ei8ht consortium, leaving the remaining partners looking for a replacement.

Mayor Fred Eisenberger said the city had no idea there were issues with the bidders. As far as city staff working with Metrolinx knew, "all three bidders [were] in."

As for EllisDon leaving, that's not unusual, said Kris Jacobsen, the city's lead on the LRT project.

"On these procurement processes, just given the scope and the magnitude, and the number of partners and players involved in these teams, it's not uncommon," he said. 

The report also includes some updated numbers of what the LRT project would cost, although it's not clear whether they include the latest done by a third-party consortium the province hired.

The report says the budget initially approved by the previous provincial Liberals was $3,658,573,000 including construction and lifecycle operating and maintenance costs. The updated estimate in the leaked Metrolinx report is $3,746,047,000. Of that total, it still shows actual construction costs at $1 billion.

The province hired a third party, Turner and Townsend, to assess the project again, and that company reported back on Oct. 22, the report says. The Turner and Townsend numbers, the report says were "significantly higher" than the project budget was in 2018.

On Dec. 16, Transportation Minister Caroline Mulroney cited a number of $5,554,681,932 when she announced the project was cancelled.

The province wouldn't give details Monday on the disparity, saying only in an emailed stated that "the documents in question affirm the statement of the government on Dec. 16 announcing the cancellation of the procurement."

"In particular, the previous government never publicly disclosed that the project would cost nearly $3.7 billion," said a spokesperson for Mulroney.

"The documents also refer to procurement challenges for the LRT. The challenges in the process developed by the previous government demonstrate why our government is committed to doing things differently. Our government is committed to delivering major transit projects better and faster."

Eisenberger says this is evidence the $5.5 billion number is inflated. The province wouldn't even know the actual numbers until the RFP closed, he said. 

But the numbers in the Metrolinx report, he said, "are more accurate than the final numbers to justify their cancellation."

The previous Liberals committed $1 billion for the capital cost of building the project. The updated estimate also includes 30 years of operating and maintenance costs. Under the LRT plan, those costs would have been covered, at least in part, by the winning consortium, which would design, build, finance, operate and maintain the system.

The Metrolinx document says two of the three bidders said they couldn't provide LRT vehicles and wanted Metrolinx to reconsider the "revenue vehicle delivery risk allocation in the current project agreement."

After hearing from the bidders, the Metrolinx document says, a break fee was added to the RFP document. Bids were due in the spring. 

Mulroney has said the province will still spend $1 billion on Hamilton "transportation" projects, and is striking a task force of four provincial representatives and one city representative to decide how the money will be spent. 

Brad Clark, a Ward 9 councillor who has opposed the LRT project, says it doesn't matter if it would cost $3,746,047,000 or $5,554,681,932. The city can't afford either.

News of the bidders having cold feet "didn't surprise me," he said.

"There were rumours and lots of innuendo that the bidding teams were nervous," he said. "This document is basically reiterating that and indicating they're wanting basically a buy out if the bid doesn't go ahead."