[North Bay] City demands answers to 10 questions about $120-M contract loss – By Maria Calabrese (The North Bay Nugget – July 7, 2011)

The North Bay Nugget, established in 1907, is the daily newspaper for the northeastern Ontario community of North Bay.

‘No grounds’ to reopen contract, MPP says

Ontario Northland Railway employees took unpaid time off work to rally with the city as it pushes the province to review a process that led to a $120-million contract going to a company in Quebec.

“I think we’re a little fed up with Northern Ontario not getting our fair share of jobs, and jobs going out of province. We’re just trying to keep local jobs,” said refurbishment worker Trevor Murphy who was part of a crowd of about 200 people, mostly ONR workers, at city hall Thursday morning.

“I think it’s great that everybody is getting involved. This effects everybody in the North.” Canada Allied Diesel Railway Industries Ltd., in Lachine, Que., bid $2 million less than the ONR even though the tender stipulated the lowest bid might not be accepted, and won the contract to refurbish 127 GO Transit rail passenger cars with a one-year-option for 22 more.

Mayor Al McDonald told the crowd the decision could cost 109 local jobs representing more than $6 million in salaries, the province could lose up to $15 million in severance pay and the economic impact to the region could reach $50 million.

“We’re doing everything we can to stop this tender,” said McDonald, reading a list of 10 questions he has for the province about the contract process.

CADRI acknowledged it received a request for an interview but did not issue a statement as of Thursday evening.

The city rallied in 2004 when it lobbied the province to award a smaller $81-million GO Transit contract to the North Bay-based Crown corporation even though its bid came in $95,000 higher than a competing company in New Brunswick.

GO Transit at the time said there was a miscalculation and the ONR bid was lower.

ONR employees say the fight to review the contract is keeping them optimistic this isn’t a done deal.

“I think everybody’s looking up a little bit. Spirits are coming up a little more,” said Chris Mong.

Nipissing MPP Monique Smith said she’s working with the ONR to secure new contracts, although she doesn’t think the GO Transit deal can be revisited.

“This was a fair and transparent procurement process. Everyone was aware of the rules. We were outbid. It’s unfortunate, but I don’t think there’s any basis at this point to review the contract,” Smith said during an interview at her office.

Global Railway Industries Ltd. announced Tuesday it’s selling its operating subsidiary CADRI to a company controlled by Global and CADRI’s president and CEO Fausto Levy for $12.9 million, including $550,000 debt.

Ontario’s Ministry of Transportation oversees government agency Metrolinx which awarded the GO Transit contract to CADRI.

Smith said she asked the MTO to review the contract after learning about the sale.

“My understanding is from a preliminary review that there is no grounds to open up the contract,” she said.

Paul Goulet, president and chief executive officer of the Ontario Northland Transportation Commission, told the gathering at city hall he may have an announcement in the coming weeks about new work at the ONR, but cautioned it won’t replace the size of the GO Transit contract.

“It’s a crisis,” Goulet told the crowd.

“There are no plans to lay people off at Ontario Northland, particularly the men and women of refurbishment who more than deserve accolades, not pink slips.”

Canadian Auto Workers national president Ken Lewenza has requested a meeting with the province about the contract, said Andy Mitchell, vice-president of the CAW, Local 103, representing ONR workers.

Mitchell said 86 ONR employees can retire in the next few years, and the company would have to replace those positions if it had the GO Transit contract, bringing the potential job loss to 195.

Mitchell said he has made an access to information request to obtain all tender and contract documents, Metrolinx board minutes and correspondence involving the contract process.



1) Admitting to a policy of lowest price awarding of contracts which is contrary to the bid document. The contract bid document makes provision that the lowest price would not necessarily be considered. Why did Metrolinx not look at the broader benefit to the Province of Ontario, and the fact that the ONTC has an excellent performance record.

2) Why was there no offset or net economic cost calculations considered? Nowhere in Metrolinx policy does it state to exclude offsets and recoveries. The Province should allow for special treatment that considers tax losses. This represents a net loss of 6 million dollars to the Province and if they have a stated policy, I question the competency and completeness of the assessment process if it is excluded. The loss of 6 million dollars or more alone should be reason enough for the tender to be re-opened. At the very least, the scoring should be adjusted for this obvious failing.

3) Did the sale of CAD have a direct or indirect influence upon the price only award? Did the Province know of the sale of CAD? If not this demonstrates that there was little in the way of meaningful due diligence. Please describe what efforts were made to substantiate the stability of the company and its ability to undertake the work and meet its obligations under the contract.

4) Describe how the scoring system was relied upon or used as was represented in the pre-qualifying sessions? – since in practice the corporation exercises independently of policy and awards on lowest price.

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