New TTC Subway Cars

[hkskyline]

When did the TTC's mandate change from getting value for its money to protecting the jobs in the rest of the province? Given the lack of resources provided by the federal and provincial governments, the TTC shouldn't be wasting its little funding to execute the government's interests.

 

[wyliepoon]

The Star

Link to article

Bombardier wins transit order for Chicago
Jul. 29, 2006. 01:00 AM

MONTREAL (CP) — Bombardier Inc. (TSX: BBD.B) has won a $577-million-US order to supply rapid-transit rail cars for the Chicago Transit Authority.

On May 10, the CTA board had selected Montreal-based Bombardier as the preferred bidder for a base order of 206 vehicles and a first option for 200 more.

The total number of cars could increase to 706 if the CTA exercises all available options, Bombardier said Thursday.

The new rapid-transit cars will be the first in the fleet to use alternating-current propulsion, a technology that permits dynamic braking regeneration, lower energy and maintenance costs and improved reliability.

Bombardier was the first rail car builder to supply AC propulsion technology to transit authorities in the United States and Canada.

The new fleet will also have a special levelling system to ensure that access to the car floor is level with the station platform during boarding.

The CTA operates the second-largest public transportation system in the United States, covering the city of Chicago and 40 suburbs. CTA trains provide about 500,000 customer trips each day via seven routes.

Subsidiary Bombardier Transportation has its global headquarters in Berlin and operations in over 60 countries. It has an installed base of about 97,000 cars and locomotives, primarily in Europe, the world's largest railway market.

 

[wyliepoon]

National Post

Link to article

Subway car deal should be derailed

Stephen LeDrew
National Post

Friday, July 28, 2006

The debate that we are witnessing on the pages of the National Post and in coffee shops is not just about the cost of subway cars and Bombardier and the TTC and the Mayor of Toronto. We are witnessing more than just a political spat; this is a debate about the way that governments in Canada conduct themselves, about the way we do business in this country, and this sole-sourcing of subway cars for approximately three-quarters of a billion dollars is not the way we do business in Canada.

The deal, as it is structured now, is that the TTC made a decision to buy subway cars from Bombardier at a specified price (we don't know where this price came from, but presumably Bombardier set the price) and a bunch of accountants and bureaucrats are going to sit down to make sure that it is a good deal. Now, as to what constitutes "good" is unknown.

For example, how much profit should Bombardier make? Should it make a 5% profit or 50% profit, and who makes this decision?

Usually in this country when either government or business makes an acquisition, it calls for proposals or tenders, and then this process is scrutinized by firm and established rules, companies interested in doing the business make submissions, and the best and the cheapest product gets the nod. This is called competition.

Another benefit from open and above-board competition is that Canadian companies are generally allowed to bid on projects in other countries, which will probably not be the case if this deal is permitted to go through. Why would Germany or France allow a Canadian company to bid on any projects in their countries when Siemens and Alstom were precluded from even trying to get the business of the City of Toronto?

In addition, there is a very good case to be made that this whole deal is illegal. Section 106 of the Ontario Municipal Act states that "a municipality shall not assist directly or indirectly any manufacturing business or other industrial or commercial enterprise through the granting of bonuses for that purpose." Aside from the obvious interpretation, this has been recently construed in the Ontario courts to prohibit the conferring of "... an obvious advantage." There seems to be no argument but that Bombardier is receiving an obvious advantage from the City of Toronto because it is getting a huge amount of business plunked on its doorstep without competition. The Mayor of the City of Toronto has stated that the purchase of subway cars is being made from Bombardier because Bombardier needs the business -- no clearer case could be made but that this is a bonus.

The public has not been let in on the information that obviously the Mayor and the TTC have had -- that the jobs of the good people working for Bombardier in Thunder Bay would be lost if they didn't get this bid, although I guess we are to trust the Mayor when he says that the 300 people working for Bombardier in Thunder Bay need this contract to keep these jobs. But who told the Mayor that these jobs would disappear without this TTC contract? Bombardier? Is this a scare tactic to make a lot of profit on a non-tendered contract? Would these jobs disappear because no one else would buy Bombardier subway cars? Is Bombardier that lame?

We have established methods of doing business in this country because they work. It is the proper way to get value for your money and it is above-board. The Bombardier contract is socialism at its very worst because it presumes that government, and not the market, has the best knowledge and decision-making ability, and it presumes that without the government business no other business will be found. Presumably, Bombardier will be closing when this contract is filled? This sleight of hand slipped through by the Mayor and the chairman of the TTC should not be countenanced on any grounds.

- Stephen LeDrew is a Toronto lawyer and broadcaster.

 

[unimaginative2]

Stephen LeDrew is woefully mis-informed. There's no other market for Bombardier subway cars since there are only two subway operators in Canada. The American market is completely closed to the Thunder Bay plant due to buy-American policies. Those Chicago subway cars are built, if I remember correctly, in upstate New York.

 

[spmarshall]

Yep, Buy America (doesn't this violate free-trade agreements?) precludes purchasing Thunder Bay built cars, unless final assembly is done in the States. That is why Orion and New Flyer buses are built in Mississauga and Winnipeg, but finished in New York and Minnesota. I'm also surprised Professor Frink, er, Stephen LeDrew doesn't get it.

 

[afransen TO]

I imagine that Canadian firms could sue under Chapter 11 of NAFTA. Unfortunately, the US ignores NAFTA unless its provisions provide an American benefit in any given circumstance.

 

[EnviroTO]

... and Harper seems fine with signing deals that provide exceptions to NAFTA in the US' favour.

 

[cdl42]

Subway car price cut?
Globe
JOHN BARBER

The price of the 234 new subway cars the Toronto Transit Commission is negotiating to buy from Bombardier Transportation will be substantially less than the $700-million budgeted for the controversial sole-source contract, according to sources at city hall and the manufacturer.

The price of the cars, which has been submitted to the TTC and evaluated by two independent auditors, is "just under $500-million," according to one source -- $100-million less than the amount Bombardier competitor Siemens AG said it was prepared to quote for Chinese-made subway cars.

A favourable negotiated price is sure to ease growing pressure to open the contract to competitive bidding. But commissioners say they won't know the actual number until Monday, when they review a staff report that will recommend whether to accept the bid.

"I sure hope it's a Bombardier recommendation," TTC chairman Howard Moscoe said. "But I have no way of knowing till Monday."

Bombardier spokeswoman Hélène Gagnon urged Torontonians to "withhold their judgment" on the deal until the negotiated price is known.

The under-$500-million price will cover the cost of the new cars, say sources, although they warned the price will climb higher when extra features specified by the TTC are factored in. They include a simulator cab for training and modifications to the Wilson Yard to accommodate the new rolling stock.

"The extras don't have anything to do with the cars," one source said. "People will try to spin it differently, but there's no way around it. The price of the cars all in is just less than $500-million."

If so, Mayor David Miller and the TTC will have a far easier time justifying the sole-source contract than they've had so far. The contract had threatened to become a difficult issue for the mayor in the coming election, with opponents decrying what seemed to be the $100-million premium the commission was allegedly prepared to pay to keep the train-making jobs in Canada.

If the outside experts who have studied the contract conclude the price is still too high, the commissioners have promised to put it out to tender.

jbarber@globeandmail.com

 

[afransen TO]

Sounds like they're spinning... I thought the Siemens 'quote' included these extras.

 

[rbtaylor]

I thought the Siemens 'quote' included these extras.

Couldn't have. At the time Siemens made their estimate, the list of extras was still being developed.

I'm sure Siemens included many modern features but the specifications the TTC wanted were not known by the TTC at the time.

Yes, they're spinning, but so was Siemens.

 

[AlvinofDiaspar]

And from the Star:

Bombardier secret deal reaches TTC
Offer sidesteps tendering process
Will keep jobs in Ontario, Moscoe says
Aug. 21, 2006. 05:23 AM
KEVIN MCGRAN
TRANSPORTATION REPORTER

A political hot potato has landed on the desk of top TTC officials and will come before the commission today in the form of a staff recommendation.

It is Bombardier's secret, controversial "sole-source" bid to build the next-generation subway cars for the Yonge-University-Spadina line.

"Negotiations are complete and everything now really is in the hands of the TTC," said Bombardier spokeswoman Helene Gagnon.

"We're saying nothing," said TTC spokeswoman Marilyn Bolton.

Bombardier's offer is said to be under wraps because, heading into a fall election, the very reputations of Mayor David Miller and TTC chairman Howard Moscoe may hang on whether TTC staff says yes or no to Bombardier's offer.

Supported by Miller, Moscoe and the TTC bypassed the usual tendering process and gave "sole sourcing" rights to Bombardier, a move Miller and Moscoe said will ensure jobs for about 750 Ontario workers in Toronto and Thunder Bay.

Other companies, such as Siemens, cried foul and warned the decision would cost Toronto taxpayers hundreds of millions. Rick Ducharme quit his post as TTC chief general manager, citing Moscoe's meddling on the Bombardier file.

Politicians have lined up on both sides of the issue, with Miller challenger Jane Pitfield and councillors Karen Stintz, Denzil Minnan-Wong leading the charge to force the TTC to conduct a proper tendering process.

"From the beginning I have felt that for good government, it is our responsibility to have an open tender," Pitfield said.

"We are not in a position to risk spending even $10 million too much let alone the possibility of spending $100 million extra.

"Bombardier could compete and win the contract. It is a step in the wrong direction to just award it to them."

Moscoe was undeterred by Pitfield's argument.

"It's a legitimate political issue and I think they're going to lose on this one," Moscoe said of his detractors.

"We have a responsibility to protect taxpayers in Ontario and jobs in Ontario. Siemens has said they could do the job for $100 million less.

"But it's the taxpayers of Ontario who'll benefit from keeping the jobs in Ontario.

"There'll be $150 million in taxes paid to Ontario and the federal government just with the contract staying in Ontario. And they're the ones paying for the subway cars.

"It's a no-lose situation for the Ontario taxpayer," Moscoe said.

While the TTC has budgeted up to $700 million for the new cars, it's doubtful Bombardier's offer will be that high.

"Really, Bombardier knows the deal," says TTC vice-chairman Adam Giambrone.

"This is not a big surprise for them. They know what the international market is. I would be shocked if their price didn't reflect the international market.

"Bombardier is competitive around the world. If I had to bet money on it, Bombardier will present a price that is competitive within the world markets and that we'll be able to support."

Moscoe said he was eager to see the document, expected to be in his hands today, and promises to have an open mind to whatever TTC staff recommend.

"The process was set up to give Bombardier the first opportunity," Moscoe said.

"But if they can't come up with a good price, both I and the mayor would be saying: `Let's go to the market.'"

AoD

 

[AlvinofDiaspar]

From the Star:

TTC's car purchase is typically off track
Aug. 22, 2006. 01:00 AM
KEVIN MCGRAN
TRANSPORTATION REPORTER

TTC — the Toronto Transit Complications.

Nothing ever comes easy to the TTC. They dig a hole to build a subway along Eglinton. They fill it in. They build a subway along Sheppard instead, but stop halfway. They build a Scarborough Rapid Transit line they don't really want but now have to replace.

Now the debate rages over Bombardier's controversial sole-source bid to build subway cars for the Yonge-University-Spadina line. If the TTC braintrust's history holds true, they'll find a way to screw this up. Reports on the issue are being kept under wraps and being examined by TTC commissioners.

Individually, it must be noted, the politicians who oversee the TTC and the individuals at the highest staff level are all extremely bright, intelligent proponents of mass public transit. They know how to battle gridlock. They know how to make the trains run on time.

But put them in a room together, and you have a dysfunctional family running North America's third-largest transit system. It's the "too many cooks in the kitchen" school of management.

For example, an 11-year-old could tell you the best way to get the best deal is to shop around for the best price. Just about every purchase the city makes, or the TTC makes, is based on this premise. It's called "public tendering" — the companies make their offers and may the lowest bid win.

Buying subway trains, apparently, is not that simple.

When Bombardier bailed the Ontario government out of its misguided attempt to get into the rapid transit construction business — the very business that landed the TTC the Scarborough RT — it won an agreement that Bombardier would be the sole source for future TTC subway train purchases.

Rick Ducharme, the former chief general manager of the TTC, preferred the public tender process and worked laboriously behind the scenes to absolve the TTC of this obligation.

He recently told the Star he got the Ministry of Transportation to supply him with a letter allowing the TTC to go to public tender this time around.

But then TTC chairman and councillor Howard Moscoe returned from a conference in Rome, saying he wanted Bombardier to "sole-source" subway trains.

A furious Ducharme told Moscoe to stop meddling. Ducharme cleaned up the mess. He went back to the ministry, getting a letter that allowed the TTC to reverse positions and resume its sole-sourcing relationship. And Ducharme instituted a "blackout" policy. In other words, no politicians can be involved in any dealings for the subway or the deal is dead. And Ducharme ensured two independent consultants would oversee Bombardier's bid.

Siemens, a Bombardier competitor, argued it could supply the subway cars for $100 million less. But the issue didn't gain traction until Ducharme quit his post after a wildcat TTC strike, hurling more allegations of meddling at Moscoe.

Closer to this fall's municipal election, opponents of Moscoe and Mayor David Miller have seized on the issue. The consultant reports will be made public on Thursday. The commissioners meet in public to debate the Bombardier bid Aug. 30.

It should be simple: If the consultants like the deal, the commission should go ahead. If they don't like it, they should kill it.

Here's a prediction: Bombardier's offer will come in at about $585 million, $115 million less than the TTC budgeted for and $15 million below the number Siemens officials have used.

The consultants will differ on the offer. The TTC commissioners will ditch the contract, going to public tender. The price tag will balloon.

Here's what should happen.

If the consultants like the bid, then Moscoe and Miller — who've talked a good game about using Bombardier because it will keep jobs in Ontario — should stick to their guns and take that choice to the voters

AoD

 

[AlvinofDiaspar]

And again from the Star:

Transit meeting to be closed
Aug. 22, 2006. 01:00 AM
JOHN SPEARS
CITY HALL BUREAU

Toronto Transit Commission members and city councillors from Scarborough are to meet behind closed doors today to discuss the area's transit future.

The public isn't invited to the gathering at Scarborough Civic Centre because it's only a briefing session, Councillor Michael Thompson said yesterday.

Thompson (Ward 37, Scarborough Centre) chairs the Scarborough community council, which normally holds its meetings in public.

But he said today's session doesn't count as a community council meeting because it's simply an informal forum where councillors can listen and ask questions.

"We're not making any decisions. We're just getting information," he said.

Councillors sometimes invite city staff members to their offices for a briefing on an issue, and this is similar, he said.

The Municipal Act requires meetings to be open to the public unless they deal with the security of property, personnel matters about an identifiable individual, land transactions, labour negotiations, legal advice or litigation.

One of the key issues for Scarborough councillors is the future of the Scarborough Rapid Transit line, which is nearing the end of its life.

Scarborough councillors want a full-scale subway extension to replace the line, but a consultant's report has outlined less costly options

AoD.

 

[cassiusa]

Why is the TTC looking to purchase so many new subway cars again? I know some of the existing need replacing but if they're budgeting $700M for replacements, that sure sounds like a lot.

 

[bizorky]

How much do the provincial, federal and municipal governments spend on luring automobile companies to the province?