Metrolinx quietly increased the cost of its order for Bombardier light rail vehicles by about $40 million last fall, and the agency says the purchase will only become more expensive.
When Metrolinx, the provincial transit agency for the GTA, signed the deal in 2017 to buy 76 light rail vehicles to run on the Eglinton Crosstown LRT, it announced the cost of the purchase as $392 million.
But on Nov. 26, 2019, Metrolinx and Bombardier inked an amendment that added work to the contract and increased its value. Metrolinx didn’t announce the cost increase but the Star has obtained a copy of the amendment.
The additional work involves Bombardier installing vital signalling and communications equipment on the cars. At least some of the work will be done at the Quebec-based manufacturer’s plant in Thunder Bay.
According to the copy of the amendment, the cost of adding the work is $36.2 million, plus a $3 million incentive if Bombardier meets a key deadline, and up to $1.5 million for costs related to labour and vehicle transportation in Thunder Bay.
Metrolinx spokesperson Matt Llewellyn said the amendment had been expected and the agency “always planned to issue a change order” for the communications and signalling equipment.
He said the contract value is expected to increase further because the agency is in negotiations with Bombardier to purchase spare parts for the new fleet. Llewellyn said he couldn’t put a dollar value on the total cost of the purchase “until those details are finalized.”
Bombardier spokesperson Kaven Delarosbil didn’t answer specific questions about the amendment but said the company is up to the work.
“Our skilled employees in Ontario are committed to the success of the Eglinton Crosstown project, and we are on track to deliver these high quality, state-of-the-art vehicles,” he said.
Complicating the work is the fact the Crosstown vehicles are already in production and dozens of them will have to be retrofitted with the communications and signalling equipment.
According to Metrolinx, Crosslinx Transit Solutions (CTS), the consortium building the LRT, is responsible for designing the interface for the line’s communications and train control systems.
Llewellyn said CTS was late in finalizing the design, which delayed the installation of the equipment and has necessitated the retrofit. Llewellyn said Metrolinx intends to recover the majority of the increased costs related to the November amendment from CTS.
However, CTS spokesperson Kristin Jenkins would not confirm that the consortium will agree to pick up the tab.
“CTS continues to work collaboratively with Infrastructure Ontario and Metrolinx to deliver this world-class transit system safely, with the utmost quality,” Jenkins wrote in a brief statement.
The Crosstown is a 19-kilometre, 25-stop light rail line currently under construction across midtown Toronto. Metrolinx has pegged its construction costs at $5.3 billion, but with additional costs like maintenance, vehicles, and contingencies, the total cost will run to more than $12 billion.
It was scheduled to open by Sept. 2021, but internal Metrolinx documents previously reported on by the Star show that by last November CTS had told the agency the LRT would be delayed by months. Metrolinx has since confirmed it won’t be operational until “well into 2022,” but has provided no firm date.
The LRT won’t initially require the full fleet to operate and Metrolinx plans to use just 42 vehicles starting opening day. Despite the delay to construction, the contract amendment maintains the previous deadline for supplying the first 42 cars with functional signalling and communication equipment as Aug. 1, 2021, long before the line is now expected to serve its first passengers. Metrolinx will pay Bombardier a $3-million incentive if it meets that date.
Asked why the agency needs the cars so far ahead of opening day, Llewellyn said they were always required before the line became operational to allow for testing and integration with Crosstown infrastructure. “These activities are still required and are still proceeding to the current schedule,” he said.
The deadline for delivering all 76 cars with functional add-ons is March 31, 2022.
The contract amendment shows Bombardier is facing steep penalties if it doesn’t meet Crosstown delivery deadlines. If it fails to supply the first 42 cars to the Eglinton maintenance and storage facility by March 31, 2021 the company will have to pay a penalty of $500,000 for every day it’s late.
Bombardier missed the Feb. 1 2019 due date to supply the first six vehicles for preliminary acceptance, which is an early stage of delivery. The due date for final acceptance of the first half-dozen cars is July 1, 2020, under penalty of $300,000 per day.
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Bombardier has manufactured 30 cars but Metrolinx has so far given final acceptance to just two. Llewellyn said the agency is “confident” Bombardier will meet the July 1 deadline for the first six vehicles.
Metrolinx originally ordered 182 vehicles from Bombardier at a cost of $770 million in 2010, with the intention to run them on both the Eglinton Crosstown and Finch West LRTs. But the agency later tried to break the contract after accusing Bombardier of falling behind in production. The company took Metrolinx to court and eventually the two sides agreed to proceed with a reduced order.
Last month, Bombardier announced it had reached a $9-billion deal to sell its rail division to French competitor Alstom. The agreement is expected to face antitrust scrutiny and has yet to receive regulatory approval.