Regional council’s attempt to piggyback on a provincial contract for light rail transit vehicles has irked at least one spurned company.
Representatives from Siemens Canada appeared at last Wednesday’s council meeting, voicing their opposition to the proposal.
Councillors originally approved the piggyback in June, which will see the region attempt to add its order to an existing contract between provincial transit agency Metrolinx and train manufacturer Bombardier.
The existing contract calls for more than 200 vehicles to be provided for new LRT projects in Toronto. Waterloo Region is looking to add 14 five-car trains to the order.
Marco Jungbeker, vice-president of Siemens Canada’s rail systems division, said his company knew nothing of the region’s decision until reading about it in media reports last week.
“We were very surprised,” he told councillors.
“The process . . . was not transparent for us. We believe the process is a non-competitive procurement and is also a closed process — and, we think, not in the best interests of the Kitchener-Waterloo LRT project.”
Coun. Jim Wideman called Jungbeker’s claims “not an accurate reflection of what is happening.”
He pointed to Metrolinx as having already gone through the competitive process when they signed their contract with Bombardier in 2009.
Siemens bid on that contract, but at a little over $1.5 billion lost out to Bombardier’s $993-million bid.
Other piggybacking scenarios in the United States — in Salt Lake City, Atlanta, and Hampton Roads — have seen Siemens as the beneficiary, said Wideman.
“I was surprised by what they said, that they would say this was not an open, competitive process when they themselves have been the recipient of the same process in three different occasions. It seemed like it was OK then,” he said.
Jungbeker also questioned why the region was procuring vehicles separate from the rest of the private-sector DBFOM (design, build, operate, finance, maintain) contract.
“There are no DBFOM projects in the world that have procured the vehicles separately from building the LRT line,” he told councillors.
“The separate procurement of vehicles will create additional costs for the region. It will commission time delays. It will add interface requirements.”
Regional transportation commissioner Thomas Schmidt said one doesn’t have to look very far to find a project where vehicles were procured separately — only as far as the same contract Waterloo Region is looking to piggyback on.
“We have one locally in Toronto,” he said.
“They’re procuring their vehicles under separate contracts from Bombardier and they will be doing their procurement of the rail lines separately.”
Jungbeker said Siemens would be able to manufacture the vehicles for less than the $4 million per vehicle Metrolinx is receiving from Bombardier, and do so with some of the manufacturing process occurring in Waterloo Region, creating jobs.
In an interview, Wideman questioned how this would be possible when Siemens’ bid on the Metrolinx contract came in at $7 million per vehicle.
“Normally when you buy a bigger quantity, it’s cheaper, so I don’t know how they could possibly suggest to us that they could do it for under $4 million,” he said.
Councillors did not opt to change their course, giving unanimous final approval to the piggyback negotiations. The result of negotiations will come before council in the fall.
“We are disappointed and we are surprised,” said Jungbeker after the vote.
“There is a competitive process. I don’t know why this council doesn’t want to do it.”