Bombardier loses Ottawa transit deal: City rail line
Nicolas Van Praet
8 April 2006
Bombardier Inc. and engineering partner SNC Lavalin Engineers and Constructors Inc. have lost one of the biggest transit contracts of the year on their home turf.
The City of Ottawa yesterday picked the group of Siemens Canada Ltd., contracting giant PCL Constructors Canada Inc., and Dufferin Construction Co. as the so-called preferred proponent to build a 30-kilometre light-rail transit line stretching from the city's downtown core over the Rideau River to South Nepean.
The rail line, to be built at a cost of between $625-million and $700-million, is the largest infrastructure project undertaken in Ottawa.
The deal was announced in a memo to Ottawa's mayor and council members late yesterday. It comes 16 months after SNC beat out then rival Bombardier to win a $1.76-billion contract for a high-capacity rail line in Vancouver.
The two companies teamed up to bid jointly for the Ottawa deal but came up short, which may raise questions about future partnership between them in the short term.
"It was a fairly easy recommendation to make," said Rejean Chartrand, Ottawa's director of economic development. "They came in as the lowest overall [price]."
The city now enters one-on-one negotiations with the Siemens group on its proposal. If both sides are satisfied by the outcome of those talks, a final contract is expected to be made public in mid-May. If the negotiations fail, the city can tap the other bidders. The other group that made a proposal was led by partnership Kiewit-EllisDon.
Bombardier workers in Thunder Bay had been gunning for the rail-car building work, claiming a 1992 agreement Bombardier struck with the former Ontario government gave the company preferred-supplier status. Ottawa's mayor has since said no bidder would get such status.
Pride aside, when considered in the context of their overall business, losing the transit deal is of little financial consequence for either SNC or Bombardier.
Bombardier enjoys 31% of the world's US$39.3 billion mass-transit market, Dundee Securities analyst Richard Stoneman noted. Last year, it did US$6.7. billion in mass transit business, winning 18 contracts over US$100 million.
"You never want to lose," Mr. Stoneman said. "[But remember] if you win everything, you're probably bidding too low."
SNC and Bombardier both declined to comment on the announcement yesterday.