Bombardier facing potential penalties over late streetcars

Sixty new vehicles originally due by August, but city has just seven currently in service

In the end it will be up to the lawyers — not TTC riders or the taxpayers footing the bill for the city’s new streetcars — to decide if and by how much Bombardier is financially penalized for its years-late delivery of the new fleet.

The TTC’s contract for 204 lowfloor streetcars allows for up to 5 per cent of the $1.2-billion cost in liquidated damages if Bombardier is late delivering the 60th vehicle.

That is one of three potential penalties to the company spelled out in a report before the TTC board on Wednesday.

At this point, with only seven supersized, air-conditioned streetcars in service, it’s a given that there won’t be 60 in town by August as scheduled.

The company isn’t even expected to respond until next week to the TTC’s proposed revised delivery schedule, which would commit Bombardier to having 30 cars in town by the end of the year.

Under the previously contracted schedule, Toronto should have had 37 streetcars by the end of 2014 and 73 by the end of this year.

But that doesn’t guarantee Toronto will get back the $60 million in damages the streetcar contract prescribes. That provision is open to in- terpretation, said TTC spokesman Brad Ross. "Bombardier does have some claims where they will say that the liquidated damages in the 60 cars by August don’t apply or should not apply. So we need to hear what those claims are. We need to understand them. It’s a contract issue and we have an obligation to hear them out," he said.

"No, we won’t have 60 cars by August, but Bombardier will claim there are reasons for that, that were not within their control and we need to hear that out," said Ross.

"In the end, that will all have to get sorted out between the legal teams," he said.

Originally, the glacial rate of production was blamed on a strike at the Thunder Bay, Ont., plant and the tricky design of the TTC’s unique, two-stage wheelchair ramp.

It was subsequently revealed, however, that there were significant issues with parts suppliers, including a plant in Mexico, and manufacturing difficulties in Ontario. TTC CEO Andy Byford has said that the cars were initially so poorly fitted that they were being riveted together and would have fallen apart on Toronto’s streets.

Other penalties at the TTC’s disposal include cancelling the Bombardier contract altogether or giving it an unsatisfactory performance evaluation that would prohibit the company from bidding on TTC contracts for at least three to five years.

The TTC evaluates each contractor, sometimes several times if the contract timelines are significant, for safety, quality, claims and contract requirements, including sticking to schedule.

Byford and Councillor Josh Colle, who chairs the TTC board, went to Thunder Bay last month to review the production line and meet with Bombardier officials to impress upon them the need to get the streetcar deliveries moving.

Colle has said that he will be pushing to make sure the company helps the TTC recoup some of the cost of keeping its old streetcars running longer.

The TTC’s revised delivery schedule would still require Bombardier to deliver all 204 streetcars in the order by 2019.