Wednesday, March 19, 2008

New transit plans and old transit lawsuits

The Ottawa Business Journal took an interesting look at the City of Ottawa's four new transit plans, and the relationship between them and the potential lawsuit which Siemens filed against the city after the original north-south transit plan was voted down by council when Larry O'Brien became mayor. A little excerpt from the story:

There are a bunch of issues associated with procurement and litigation. Let's deal with the city's perspective. First of all, we are dealing with a transportation plan with an estimated cost of somewhere between $3.2 billion and $3.8 billion. As if that is not enough, we are looking at the lawsuit. What do you do? Do you sole-source the contract to Siemens to avoid the lawsuit? Are you allowed to sole-source if this is a much bigger contract than the original plan? Do you settle the lawsuit prior to the launching of the procurement effort and if you do, what does that do to Siemens and its interest in the project?


And of course, what about Siemens? What is its next step? Does it drop the lawsuit in order to go after the much larger contract with the city? Does it settle with the city for a much lower sum so that it can position itself for a run to the bigger prize? Or is Siemens at the point where it really doesn't want to have anything to do with the City of Ottawa?

Now, I will offer the same qualification as the author of the original story (Jeff Polowin): I am no lawyer. I do think, however, that the potential lawsuit has to enter into the equation when soliciting bids for the construction of whatever plan is chosen.

This should not involve a sole-source contract, but you've got to consider the possibility of Siemens dropping their lawsuit when examining competing bids. If they and another firm offer bids that are essentially the same bottom number, but the offer from Siemens offers the proviso of dropping their $277M lawsuit, Siemens' bid should win. The lawsuit serves as a credit, and it may seem to be unfair to competing firms, but it is a direct result of the "very long and expensive procurement battle to construct the ill-fated north-south light rail transit line" (in the words of Polowin) that Siemens engaged in years ago.

That's just my two cents, however; I encourage anyone who agrees or disagrees to comment on the thread.

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