Report of the Ottawa Light Rail Transit Public Inquiry

Description

Contents Acknowledgements Table of Abbreviations Chapter 1 Executive Summary 1.1 Project Delivery Model 1.2 Bidding Process 1.3 Contractual Arrangements 1.4 Unproven Design 1.5 Inexperience 1.6 Project Delays 1.7 The Relationship between RTG and the City 1.8 City Governance Prior to Trial Running Testing 1.9 Testing and Commissioning 1.10 Substantial Completion 1.11 Trial Running Testing and Vehicle Reductions 1.12 City Governance during Trial Running Testing 1.13 System Opening and Problems 1.14 Derailments and Safety 1.15 Conclusion Chapter 2 Timeline of Key Events Chapter Contents 2.0 Introduction 2.1 Background: The Transportation Master Plan, Funding, and Preliminary Engineering (2006–2010) 2.2 Procurement: The RFP Process and Selection of Rideau Transit Group (2010–2013) 2.3 Construction and Manufacturing: Delays and the Rideau Street Sinkhole (2013–2018) 2.4 Handover: Substantial Completion, Trial Running, and Revenue Service Availability (2018–2019) 2.5 Public Service: Malfunctions and Derailments (2019–2021) Chapter 3 The Ottawa Light Rail Transit Project, Stage 1: Background; Key Roles and Responsibilities Overview Chapter Contents 3.0 Introduction 3.1 Overview of OLRT1 3.2 The Origins of the OLRT1 Project 3.2.1 The Transitway 3.2.2 The O-Train 3.2.3 The Cancelled North-South LRT Line 3.2.4 Planning Begins for the OLRT1 3.2.5 The 2010 Municipal Election 3.3 The City’s Governance Structure for the OLRT1 3.3.1 City Council and the Mayor 3.3.2 City Manager 3.3.3 City Treasurer 3.3.4 Finance and Economic Development Committee 3.3.5 Executive Steering Committee 3.3.6 Rail Implementation Office / O-Train Construction Office 3.3.7 OC Transpo and Transportation Services 3.3.8 Regulatory Monitor and Compliance Officer 3.3.9 City Transit Commission 3.4 Advisors to the City 3.4.1 Engineering and Technical Advisors 3.4.2 Financial and Transactional Advisors Notes Chapter 4 Setting the Budget and Schedule: Concerns about Interference for Political Reasons Key Findings Chapter Contents 4.0 Introduction 4.1 The City’s Planning and Priorities 4.2 Government Funding and Preliminary Engineering 4.3 Setting the Budget and Schedule 4.4 Political Pressure on the Budget 4.5 Conclusions regarding the Budget and Schedule Process Recommendations Chapter 5 The Procurement and Delivery Model (2010–2011) Key Findings Chapter Contents 5.0 Introduction 5.1 Public-Sector-Led Procurement Models 5.1.1 Design-Bid-Build 5.1.2 The Design-Build Approach 5.1.3 Downsides of Traditional Project Delivery Models 5.2 Public-Private Partnerships 5.2.1 Underlying Rationale and History 5.2.2 Advantages and Disadvantages of P3s 5.3 Ottawa Selects a Public-Private Partnership Delivery Model 5.3.1 Deloitte 5.3.2 Factors That Led to a Public-Private Partnership 5.3.3 Operations and Maintenance in P3s 5.3.4 The City Formally Adopts the Design-Build-Finance-Maintain Model 5.4 Impact of the Procurement Model 5.4.1 Risk Transfer 5.4.2 Impact on the City’s Role in the Project and Its Relationship with RTG 5.4.3 Assessment of Impact of the P3 Model 5.5 The Future of Procurement 5.5.1 Preconceived Models 5.5.2 Market Innovations 5.5.3 Objective Criteria 5.6 Conclusion Recommendations Notes Chapter 6 The Procurement (2011–2013) Key Findings Chapter Contents 6.0 Introduction 6.1 Overview of the City’s OLRT1 Procurement 6.2 The Request for Qualification 6.3 The Request for Proposals 6.3.1 Overview of the RFP 6.3.2 Communications during the In-Market Period 6.3.3 Fairness 6.4 The RFP Incentivized Affordability and Risk Transfer 6.4.1 Affordability Cap 6.4.2 Bidders Accept Full Geotechnical Risk 6.5 Vehicle Procurement 6.5.1 Canadian Content Requirement 6.5.2 The LRV Project-Specific Output Specifications 6.5.3 Vehicle Procurement and Pre-qualification Process 6.6 Negotiation of the Project Agreement 6.6.1 Selection of Payment Milestones 6.6.2 No Bedding-In Period or Soft Start 6.7 RTG Wins the RFP 6.7.1 Optimism Bias and Complex Infrastructure Procurement 6.7.2 Evaluation Process for the Proposals 6.7.3 RTG Selected as Winner 6.8 RTG’s Corporate Structure and Implications for the OLRT1 Project Recommendations Notes Chapter 7 The Project Agreement Key Findings Chapter Contents 7.0 Introduction 7.1 The Project Agreement: General Structure 7.1.1 General Content of the Project Agreement and Its Schedules 7.1.2 Performance-Based Project Specifications 7.1.3 Variations to the Project Scope 7.2 Risk Allocation during Construction 7.2.1 Failure to Maintain Schedule 7.2.2 Delays to Revenue Service Availability 7.2.3 Cost Overruns 7.2.4 Events for Which Relief Could Be Provided 7.2.5 Geotechnical Risk 7.3 Progress Reporting and Public Communications 7.3.1 Authority over Public Communications about the OLRT1 Project 7.3.2 Reporting to the City 7.3.3 The City’s Communications Governance 7.3.4 The One-Sided Communication Challenge 7.4 Payment Mechanisms and Incentives 7.4.1 Construction Milestone Payments 7.4.2 Maintenance Term and the Maintenance Payment Mechanism 7.5 Role of the Independent Certifier 7.5.1 The Role Generally 7.5.2 Certification Role 7.5.3 Dispute Resolution Role 7.6 Role of Third-Party Finance Providers and Project Extensions 7.6.1 The Role of Third-Party Lenders 7.6.2 The Credit Agreement and Lenders’ Direct Agreement 7.6.3 Extensions to the OLRT1 Project 7.7 Testing and Commissioning, Trial Running, and Handover 7.7.1 Testing and Commissioning 7.7.2 Trial Running 7.7.3 Handover: Substantial Completion and Revenue Service Availability 7.7.4 Revenue Service and Full Start to Public Operations Recommendations Notes Chapter 8 Project Characterized by Inexperience Key Findings Chapter Contents 8.0 Introduction 8.1 New Aspects of Work for the City and Its Advisors 8.2 An Unproven Vehicle 8.2.1 The “Service-Proven” Requirement and Rejection of CAF 8.2.2 Alstom’s Citadis Spirit Vehicle 8.3 Unproven Relationships, Facilities, and Operator 8.4 Implications of the New and Unproven Elements Recommendations Chapter 9 Construction and Manufacturing: Challenges and Delays Key Findings Chapter Contents 9.0 Introduction 9.1 Construction and Manufacturing Roles, Responsibilities, and Key Terms 9.1.1 RTG, OLRT-C, and Subcontractors 9.1.2 The City and Its Advisors 9.1.3 Key Terms and Steps in Construction and Manufacturing 9.2 Changes to the Manufacturing and Validation Testing Location 9.2.1 Alstom’s Early Planning Challenges 9.2.2 Early Vehicle Design Delays 9.2.3 LRV Manufacturing Is Moved to North America 9.2.4 The Effect of the Moves on Validation Testing 9.2.5 Conclusion 9.3 Train Manufacturing Challenges 9.3.1 The Canadian Content Requirement 9.3.2 Changes to Alstom’s Supply Chain 9.3.3 Finding Skilled Labour in Ottawa 9.3.4 Manufacturing LRVs at the MSF 9.3.5 Considerations for Future Projects 9.4 The Alstom-Thales Interface and Integration 9.4.1 A Critical Interface 9.4.2 Misaligned Subcontracts and Early Troubles 9.4.3 Gaps in OLRT-C’s Systems Integrator Role 9.4.4 Operational Issues 9.4.5 Conclusion 9.5 Systems Integration 9.5.1 Systems Integration and Systems Engineering 9.5.2 Systems Integration Was a Critical Risk of the Project 9.5.3 Responsibility for Systems Integration 9.5.4 Systems Integration and Engineering Were Late and Ineffective 9.5.5 The City Had Limited Involvement in Early Design and Construction 9.5.6 Conclusion Recommendations Notes Chapter 10 The Rideau Street Sinkhole, Increased Pressure, and Souring Relationships Key Findings Chapter Contents 10.0 Introduction 10.1 The Rideau Street Sinkhole 10.1.1 The Rideau Street Sinkhole’s Appearance 10.1.2 Geotechnical Risk Transfer and the Cause of the Sinkhole 10.1.3 The Sinkhole’s Disruptive Effect 10.1.4 The Sinkhole’s Financial and Contractual Impacts 10.1.5 Conclusion 10.2 Delay Pressure and Changes to the Schedule 10.2.1 Serial Testing and Integration Testing 10.2.2 Pressure to Catch Up 10.2.3 Revised Schedules 10.2.4 Track Completion 10.2.5 Conclusions 10.3 Relationship and Communication Problems 10.3.1 The City’s Loss of Trust in the Schedules and Delivery Date 10.3.2 Pressures on the City and Its Resulting Abidance by the Contract 10.3.3 Commercial Positioning and Communication Breakdown 10.3.4 The Debt Swap and Resulting Imbalance Recommendations Notes Chapter 11 Safety of the OLRT1 Entering Public Service Key Findings Chapter Contents 11.0 Introduction 11.1 Key Roles and Key Terms 11.2 The Independent Safety Auditor 11.3 Safety Certification of the System Infrastructure 11.4 The City’s Safety Oversight Role 11.4.1 The Delegated Authority Agreement 11.4.2 The City’s Regulatory and Safety Oversight Framework 11.4.3 The City’s Safety Enforcement Powers 11.5 Conclusion Recommendations Chapter 12 Events of Summer 2019: Substantial Completion, Trial Running, Revenue Service Availability Key Findings Chapter Contents 12.0 Introduction 12.1 Backdrop to Trial Running: Environment for Poor Decision-Making 12.2 Substantial Completion: Contract Criteria Changed for the First Time 12.2.1 Contract Process for Substantial Completion 12.2.2 RTG’s First Application for Substantial Completion 12.2.3 RTG’s Second Application for Substantial Completion 12.2.4 The City and RTG Were Aware That the System Was Not Substantially Complete 12.3 The Trial Running Criteria and Process 12.3.1 What Is Trial Running and Why Was It Important? 12.3.2 Development of 2017 Criteria for Trial Running 12.3.3 The City and RTG Agree upon New Criteria in 2019 That Match the Performance Required under the Project Agreement 12.3.4 The 2019 Criteria Were More Stringent and Difficult to Meet 12.3.5 The Role of the Independent Certifier 12.4 Detailed Review of the Trial Running Period 12.4.1 Information Sharing as Trial Running Began 12.4.2 Performance Issues Heading into Trial Running 12.4.3 Start of Trial Running and the Early “Pause” 12.4.4 August 2–9, 2019, the Emergency Briefing, and the Reversion to the 2017 Criteria 12.4.5 Performance, August 9–23, 2019 12.4.6 The Approach to Maintenance Review 12.5 Decision-Making and Transparency during Trial Running 12.5.1 Decision-Making 12.5.2 Communications to Council 12.5.3 The Alleged “Commitment” Not to Update Council until after Trial Running 12.5.4 These Were Not “Operational” Issues 12.6 Fewer Trains, the RSA Term Sheet, and Public Launch 12.6.1 The City Initially Holds Firm to Requiring 34 LRVs (17 Double Cars) Available for Use 12.6.2 The City and RTG Agree to Reduce to 26 LRVs (13 Double Cars) Available for Use 12.6.3 RSA to Public Launch 12.7 Why Did the Parties Decide to Launch despite the Reliability Problems? 12.8 Causation and Conclusion Recommendations Chapter 13 Maintenance Was Not Ready for Burden Key Findings Chapter Contents 13.0 Introduction 13.1 Maintenance for Public Service: Roles, Responsibilities, and Key Terms 13.2 Growing Maintenance Burden Passed Along from Construction Phase 13.2.1 Reliability and Performance Issues Pushed to Public Service 13.2.2 Risk of Latent Defects, Deficiencies, and “Bugs” 13.2.3 Retrofits Increase Reliability Risks, Complicate Maintenance 13.2.4 Incomplete and Disorganized Handover to RTM 13.2.5 Conclusion 13.3 Insufficient Maintenance and Warranty Staffing 13.3.1 Inexperienced Maintenance Workforce 13.3.2 Insufficient Maintenance and Warranty Personnel 13.3.3 Insufficient RTM Oversight 13.3.4 Conclusion 13.4 OLRT1 Learning Curve 13.4.1 OC Transpo’s First LRT System 13.4.2 The Relationship between OC Transpo, RTG, RTM, and Alstom 13.5 Mistrust Undermines Partnership 13.5.1 Systems Engaged in OLRT1 Maintenance 13.5.2 City Generated a Flood of Work Orders in Early Revenue Service 13.5.3 City Mischaracterized Work Orders 13.5.4 Disputes between Alstom and OLRT-C Slow Maintenance 13.5.5 Conclusion Recommendations Notes Chapter 14 Public Service Key Findings Chapter Contents 14.0 Introduction 14.1 The OLRT1 System Launches with Full Public Service 14.1.1 No Soft Start 14.1.2 Parallel Bus Service Shut Down after Only Three Weeks 14.1.3 Replacement Bus Service 14.2 Known Issues Hinder Public Service 14.2.1 Door Faults and Failures 14.2.2 Power Supply Issues 14.2.3 Train Control Management System 14.2.4 Track Buckling 14.3 Winter Conditions Cause Technical Failures 14.3.1 Failures of the Line Inductors and Overhead Catenary Systems 14.3.2 Electric Switch Heater Failures 14.4 Wheel Problems Take LRVs out of Service 14.4.1 Wheel Flats 14.4.2 Cracked Wheels 14.5 Safety during Public Service 14.5.1 The City’s Safety Oversight Framework in Public Service 14.5.2 Improvements to the City’s Oversight 14.5.3 Regulatory and Safety Concerns 14.6 Relationship Issues in Public Service 14.6.1 Ongoing Payment Disputes between the City and RTG 14.6.2 Public Communications 14.6.3 The Transit Commission Received Limited Information 14.7 Improvements Are Made 14.7.1 Management Changes at RTG and RTM 14.7.2 Staffing Changes at Alstom 14.7.3 Greater Co-operation between the City, RTG, and RTM 14.7.4 Improvements Due to Experience Recommendations Chapter 15 Derailments Key Findings Chapter Contents 15.0 Introduction 15.1 The First Derailment 15.1.1 The August 2021 Derailment 15.1.2 The Vehicle Components Involved 15.1.3 Grounding the Fleet 15.1.4 Inspection Results 15.1.5 Return to Service 15.1.6 The Preliminary Investigations into the Cause of the Derailment 15.2 The Second Derailment 15.2.1 The September 2021 Derailment 15.2.2 The Root Cause 15.3 The System Shutdown 15.3.1 The System Shutdown and Engaging TRA 15.3.2 The Second Notice of Default and the Return-to-Service Plan 15.3.3 TRA’s Assessment of the Root Causes 15.3.4 Implementing the Return-to-Service Plan 15.3.5 TRA’s Ongoing Engagement 15.3.6 Conclusion 15.4 Return to Service 15.4.1 System Reliability Following the Return to Service 15.4.2 The Wheel/Rail Interface 15.4.3 Potential Remedial Actions 15.4.4 Conclusion on the Return to Service 15.4.5 Postscript on Issues Subsequent to the Public Inquiry Hearings Recommendations Notes Chapter 16 Conclusion Chapter Contents 16.0 Introduction 16.1 Report Takeaways 16.1.1 Budgeting 16.1.2 Procurement 16.1.3 Inexperience 16.1.4 New Vehicle 16.1.5 Working Relationships 16.1.6 Testing and Commissioning 16.1.7 Radical Shift in Approach 16.1.8 Trial Running Testing 16.1.9 Governance, Communication, and Accountability 16.1.10 Communication 16.1.11 Public Launch 16.1.12 Operation of the System 16.1.13 Derailments 16.2 Closing Thoughts Chapter 17 Recommendations Chapter Contents 17.0 Introduction 17.1 Planning Complex Infrastructure 17.2 Preparing Project Estimates and Budgets 17.3 Selecting a Project Delivery Model 17.4 Risk Reduction during Procurement Proven Project Elements Should Be Preferred Review of Canadian Content Requirements Providing Time to Incorporate New Elements during In-Market Period 17.5 Creating an Effective Contract Scheme Contract Review Public Communications about the Project Dispute Resolution Independent Oversight Project Changes Testing and Commissioning Trial Running Bedding-In Periods Handover Operations Project Additions or Expansions 17.6 Fostering Successful Working Relationships 17.7 Transparency and Effective Planning and Oversight during Construction Subcontract Consistency and Completeness Systems Integration Validation Testing Maintaining a Current Consolidated Project Schedule Communications regarding the Project Schedule Changes to the Project Schedule Fostering Timely, Candid Communications about Project Issues 17.8 Accuracy, Transparency, and Public Entity Decision-Making 17.9 Safety Requirements 17.10 Preparing for and Achieving a Successful Handover and Start to Public Service Ensuring a Skilled Workforce Providing Adequate Operations and Maintenance Resources Supporting Success in Early Public Service Clearly Defined Operations and Maintenance Responsibilities Transparency between Operations and Maintenance 17.11 Public Service Oversight during Public Service Adopting a Partnership Approach between Owner, Operator, and Maintainer Efficient and Effective Warranty Service Maintenance during Public Service 17.12 Recommendations for the OLRT1 Future Assessments and Preventive Maintenance Chapter 18 Inquiry Process Chapter Contents 18.0 Introduction 18.1 What Is a Commission of Public Inquiry? 18.2 What Was the Commission’s Mandate? 18.3 What Were the Commission’s Governing Principles? 18.3.1 Fairness 18.3.2 Proportionality 18.3.3 Efficiency 18.3.4 Expeditiousness 18.4 How Did the Commission Meet Its Deadline? 18.5 What Rules Governed the Inquiry? 18.6 How Did the Commission Communicate with the Public? 18.7 Who Participated in the Inquiry? 18.7.1 Commission Counsel 18.7.2 Third-Party Participants 18.8 How Did the Commission Prepare for the Hearings? 18.9 How Were the Public Hearings Conducted? 18.9.1 Room and Recording Logistics 18.9.2 Evidence 18.9.3 Expert Panel on Major Projects and Public-Private Partnerships 18.10 How Did the Commission Form Its Recommendations? 18.11 What Considerations Guided This Report? Notes Appendices Appendices Contents Appendix A: Executive Council of Ontario Order in Council 1859/2021 (December 16, 2021) Appendix B: Letter from Transportation Safety Board Counsel to Commission Counsel (February 9, 2022) Appendix C: Revised Rules of Procedure (March 21, 2022) Appendix D: Rules of Standing and Funding (January 20, 2022) Appendix E: Order on Applications for Standing and Funding (March 3, 2022) Appendix F: Procedural Order 1 (February 11, 2022) Appendix G: Procedural Order 2 (March 24, 2022) Appendix H: Procedural Order 3 (May 31, 2022) Appendix I: Procedural Order 4 (June 6, 2022) Appendix J: Arbitrator Order on Application by the City of Ottawa for Privilege (June 21, 2022) Appendix K: Order on Application by Infrastructure Ontario for Confidentiality (June 6, 2022) Appendix L: Order on Application by the City of Ottawa for Confidentiality (June 10, 2022) Appendix M: Order on Application by Rideau Transit Group General Partnership for Confidentiality (June 16, 2022) Appendix N: OLRT Commission Hearings Schedule (June 22, 2022)