(The following article by Francois Shalom was posted on the Montreal Gazette website on May 26.)
MONTREAL — Bombardier Inc.’s rail division, it seems, negotiates important contracts twice – once before winning them, and again after delays, cost overruns and a host of other assorted glitches.
Two major contracts obtained by Bombardier Transportation years ago could well end up in court, embroiled in disputes about who is responsible for their delivery problems.
The main dispute is with Las Vegas Monorail Co., for which Bombardier is building trains for a monorail system linking downtown hotels and casinos in the desert town.
Bombardier won the bid four years ago with its consortium partner in the $690-million (U.S.) project, Granite Construction Co., a major U.S. public infrastructure contractor for projects like airports, bridges, dams, highways, tunnels and mass transit systems. Bombardier’s share of that is $392 million U.S., including a five-year operating and maintenance provision.
The consortium, of which Bombardier owns 55 per cent, was scheduled to deliver the system on January 20, 2004 when the deal was signed four years ago, said Bombardier Transportation spokesperson Helene Gagnon yesterday.
But problems developed, and as stipulated in the agreement, the consortium started paying $85,000 U.S. a day in late fees starting 45 days after the scheduled delivery date, or March 6th.
Bombardier’s share, however, is $47,000 U.S. a day – not the entire $85,000 U.S., as stated in a previous report. Granite Construction, with 45 per cent of the consortium, is paying its proportional share – $38,000 U.S. a day.
In addition, said Gagnon, Bombardier has filed a request to the project’s insurer, arguing that the policy should cover the late-fee fines as of March 6.
Gagnon said the priority is now to finish the contract to carry the 19 million passengers annually.
But after all is ironed out, “we will have to discuss all these financial considerations with all the customers, and all parties involved.”
She could not say if that would involve lawsuits.
The delay was largely caused by a problem with a train-control software developed by French firm Alcatel, Gagnon said.
The other issue is Bombardier’s late delivery of cars for Minneapolis-St.Paul’s Hiawatha light-rail project.