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Pan-Canadian P3 Report released by the Canadian Conference Board

The Conference Board of Canada recently released a report entitled "Dispelling the Myths: A Pan-Canadian Assessment of Public-Private Partnerships for Infrastructure Investments" which will undoubtedly be of interest to private and public sector participants in the Canadian infrastructure projects world.

The report assesses the benefits and disadvantages of using public-private partnerships (P3s) as a procurement vehicle for Canadian governments seeking to build or upgrade infrastructure assets. It does so by using empirical and anecdotal data gained from P3 projects in Canada executed from 2004 onward under the auspices of PPP Canada, Partnerships BC, Infrastructure Ontario, the Alternative Capital Financing Office of the Alberta Treasury Board and the recently re-named Infrastructure Québec (or the so-called "second wave" P3s).

The report's highlights include a conventional-to-P3 efficiency comparison for Canadian infrastructure project procurement, using value-for-money studies ("VfM studies") and studies of the ex post performance of P3s ("ex post studies"), an efficiency analysis of the second wave P3s and an analysis of the factors responsible for efficiency gains in P3 projects.

Among the factors deemed responsible for P3 efficiency gains are upfront risk allocation optimization, as well as the incentivising of construction phase efficiency as a result of private financing and the ensuing private sector partner's responsibility for a large portion of debt. The report also cites private sector innovation, whether in proposed outputs pursuant to performance-based contracts or relative to total project life cycle costs. The report however points out that innovation is not exclusive to the P3 model.

With regards to the second wave P3 projects, the report estimates the value of the P3 efficiency gains from between a few million dollars per project to over $750 million, which represents taxpayer savings of between 0.8% and 61.2% per project when compared to conventional contracting.

A copy of the report can be obtained from the Canadian Conference Board's website by clicking here.

Montreal Métro invites bids for 765 cars with an option for up to 288 more - Total Contract Value could top $3 billion

The Societe de transport de Montreal ("STM") and Transports Quebec recently announced that the procurement of a new fleet of rubber-tyred Métro cars would be put out to tender again. The tendering period is to last 30 days, in compliance with World Trade Organisation rules.

The international public notice of the invitation to bid can be found at the following link: http://www.stm.info/english/en-bref/a-avisdintention_mr-08.pdf

The timing of the STM's decision to re-bid has been criticized by many as a result of sole-source negotiations having been nearly completed with a consortium formed by Bombardier and Alstom. However, the STM justifies its decision as a result of significant changes to the scope of the contract. Several new contenders may decide to bid for the contract, including Siemens and Chinese manufacturer CSR Zhuzhou.

The acquisition of a new fleet of cars by the STM has been a lengthy and troubled process. Following the STM's first announcement in July 2005 that it would issue a tender for 342 new cars, it then decided to negotiate exclusively with Bombardier in May 2006. The STM's reasoning was that Bombardier was the only company equipped to supply the cars. Bombardier competitor Alstom challenged this in June 2006, and its case was upheld 18 months later by the Québec Superior Court. This could have forced STM to re-bid the $1.2 billion acquisition but, following pressure from various levels of government, Bombardier and Alstom decided in November 2008 to work together and submit a joint bid.

Whereas the STM originally wanted to replace only the 45-year-old MR-63 cars, the increased size of the tender will now allow the replacement of the more recent MR-73 cars as well. The optional cars would be required if the proposed 20 km expansion of Montreal's subway network goes ahead.