1996 ANNUAL REPORT,
PROVINCIAL AUDITOR
HIGHWAY 407 CENTRAL PROJECT
ONTARIO TRANSPORTATION CAPITAL CORP
CONTENTS
Thursday 21 November 1996
1996 annual report, Provincial Auditor: Highway 407 Central Project
Ontario Transportation Capital Corp
Mr Dennis Galange, president and chief executive officer
Mr Chad McCleave, chief financial officer
Mr David Garner, executive vice-president, engineering
Mr David Guscott, assistant deputy minister, Ministry of Transportation
Mr Bob Nairn, chairman and chief executive officer, McCormick Rankin
STANDING COMMITTEE ON PUBLIC ACCOUNTS
Chair / Président: Mr Dalton McGuinty (Ottawa South / -Sud L)
Vice-Chair / Vice-Président: Mr Mike Colle (Oakwood L)
Mr Marcel Beaubien (Lambton PC)
*Mr Dave Boushy (Sarnia PC)
Mr Gary Carr (Oakville South / -Sud PC)
*Mr Mike Colle (Oakwood L)
*Mr Bruce Crozier (Essex South / -Sud L)
Mrs Brenda Elliott (Guelph PC)
*Mr Gary Fox (Prince Edward-Lennox-South Hastings / Prince Edward-Lennox-Hastings-Sud PC)
Mr Steve Gilchrist (Scarborough East / -Est PC)
Mr John Hastings (Etobicoke-Rexdale PC)
Mr Gerard Kennedy (York South / -Sud L)
Ms Shelley Martel (Sudbury East / -Est ND)
Mr Dalton McGuinty (Ottawa South / -Sud L)
*Mr Gilles Pouliot (Lake Nipigon / Lac-Nipigon ND)
*Mr Toni Skarica (Wentworth North / -Nord PC)
*In attendance /présents
Substitutions present /Membres remplaçants présents:
Mr Jack Carroll (Chatham-Kent PC) for Mr Hastings
Mr Bill Grimmett (Muskoka-Georgian Bay / Muskoka-Baie-Georgienne PC) for Mr Beaubien
Mr Trevor Pettit (Hamilton Mountain PC) for Mr Gilchrist
Also taking part /Autres participants et participantes:
Mr Erik Peters, Provincial Auditor
Clerk / Greffière: Ms Donna Bryce
Staff / Personnel: Ms Elaine Campbell, research officer, Legislative Research Service
The committee met at 1035 in room 228, following a closed session.
1996 ANNUAL REPORT, PROVINCIAL AUDITOR
HIGHWAY 407 CENTRAL PROJECT
The Acting Chair (Mr Bruce Crozier): We are ready to begin the open session. We will have some provision for opening comments from the Ontario Transportation Capital Corp, and then we will move to the various caucuses with a time division. For the purposes of Hansard, I ask that you first identify yourselves and then whoever might have some opening comments can proceed.
ONTARIO TRANSPORTATION CAPITAL CORP
Mr Dennis Galange: My name is Dennis Galange, president and chief executive officer of the Ontario Transportation Capital Corp. Mr Chairman, members of the committee, thank you for inviting OTCC to this committee. I want to make some general comments on the progress of the Highway 407 and then deal directly with a number of statements made about the 407 in the media.
I want to report to the committee that the project is still progressing for an end-of-year implementation, although there are a number of critical test results over the next few weeks which will be required to confirm whether that date will be achieved. The contractual date for the tolling suppliers to deliver a fully functioning tolling system that includes both the transponder-based and video-based components is March 31, 1997. We fully expect that the entire system will be available before this date.
The civil works are completed for the first 36 kilometres of the highway with no significant outstanding issues and, as you are all aware, we are in the midst of a very aggressive marketing campaign. As stated by the minister, the Honourable Al Palladini, and reiterated by the Premier, highway safety is the number one priority of the Ministry of Transportation and the highway will only open after confirmation that it is safe.
I would also like to report that the costs are within budget and we fully anticipate that the project will come in not only on budget but also on time. I am sure you are all aware that initially the crown sought a develop, design, finance, build, operate proposal, but that the financing component was not acceptable and a decision was made to utilize interim crown financing. Interest rates have been at historic lows recently and we believe there will be an excellent opportunity to privatize that financing once the highway has opened. This refinancing would reintroduce private sector involvement on a much more favourable basis than would have been the case three years ago.
I would also like to report that our state-of-the-art tolling system is attracting worldwide attention. We have hosted numerous delegations from around the world, many of whom have expressed a very keen interest in utilizing the same technology for their tolling projects. It is safe to say that the whole tolling world is watching what we are doing.
I can also report that the interest of potential customers for the highway has been extremely positive. To date, we have transponder orders exceeding 9,000 transponders. This is ahead of our projections. Customer inquiries are coming in at the rate of 400 to 500 per day.
I would now like to talk about issues raised over the last few weeks. It has been reported that the crown saved $300 million by lowering safety standards. I want to clearly state that this statement is completely false. I reiterate that highway safety is the number one priority of the Minister of Transportation. Developing Highway 407 as a safe facility was also, and continues to be, the number one priority for both OTCC and Canadian Highways International Corp, the designer and the builder of the highway.
The majority of the $300 million savings were derived from efficiencies, economies of scale and the deferral or elimination of interchanges. The savings did not result from any compromise of safety or in the reduction of standards.
The press has also reported that some of the savings were attributed to the fact that there are no median barriers. Median barriers and protection of obstructions outside of the 10-metre clear zone are not, and never were, required by provincial standards. They are not included in these savings. I want to state that the auditor has not suggested in his report that the highway is unsafe. In fact, the Provincial Auditor recommended that "The ministry...assess the applicability of the revised standards originating from the Highway 407 Central value engineering exercise as benchmarks for cost reductions to other provincial highway projects."
I also want to state that the value engineering ideas were recommended by eight of the most respected highway engineering firms in Ontario and there is a representative from one of those firms here to address any questions you may have on the value engineering exercise.
More specifically, the issues raised recently:
(1) With respect to median barriers, the Ontario standards require a median barrier when the median width is less than 10 metres. The Highway 407 median width is between 22.5 and 31.5 metres and exceeds the 10-metre minimum.
(2) Protective barriers for light poles and bridge piers: The standard calls for a 10-metre clear zone to any major hazards. This is intended to allow errant vehicles that leave the roadway space to recover or come to a safe stop. High mast poles and bridge piers are located outside of the 10-metre zone. Where possible, and where they are within the zone, they are protected by guard rails.
(3) Concrete surface: The 407 uses an exposed concrete surface with a 30-year design life. The skid resistance of exposed concrete and asphalt are comparable. The example of polished concrete that had been cited relates to Highway 401 after it had been in use for 20 years. Highway 407 will have its surface retextured under a comprehensive rehabilitation program.
(4) Inner loop ramps: The radius of inner loop ramps at freeway-to-freeway interchanges was allowed to be reduced from a radius of 120 metres to 75 metres. This did not reduce safety. For inner loop ramps, the standard values are not attainable because of the large areas involved. Depending on the type of inner loop ramp, MTO standards allow the values to be reduced. Smaller radius curves have been used by MTO in the past where there are property constraints, and here similar ramps operate on Highway 401 without a problem.
(5) The auditor's report states that entry and exit lanes were lowered to 446 metres from 500 metres. The 446 metres was the ministry imperial standard and was rounded to 500 metres when the standards went metric.
Again, I want to state that this is a safe highway. The OTCC is committed to safety and has incorporated safety into building the state-of-the-art highway. That is why, in addition to the foregoing, we've exceeded standards by a state-of-the-art high mast lighting system for better night-time visibility; paved shoulders on both sides for increased driver recovery areas in the event a vehicle strays from the travelled lanes or breaks down; a median width that is 12 metres wider than the minimum standard that requires a median barrier.
The Highway 407 is being developed as a state-of-the-art facility by Canadian Highways that includes some of the most respected construction and engineering companies in Canada. These companies are using this highway as a showcase to secure other projects around the world. They would not implement ideas that would jeopardize safety or their chances in either the Canadian or the world export markets.
Finally, notwithstanding our reconciliation of these safety issues, it's paramount that the public have confidence in the safety of the highway, and therefore we welcome the minister's independent safety review. We are pleased that the auditor concluded that the selection of the winning submissions for the design and the construction of the road and the tolling components of the project followed a predetermined process, and the proposals were evaluated by experienced evaluation teams using predetermined evaluation criteria. He also concluded that there was due regard for economy and efficiency in the planning, development and implementation of the Highway 407 Central Project.
I want to conclude by stating that we embrace the Provincial Auditor's recommendations for future projects. Thank you.
The Acting Chair: Thank you. Could we just have you identify yourselves for the purposes of Hansard.
Mr David Guscott: David Guscott, assistant deputy minister, policy and planning, Ministry of Transportation.
Mr Galange: Dennis Galange, chief executive officer, OTCC.
Mr Chad McCleave: Chad McCleave, chief financial officer, OTCC.
Mr David Garner: David Garner, executive vice-president, engineering, OTCC.
The Acting Chair: Thank you. We'll begin a round of questioning of 10 minutes each per caucus, if that's all right. I have two names to begin with from the government, Mr Carroll and then Mr Skarica.
Mr Jack Carroll (Chatham-Kent): I thank all you gentlemen for coming forward today. We appreciate having access to you. My first question is for the Provincial Auditor. Having read your report in the area of value engineering, I don't see any reference in that whole section to anything about safety. Was it your intention in evaluating the Highway 407 project to make any recommendations or any comments on safety? If it was, what expertise did you use to come up with those comments about safety?
Mr Erik Peters: That's a very quick and good answer. I'm not an expert. I therefore did not make any comments about the safety. None of the comments we make in the report nor comments that we made to the media were about compromised safety. To the best of my knowledge, the only safety concerns that I've heard were raised by the OPP, but they were not raised by my office.
Mr Carroll: So there was no intention on your part at any time, because of the fact that you did not have any expertise in the area, to make any comments about the safety of the Highway 407 project.
Mr Peters: That is right, and in fact the opposite occurred. If you look at our recommendation on page 346, we said in there, can this be used as a benchmark, and we considered that actually a positive recommendation that said: "Look, if you can achieve this sort of cost avoidance, as you did on this highway, can these new standards be used as a benchmark for future cost reductions? Would you please do an evaluation?" That was the question we raised and the ministry responded very positively to it. Not only did they say that they would carry out this evaluation, they also said they would keep safety uppermost in their minds.
Mr Carroll: Thank you, Mr Peters. Then I have a couple of questions for the plethora of engineers that we have with us, and I don't know who wants to answer this but whoever can answer it. When an engineer designs a highway, do we need somebody to come forward then and question whether, if it's built to that design, we have a safe project? Is an engineer an expert on safety on highway design, or do we need some additional comments on that?
Mr Garner: Perhaps I could answer that question. Certainly when an engineer puts his stamp on a drawing, as he does when there are structural drawings involved, or when he's signing design criteria which he's submitting for approval, he is attesting to the fact that, in his opinion, what he's putting forward is a safe recommendation or a safe design. Should there be a second opinion on that engineer's authority? I don't believe so.
Mr Carroll: What is the engineer's liability if in fact what he said was safe turns out to be unsafe?
Mr Garner: His liability is potential loss of licence, and he cannot practice in the province.
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Mr Carroll: A couple of other questions. I don't know whether you would have access to this information. There has been a lot said about the length of the speed change lanes. Has anybody got access to what would be the average of our 400 series highways now? We know what they are going to be on 407. What's the average of our other 400 series highways?
Mr Garner: Most of the 400 series highways were built when the imperial standard was in effect. My understanding is that the average length of the speed change lanes on the 400 series highways is around 400 metres.
Mr Carroll: And 407's?
Mr Garner: It's 446 metres.
Mr Carroll: The other thing that's talked about, the other number that's bandied around, is the radius loops of the interchanges. Have you got a number on what the average is for the other 400 series highways?
Mr Garner: MTO tells me that the average in a loop ramp on the 400 series highways is 50 metres.
Mr Carroll: And 407 is?
Mr Garner: We have ramps at I think it's 410 at 75 metres, 404 at 90 metres, and at 427, which is ministry-designed, which we took over, at about 46 metres.
Mr Carroll: If because of land restrictions, which we obviously encounter in areas like Metro Toronto, we don't have the land to put in a 125-metre or an 80-metre radius turning ramp, what other things can we do to compensate for that lack of sheer land?
Mr Garner: What you do is you're counteracting the difference in speed from the approaching highway to the speed on the ramp. Therefore, you have to provide the appropriate deceleration lane or slowdown lane so that the vehicle can go from the one speed to the second speed. If you've got a tighter radius ramp where you want the vehicles to slow down a little more, that ramp is longer as you approach that curve. In addition, of course, because the curve is slightly tighter, you put additional super-elevation on the curve. That's the angle of the curve as you go round.
Mr Carroll: That's all part of the engineering.
Mr Garner: That's all part of the engineering.
Mr Toni Skarica (Wentworth North): I'd like to refer to the front page of the Toronto Star. I'm sure you're familiar with that. Under the subtitle "Bending the rules," they give examples of shorter merge lanes, tighter interchanges and closer obstacles. I think you've dealt with most of those. But the alarming part of the article was, "To save money, existing mandatory standards were reduced...." Did that in fact happen? Were mandatory standards reduced?
Mr Garner: You refer to the front-page article in the Star. Unfortunately, we've made that three times, I guess, in the last few days and I'm not sure which one --
Mr Skarica: This one here under "Bending the rules."
Mr Garner: I'm not sure I have that particular one, but no mandatory standards were changed. I think the article that appeared on November 19 where the Star says that $300 million was saved by not putting in barriers, lowering standards so that we didn't put in barriers, is, as Dennis said, totally incorrect.
Mr Skarica: My other question then is, has any minister in the government, whether it was Mr Pouliot or Mr Palladini, ever authorized the building of any substandard highways?
Mr Garner: Absolutely not.
Mr Bill Grimmett (Muskoka-Georgian Bay): I'm interested in asking Mr Guscott a question. It relates to the stories in the media about the OPP concerns and I'll just quote from this Toronto Sun article of November 13 where Superintendent Currie says, "We brought our concerns to them and they chose -- for whatever reasons -- not to act on them."
What concerns were brought to the ministry by the OPP, and if you did not act on them, why did you not act on them?
Mr Guscott: In terms of the design of the highway, being a partnership and being done by OTCC, the interaction with the OPP was done with the Ontario Transportation Capital Corp and with Mr Garner's staff. So I think he could probably give you a precise answer to what you're asking.
Mr Grimmett: If he could.
Mr Garner: We have checked whether or not anything was said by the OPP to us in a formal way or an informal way. We have no record that I can detect of a formal request by the OPP or a concern by the OPP in writing to the OTCC about safety concerns on Highway 407.
There were two meetings that I'm aware of. The one meeting that I attended, which was to address enforcement issues of the tolling system, was held some time last year, and OPP officers were present. I was present at that meeting and I said the focus at that meeting was the new regulations that were being enacted around the tolling, and if somebody was violating the toll -- maybe a truck didn't have a transponder -- how was that going to be enforced? That was the focus of that discussion. I do not recall from that meeting any safety concerns being addressed, with one proviso, which was a safety concern that I raised with the OPP.
At that point in the construction of the highway, we had several kilometres of concrete pavement laid down. We had some bridges built, and in the construction sequencing you always leave a gap between a concrete pavement and the bridge that's built and then you come in later and fill that gap in with an expansion joint. We could see on the side of the highway that there had been some all-terrain vehicle accessing from some local valleys. My concern was that one of those vehicles might be coming down the highway at night, not realizing that -- although they were trespassing, not seeing one of these gaps.
My question of the OPP was more of an enforcement question: "This is a provincial highway that isn't open. Should I be calling you or should I be calling York Regional Police about this concern?" That was the only safety concern that was raised at that particular point.
There was another meeting held at the project office at which one of the officers did say, "Do you have median barriers?" or something to that effect. It was pointed out that the provincial standard did not require median barriers and it was felt that the issue was closed at that point.
Mr Mike Colle (Oakwood): The first question I have in terms of safety is that retired OPP traffic Staff Sergeant Len Briden is quoted in an article in the Toronto Star of November 12: "`Nobody ever sought any input from front-line officers as to what we thought about the design,' Briden said. `We told them they were building another Highway 403 with all of its disasters.'" When did Staff Sergeant Briden tell you that?
Mr Garner: I don't know when Staff Sergeant Briden said that because I don't have a recollection of a meeting in which that was raised.
Mr Colle: So if you meet with front-line OPP officers or somebody did with the OTCC or the Ministry of Transportation, you don't take any records of their comments? A serious comment of this nature saying basically you're going to have another disaster like 403 I would assume would be written down on paper.
Mr Garner: We were building the highway to provincial standards. As Dennis has said, the provincial standard requires that if the median is less than 10 metres, we erect a barrier. If it's between 10 and 15 metres, the standard says it's optional, and above 15 metres a median barrier is not required. We are building to provincial standards. Those provincial standards are similar to or the same as standards used in other jurisdictions across North America. The American Association of State Highway and Transportation Officials has recently released an updated manual. That particular standard remains the same.
Mr Colle: Talking about provincial standards, the new concrete barriers that are being erected in some sections of the 401, are they provincial standard?
Mr Garner: The barrier itself is a provincial standard, yes.
Mr Colle: No, no. The erection of those barriers that are going in on sections of the 401 separating the east and westbound lanes.
Mr Garner: I'm not aware of the exact median width in those locations of the 401, but I know they are considerably less than the median width that we have on Highway 407.
Mr Colle: But they've been erected after the 401 was constructed, after the fact.
Mr Garner: Yes.
Mr Colle: Why then were they placed there?
Mr Garner: You'd have to ask MTO that question, but I'm pointing out that the median width on 401 in those areas is substantially less than the median width on Highway 407.
Mr Colle: But as a result of the experience and high incidence rates of accidents, sometimes there are new concrete barriers, there are new protective devices that are put on highways as a result of serious accidents and of dangers that are foreseen after the fact. Aren't standards adjusted to improve safety?
Mr Garner: I believe you will find, and this is why I don't want to categorically answer that question because I'm not responsible for putting those barriers up, that they will be in areas where the median width is between 10 and 15 metres, in the optional area I just spoke of. I don't believe, and this is why I don't want to be categorical on that, that the median width on the 401 was less than 10 metres. I do know of some areas where it's 10.9 metres. I would believe that where those barriers are going in, it's probably in the section where the median width is 10.9 and therefore you're in that optional range. It therefore doesn't represent a change to the standard.
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Mr Colle: So there are no adjustments made to highways across Ontario after experience shows that perhaps there's a need for extra barriers. Is that what you're saying?
Mr Garner: No, I didn't say that. I think you asked the question, were they using a different standard? I'm suggesting that --
Mr Colle: I'm saying, are your standards adjusted to take into account that perhaps the case history shows you may need it? I maybe would like to ask Mr Guscott that question. Again, Sergeant Briden said, "We told them they were building another Highway 403 with all its disasters." You know the history of 403. That was built to ministry standards also and it's the subject of many inquests. Would you have any record of this meeting? Was it told to ministry officials?
Mr Guscott: As Mr Garner said, we've checked our records. We treat any comment like that very seriously and we have no record of that having been raised.
Mr Colle: Another question for you, Mr Guscott. In the same article the same sergeant says, "We got criticized for criticizing the MTO...on their standards after the Tobias inquest." As you know, Tobias was a young man who was unfortunately killed in a tragic accident on 403. On what basis did you criticize the officers for questioning MTO standards as a result of their firsthand experience of what 403 has shown?
Mr Guscott: I'm not aware that the ministry criticized the officers at all and I don't think that's implied in your question. The article certainly doesn't say that the ministry criticized the officers.
Mr Colle: It says, "We got criticized for criticizing the MTO (transportation ministry) on their standards."
Mr Guscott: I repeat, that doesn't mean the ministry criticized them for that, because I have no recollection of the ministry criticizing them on that.
Mr Colle: So there's no documentation when the OPP officers met with your officials where they expressed concern about safety on this new highway.
Mr Guscott: That's correct.
Mr Colle: There's no written report.
Mr Guscott: I'm not aware of any, and we have looked.
Mr Colle: If safety is so critical to your ministry, when you meet with front-line officers who are experts in reconstructing accidents, are experts in coroners' inquests, as some of these officers are, when you meet with these front-line people, you have no written report on what suggestions they've made?
Mr Guscott: Mr Colle, you're making an assumption that there was a meeting of the front-line officers. I'm not aware that there was such a meeting. We have not been able to find a record of the meeting that's being referred to in that article.
Mr Colle: Wouldn't this all have been cleared up if you had a process in place where there is a formal meeting with front-line officers, especially given the history of 403, if before you design this highway, you sit down and have formal meetings with front-line officers where they can have their input in this process? Or is it the party line to tell the front-line officers, as your minister has told them, basically to mind their own business, that they are out there just to issue tickets and they are not engineers? Is that what the ministry tells the front-line officers?
Mr Guscott: The ministry doesn't address the front-line officers in that way at all. The ministry designs and builds the highways to the standards that are developed. Those standards have, as Mr Garner said, been exceeded in the case of 407.
Mr Colle: But wouldn't it be advantageous in terms of enhancing safety to have part of your process of ensuring the standards are the right standards be to make a comprehensive process, interview, with front-line officers to get their firsthand suggestions on some of the things you might be able to do, along with the engineering recommendations, to make our highways safer? Is this not part of the processes that MTO has in place?
Mr Guscott: It goes beyond that. When the standards are reviewed that the highways are built on, there is a comprehensive evaluation of accidents, of construction issues, of changes to car, tire and pavement design etc. As Mr Garner said, those standards across North America have recently been reissued. They were reissued last year. In doing that, they do take into account discussions with front-line officers, whether they're state troopers or anyone else, in the development of the standards. Those standards are recent; they're up-to-date. They've been evaluated with the most recent accident data that goes into their evaluation. As I said before, Highway 407 exceeds those.
Mr Colle: But as you know, Highway 407 is going by the same standards you used on 403. Is the ministry content that the standards for 403 were adequate to protect people's lives and bodies and property on 403?
Mr Guscott: I don't have direct knowledge of the design on 403. Highway 407 is designed to exceed those standards. It's better lit than Highway 403. There are other differences in that aspect.
Mr Gilles Pouliot (Lake Nipigon): Departing from the style, the operandi, it's a renewed pleasure; it's been too long, colleagues and friends. You will allow me, Mr Chair. I'm somewhat close to the 407 contract. On behalf of our government, I signed the contract as the Minister of Transportation then.
I have some questions which are relevant indeed and continuous to what has been raised, directed to you, Dennis. We read the newspaper, and I know as the CEO you lived the project. It's a normal reaction. You take a great deal of pride and you should, and should be commended. When you read the Provincial Auditor, that man there, Mr Peters, saying that $300 million was saved by focusing on lower standards, candidly tell me, did safety not come into your mind when that was said? For me as a neophyte -- but I read like everyone else -- when I read in the largest circulation paper in the country that standards were lowered, the light went on in my mind. It said, "Safety was -- " That's what he said. You said the very opposite a minute ago in your presentation. Were you as appalled and shocked as I was when you read that?
Mr Galange: As far as I'm concerned, if the Provincial Auditor had ascertained there was a significant issue around safety, it would have clearly been spelled out in his audit report.
Mr Pouliot: I need your help. The article further said that $300 million was saved. When I was the minister, I was informed as to the progress of negotiations with the ministry and the winning consortium, that money would be saved because of the size of the project, economy of scale.
Mr Galange: That's correct.
Mr Pouliot: And that money would be saved because of value engineering: The same people would do both the engineering and the construction. The bigger the pie, the more opportunities for saving. Do you corroborate?
Mr Galange: Yes. On the value engineering, the approach was that before the contract was selected with the winning contract, there was a value engineering exercise that was participated in by both the finalists for the requests for proposals. It was out of those findings, working with them, that we identified the opportunities in value engineering savings. In addition to that, by the nature of a design, develop, build contract and the size of that contract, when we priced the specifications of the project with standard pricing the way we would have conventionally done that, it became clear there was upwards of $100 million worth of savings one would attribute to economy of scale.
Therefore, there were two exercises that took place: one separately on the value engineering, which was done before the contract was finalized, and the second was done on the basis of the comparison of those savings against a traditional approach.
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Mr Pouliot: A chief executive officer would be most cognizant of money, of financing. It was the intent of the government of the day to have you, the private sector, do the financing. Would I be correct or incorrect in stating that by having the government do the financing between 50 and 75 basis points were saved, and that this will come out in the wash, will be reflected in the tolling fees and the overall cost of the project?
Mr Galange: That's correct. In fact it was a greater saving than that. The financing proposals that were submitted by the private sector carried an interest rate cost that was about 125 to 150 bases points higher than what the government would borrow at. In addition to that, the government would still be guaranteeing the vast majority of the debt and the equity those consortiums would be contributing was very small relatively. The savings, by having the government finance the project over this interim period itself, were very substantial, probably in the range of $12 million plus a year.
Mr Pouliot: I have with me a copy of the summary of development and design build agreement. It's not a leak. I was the minister and I signed the agreement so why shouldn't I have access to a copy. It says on page 4, "Construction standard: The developer is required to perform construction work in compliance with the terms of the agreement, all relevant laws and regulations of the contract document defined as the construction contracts with the constructor company" etc. When it says "laws," if you were to lower the standards that are set by statute you would be breaking the law, wouldn't you?
Mr Galange: Absolutely.
Mr Pouliot: So you did not lower the standards.
Mr Galange: Absolutely.
Mr Pouliot: Thank you. I also have the same documents, "Required tests: The developer is responsible to perform all test studies and investigation necessary in connection with the work in order to ensure that the design and construction of each portion of the facility is in conformity with the contract document and all relevant laws and regulations." He says that standards were lowered. He said that relevant laws and regulations were breached if the standards were lowered. You say, with the backing of your scientist and engineer, that you have complied with all regulations, standards and law. Right?
Mr Galange: Yes, sir.
Mr Pouliot: In that case you don't have to be a lawyer emanating from Harvard to understand that one. One says the very opposite of the other. I believe you.
Mr Guscott, you and I worked closely for a number of years in your capacity and my tenure.
Mr Guscott: Yes, sir.
Mr Pouliot: I've enjoyed your friendship and your ethics indeed a lot, and it's a sentiment that's shared by many people. When I was kept apprised by virtue of the tenure with the previous administration -- I will speak candidly -- was there two meetings where safety -- remember terms like, "Our model is to make Ontario roads the safest in North America?" Remember the graduated driver's licence? Remember taking points away or putting points on someone's record if they did not buckle up to our rate of compliance? Remember the blitz on trucks? Safety was very high.
Do you believe that the government of today, any government of any stripe, would lower standards when you have a continuity of close to 1,000 people, men, women, children, losing their lives on Ontario highways because of seven million motorists? Do you believe anybody, regardless of stripe, would ever affix his or her signature to a document that would lower standards?
Mr Guscott: No, Mr Pouliot, I don't believe anyone would.
Mr Pouliot: No, I don't believe anybody would reach that degree of callousness.
On the 407, it's being marketed all over the world. It's over $1 billion, close to 20,000 jobs. Wouldn't that be to the advantage of Canadian Highways International, or whoever the successful bidder is, in this case yours, if you were to take the package and showpiece it all over the world, "Look what we've done in Toronto, Ontario, Canada?" In your opinion, do you just meet the standards, surpass, exceed the standards? Because you're to show it all over the world. Is it better than, is it as good as any other highway? Would you go on record as saying: "In fact it's built with the latest technology; not only are the minimum standards adhered to but we've exceeded the standards"?
Mr Galange: Yes.
Mr Pouliot: You feel confident in that?
Mr Galange: Yes, I do.
Mr Pouliot: And your engineers, they do too.
Mr Garner: Yes, I do.
Mr Pouliot: So this is state-of-the-art here?
Mr Garner: Yes, it is.
Mr Pouliot: So there were no standards lowered.
Mr Galange: There were no standards lowered.
Mr Pouliot: Thank you.
The Acting Chair: Before we move on to the government caucus, the auditor would like to make a brief comment.
Mr Peters: I agree with the statements already made by the ministry. I also would like to point out that nowhere in my report did we talk about lowering standards; we talk about changing standards. Just to make the record straight.
The Acting Chair: Thank you. I have Mr Skarica and then Mr Carroll.
Mr Skarica: I think it's very important for the public to have the record completely clear and accurate then as to what's occurred here. I'm just going to summarize what I've heard and you can tell me if I'm right or wrong.
Number one, the auditor's report did not have safety concerns with Highway 407. Correct or not correct?
Mr Galange: That's correct.
Mr Skarica: That the highway was built to MTO safety standards and in many cases exceeded those standards. Correct or incorrect?
Mr Galange: That's correct.
Mr Skarica: That the OPP are not saying that MTO standards have been breached. Correct or incorrect?
Mr Galange: That's correct.
Mr Skarica: That the standards the MTO uses are consistent with the standards used throughout North America. For example, the American Association of State Highway and Transportation Officials in the USA has recently released updated roadside design guides and this reflects the same standards as Ontario. Correct or incorrect?
Mr Galange: That's correct.
Mr Skarica: That the OPP did not feel sufficiently concerned with the highway to meet with senior MTO officials. Correct or incorrect?
Mr Galange: OTTC officials, that's correct.
Mr Skarica: As I understand it, they met with the Canadian Highways International Corp at some point to express some concerns. Correct, or would you even know about that meeting?
Mr Garner: I tried to confirm yesterday with the Canadian Highways officials whether or not they had met. I spoke to Leo Moll, the project director. He has no record of meeting with OPP. There may have been a meeting with Al Stretch, one of the directors of Canadian Highways. He's in Israel preparing a bid for a major highway construction project in Israel that Canadian Highways is involved in.
Mr Skarica: Before I did this I was a crown attorney and it seems to me that if the OPP felt that regulations were being breached or that the public was in serious danger by the building of this highway, they would have approached senior officials in your ministry. Correct?
Mr Guscott: That's correct.
Mr Skarica: And that never occurred?
Mr Guscott: No.
Mr Skarica: Thank you.
Mr Carroll: Just a couple of comments and a question: Mr Colle brought up the Tobias inquest relative to Highway 403 and we've heard a lot of conversation about 403. It should be noted on the record that the inquest findings were that highway design did not contribute to the problem, that it was incidents involving the driver of the vehicle that were the contributing factors there, so I think we should set the record straight on that one.
As I understand it, there were two consortia that bid on this particular project, both of which had input into the changes that were made in the design. Is there anybody here in the audience who represented the losing bidder?
Mr Garner: Yes.
Mr Carroll: Could I ask that gentleman a question? Would that be permitted?
The Acting Chair: The request has been made. There's someone here from the losing bidder on this project and Mr Carroll would just like to ask him a question. If we can get --
Mr Colle: This is quite unusual.
The Acting Chair: It may be unusual, but what I'm looking for is some sort of agreement that this could be done, without taking it to a vote. Okay?
Mr Carroll: Thank you.
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The Acting Chair: Could you please for Hansard identify yourself, sir?
Mr Bob Nairn: My name is Bob Nairn. I'm the chairman and CEO of McCormick Rankin. I led the engineering team that put together the bid prepared by the Ontario Road Development Corp as the second bidder. I also led the value engineering team of that same group.
Mr Carroll: Thank you, Mr Nairn. I appreciate your volunteering to answer a question. I hate to use the term "loser," but the fact that you represented the unsuccessful bidder, in your opinion as a professional engineer -- because you don't have any vested interest now, you're not involved in the project, you don't own it, you're not going to be running it -- did any changes made under the value engineering initiative in any way impact on the safety of Highway 407?
Mr Nairn: None whatsoever.
Mr Carroll: Were you involved in those changes?
Mr Nairn: Very much so. In fact, the changes that have been identified most recently are changes that our own consortium had proposed in our bid.
Mr Carroll: If you were doing it again today the same changes, in your opinion, would be totally acceptable from the standpoint of safety of Highway 407?
Mr Nairn: They would.
Mr Carroll: A little bit about the chronology, and I don't know whether you'd be the person to answer this, but at some point in time this was a private sector-public sector partnership. The auditor made some comment about the fact that there were some changes made that made it more of a totally public sector thing and the government took responsibility for the debt etc. Did that change happen before or after the value engineering changes were made?
Mr Nairn: That happened after.
Mr Carroll: When the value engineering changes were put forward by the two consortia that were going to bid on this, they believed they would be totally responsible for the warranty and the operation and the financing of this particular project?
Mr Nairn: They did.
Mr Carroll: So it wasn't as if they were saying, "Well, now that the government is going to take this over, we can change the standards." They had felt at that time they were going to be responsible, therefore they would not in any way jeopardize their own financial position by proposing standards that were unsafe or were shortcuts.
Mr Nairn: No, they did not, and I think I'd like to pick up on the earlier question that regardless of whether it was privately financed or by the government, your own professional responsibility lies with producing a safe design. It goes beyond the issue of losing one's licence. As a firm you've got your own liability insurance in place, so it has a far more serious effect if you're found liable in terms of inadequate design.
Mr Carroll: One final question. In the auditor's report he uses the terminology "changing of standards normally applied in ministry highway construction." Is that good terminology? Does anybody want to comment on that "changing of standards"? Does that imply something that is really bad as opposed to what happened? Should the wording have been a little different there? Maybe even the auditor would choose to comment on this. What's your feeling about that terminology?
Mr Garner: I would perhaps take issue, since you raise the point, with the adjective "normally." I think we have pointed out, for example, that the radius of curves on the 400 series highways is less than the radius of the curves that were used on 410 and 409. So it's difficult to say when that "normally" applied. In the case of the entry ramps we pointed out that the majority of the highways were built when the imperial standard was in place, so the standard of 446 metres is the standard you'll find on most of the highways.
Mr Carroll: Basically the project, to make it safe and acceptable for the driving public, has to develop some of its own standards based on the geography and the traffic and all those things.
Mr Garner: Yes, and in the design manuals there are tables and there is text around the tables. The one on the geometry says this particular table is a guide. It uses the word "guide." Then it goes on to say that if there are property constraints or other issues and you can't meet that guide, then you engineer around it.
Mr Carroll: Mr Peters, do you have any comment on the choice of words?
Mr Peters: The choice of words was very carefully done. We based it essentially on ministry-prepared documents. There is clearly, in the documents we saw, a column that says "MTO Current Policy." So we had to assume that was the normally applied standard at that point and that was discussed with ministry officials. We discussed this particular paragraph with ministry officials and achieved agreement on this very point. Our evidence showed that was, at least at the time, the policy of MTO.
The Acting Chair: Mr Colle, we'll move on and you'll get an opportunity in the next round.
Mr Colle: Mr Chairman, I would just like to comment on the calling of another witness who wasn't on the agenda. We were supposed to be dealing with the Ontario Transportation Capital Corp. I find it very unusual. I would think that this witness should be called before the inquiry that takes place. I certainly would have brought in the OPP officers here if I knew that we were at liberty to call people from the audience to give their testimony. I know it's quite convenient for a member of the losing consortium to be here, but I find it very unusual that he should be allowed to give testimony and other people who wanted to give testimony were not given that opportunity.
If you want to continue this hearing till next week, let's bring all the people concerned before this committee and let them give firsthand testimony on what they said to whom about safety on Highway 407.
The Acting Chair: Mr Colle, in my attempt to be fair, and I won't get out of this hole by digging it deeper, it was my understanding that Mr Carroll had asked about this kind of thing. I was not aware that anyone other than the witnesses listed was going to be called, so it will end here. I think the subcommittee at the end of the day may want to decide whether there's a need for further witnesses to come before the committee. While we're passing blame for things around this table, I'll take blame for that.
Mr Pouliot: On a point of order, Mr Chair: I readily acquiesce and certainly welcome their presence. I don't wish to prolong this, but with respect, Chair, if you allow one side to benefit from the expertise of our witness, should you not be consistent and allow the other two parties equal opportunity should they wish at least to have the opportunity?
The Acting Chair: As I've explained, sir, your point of order may be a good one. The point is that you should have made your point of order before the witness appeared. I then decided that was the subcommittee's decision, and if I erred or there were no points of order brought up at that time --
Mr Pouliot: You should have made your ruling before the witness appeared.
The Acting Chair: I'm saying that, sir. I don't know how many times you want me to admit it, but I'll do it one more time. Now, is your point made? Can we move on?
Mr Pouliot: I'm asking, with respect, for equal opportunity because I have some questions that are relevant to what Mr Carroll has asked. I have a follow-up.
The Acting Chair: Oh, you can ask the same witness. I'm saying that other witnesses can't appear. Okay? We have him here. He's on the record.
Mr Pouliot: Will you accept my apologies?
The Acting Chair: They aren't necessary. Anyway, the clock is now starting for your 10 minutes.
Mr Colle: Just for the record, I know that the member on the government side mentioned in his conclusion that the Highway 403 accident, the Tobias inquest, was not the fault of highway design. I should also note for the record that the inquest made recommendations on improving safety on Highway 403. They recommended better lighting, installing centre median barriers and paving the gravel sections of the left shoulder of Highway 403. Those were the inquest's recommendations. I'd like to put that on the record also.
In other words, Highway 403 is not a perfect highway. It wasn't designed perfectly. There have been some serious accidents where people have driven across the median and hit oncoming traffic, so the inquest has made recommendations.
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Also, just a last comment on the standards, I hope that in the inquiry that takes place on the safety of Highway 407 there is an examination, with documentation, of these changes, because in the auditor's report it states very clearly, "Clearances to obstructions were lowered to 5 and 8.5 metres from 10 metres." This is a change in a standard, or is there documentation that shows it wasn't? "Entries and exits from speed change were lowered to 446 metres from 500 metres. The minimum radii of inner loops for tollway to freeway...were reduced to 75 metres from 120 metres." So in black and white it says there were changes. I think it's up to the inquiry to find out whether these changes had any impact or might have any impact on safety. That is what's got to be addressed, and I think it's for the inquiry to address.
I have a question that I think we first encountered with this project when we looked at it with the auditor's report: the tendering of contracts. As you know, today there is another story in the newspapers saying that the highway opening is going to be delayed. I know that in your brochures, in your advertising, in all the statements that have been made by the minister, by the vice-president of the consortium, Margaret Kelch, they keep on referring to December 31, the end of the year, as the opening date for the new tollway. It's always December. All of a sudden the minister said yesterday, "No, it's not December; it's March 31."
Mr Galange: That's not what --
Mr Colle: Let me just complete, okay? My understanding of it is that this contract for the electronic tolling devices was given without tender to the losing consortium. The rationale you gave was that it would save time even though it might be more expensive. Now we have a situation where the electronic tolling equipment, the transponder-related equipment or the photo devices, are not going to be ready as you had planned. Doesn't this defeat the whole rationale that you gave the Provincial Auditor about why you gave the $72 million without tender and without going to the lowest bidder?
Mr Galange: First of all, to answer that question, the Star article from this morning is wrong. The minister did not say that the project was not going to open until the end of March. The reference to the end of March by the minister had to do with the fact that the contracted date for the delivery of a fully functional toll system, which included the transponder-based system as well as the video-based system, is March 31, 1997. We expect that system to be delivered early from that date. The consortiums are still targeting December 31, 1996, for completion of their acceptance testing on that system. Whether it opens January 1 will remain to be seen based on other variables, including the independent study that the minister is proceeding with.
The consortiums, as I said, are still working on that year-end acceptance date. There are some tests that are important tests because of the timing of the integration testing of the system that will be forthcoming in the next two to three weeks. The outcome of those tests will be important in our confirming that year-end date, but nobody is off the record of saying that date is still not the completion date. That article is incorrect.
To move on to your comments with respect to the decision on altering the tolling system, there was a competitive procurement. There were two proposals submitted and we elected to select what we believed was the best one. That was the integrated electronic toll system. That system was going to deliver to us what we wanted. We didn't want toll booths on the highway. We wanted a fully electronic system.
The decision that was made, that we would proceed with that system as opposed to go back to the marketplace at large and go through a complete tendering process, had a significant economic factor that had to be taken into account. A process of resubmitting tenders and going through that procedure would take up to six months. There is a substantial cost in delaying the project opening for six months. What we had in front of us was the system we wanted, it was a competitive procurement process, we selected the better of the two and we went with it.
Mr Colle: You're saying this $72-million contract went out to competitive tender.
Mr Galange: Surely. It was part of the design, develop, build, operate, finance proposals, and the government left itself the flexibility of unbundling the components of those proposals and selecting the best of both proposals, so it selected the best design, develop, build of the highway and the best of the tolling alternatives.
Mr Colle: The only other proposal was from the losing consortium, was it not?
Mr Galange: That's correct.
Mr Colle: If you unbundle this thing and therefore that $72-million contract is out, why would you not put it out to public tender to see if there's anyone else out there who might be able to provide that tolling technology at a lower price than the two you had on the table from the consortiums?
Mr Galange: First, as I said, when we looked at the tendering of the two alternatives we took into account the pricing as well. That's why I said a competitive procurement process was followed.
We got the system. We got the costs that would be related to that system. We got the system that we felt we wanted. These systems are not on the shelf. You don't go out there and expect that somebody else has in their back pocket a full electronic system. There are no other full electronic systems out there. The process would have been extensive to find potential suppliers that would have provided us with alternatives. The cost of waiting six months is over $20 million worth of net revenue.
Mr Colle: But that's the point I'm making. It seems now there are some major hiccups with the system. You may lose those six months.
Mr Galange: No, we will not. As we sit here today, as we speak, we are still targeting year-end acceptance of that system.
Mr Colle: That's not what the minister said yesterday in a scrum. He said "March 31," that December wasn't the date in the first place.
Mr Galange: March 31 is the committed date for delivering that contract.
Mr Colle: So you're going to open the highway without the tolls. Is that what you're saying?
Mr Galange: That's not what I'm saying. I'm saying that March 31, 1997, is the committed date for delivering the toll system. We expect that toll system will be delivered earlier. The critical path they're following right now is to deliver that earlier, ie, December 31.
Mr Colle: So everything is going according to schedule on the new electronic tolling technology.
Mr Galange: We have some critical testing outstanding over the next two to three weeks. We need the results of that testing to confirm this.
Mr Colle: You're saying that if the tests go bad, there could be a major delay?
Mr Galange: There could be a delay if the tests are off and they need fixes that take time.
Mr Colle: The other question I have --
Mr Galange: But the article in the Star is incorrect, completely.
Mr Colle: I think you should get it straight with the minister, when you're going to open this, that there could be a potential delay. You've just said there could be a potential delay, and that's what the article is saying.
Mr Galange: The article said that it's delayed to March 31. That's totally wrong.
Mr Colle: I think you should ask the minister when he's going to open it.
The other question I want to get to you about is competitive tendering. As you know, the construction, design and build has been given to this consortium -- 930 million of taxpayers' dollars. Are you in the process of awarding any contracts for the rehabilitation and maintenance of this highway?
Mr Galange: The rehabilitation contracts aren't being awarded now. Our provisions for rehabilitation are further out in the future.
Mr Colle: So you haven't awarded them yet -- the rehabilitation?
Mr Galange: No, there are no contracts to award for rehabilitation.
Mr Colle: Maintenance?
Mr Galange: Operating and maintenance for the highway has been awarded to the tolling consortium that's delivering the toll system.
Mr Colle: When did you do that?
Mr Galange: This was part of the original proposal when we accepted the toll supplier and when we accepted the contractor for the highway. That's when the operation and maintenance was awarded.
Mr Colle: So the operation and maintenance contracts were given to the same consortium. That's part of the deal.
Mr Galange: That's right. Remember there were design, build, operate, finance proposals that were competitively procured on the table.
Mr Pouliot: It's intriguing, and indeed I too need your help, sir: Two consortiums filled the criteria and were allowed to enter the bidding process, right? When they put their best proposal forward was there somebody to monitor ethics to make sure the process was strictly, religiously adhered to, that everything was aboveboard?
Mr Galange: Absolutely. We had outside consultants that were specifically doing that role.
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Mr Pouliot: Will you name the firm?
Mr Galange: Price Waterhouse.
Mr Pouliot: Price Waterhouse. Say no more. In terms of your obligation, and it's well set -- you have criteria for early completion -- you also have a responsibility should the targeted date for completion not take place. I have again in front of me, on my page 11, "late completion payment." If you don't deliver the goods, if you don't open the highway, you can't charge motorists. Right? And you cannot pay back the corporation. Under the tutelage of the province, they wouldn't wish to be on the hook, would they?
Mr Galange: That's correct.
Mr Pouliot: This is a toll operation. This will pay for itself. That's the way highways, major projects, might function in the future. You have an alternative which is that of the 401, but even at 12 lanes it's oversubscribed. It gets congested. We're all painfully aware of that. So you build the 407, six lanes, three each way, to alleviate traffic; 69 kilometres. If you can't deliver on time, you are subject to a penalty, aren't you?
Mr Galange: Yes, you are.
Mr Pouliot: Although you will do things strictly in accordance with the plan, that's been well established -- so the pressure's on you. Money in pocket, and everything that derives from that, the general public who are waiting, the bankers who wish to get their money back, or the debenture holders, the coupon clippers, people who have advanced the money for the project -- it's time to pay back now. And that's okay. In fact, it's honourable. It's good partnership.
There are all kinds of conditions when we look under "contractual arrangements": default by developer, termination, suspension and remedies. It reads like a lament, a litany of "you must." Should you fail, you carry the guilt and you pay the price, fairly big time?
Mr Galange: Very substantial.
Mr Pouliot: This is an agreement with the acquiesence, the support, of the province, the building of the 407, still the largest highway development in North America. A flagship. Something to really look forward to.
The conditions, including the termination rights, are contractual. This is what the law says. That's an agreement we have. It's signed by both parties. The arriving at this was not only sanctioned but was guarded by the professionalism and reputation of Price Waterhouse.
If I were to ask the gentleman who is with us who was the unsuccessful bidder -- are you, sir, satisfied with the way the exercise was conducted, although naturally you would have wished that you would have been the successful bidder?
Mr Nairn: You're asking a difficult question of a loser, but I have to honestly say, yes, I'm satisfied.
Mr Pouliot: That speaks highly of your regard for ethics, sir, because it's not every day that one is asked to bid on $929 million, aside from the tolling mechanism.
Incidentally, I lost this part of this project. I was in favour of having one lane which was to be manned. Someone was to be the operator, so you would give everybody an opportunity to make a donation for usage of the highway. After many good meetings, Mr Guscott, I probably lost that. That's one I lost. I lost many more, but that's one that I know I lost.
I really have no more questions. I think the record has been set straight that there was no lowering of standards; absolutely not. In fact, I'm satisfied that Highway 407 will exceed, surpass any standards built on any other highway. I will leave with that.
The Acting Chair: We have about 15 minutes left, so we can go for one more round, five minutes apiece.
Mr Carroll: Just to set the record straight on Mr Nairn's being here, he was invited as part of the OTCC delegation, so he's here on their behalf.
Mr Colle: He's not part of the OTCC.
Mr Carroll: But they invited him to be here. We didn't invite him as a committee. So that's how he is here.
Just some reference to some comments that Mr Colle made about Highway 403 and the inquest recommendations: They made sense to me, as a layperson, but I'd just like some comments from our experts here. The Tobias inquest recommendations involved better lighting, more control over the median deal and paving gravelled sections. Can you make some reference to what, if any, consideration was given in the construction of Highway 407 to those particular inquest recommendations?
Mr Garner: Two of the three recommendations actually are incorporated into the work of Highway 407 in that the inside lane does have a paved shoulder. We do have high-mast illumination. However, we exceed the median width of 403 by some considerable amount. The median width on 407 is about 50% wider than the median width on 403.
Perhaps since we've touched on that tragedy, I think it should be clear that there were other findings of the jury around that particular tragedy: That Mr Tobias had never been a licensed driver, he was intoxicated at the time of the accident and he had taken the vehicle without the owner's permission. There are accidents that occur on our highway system and tragedies such as that. If the committee is asking, do all our standards save accidents of that nature, when you've got excessive speed or alcohol or unlicensed drivers, I don't believe there's a highway system in the world that will accommodate that sort of activity.
Clearly our recommendation would be for certainly enforcement and regulations around that so that the public using our highway system operates in a safe manner, that they operate at or below the speed limit, that those limits are reduced when there are inclement weather conditions that we have in Canada. We cannot put a safety system in place that will accommodate that sort of activity.
Mr Carroll: Just to summarize what you've said, because I think it's very important, Highway 407 has better lighting than Highway 403, it has a paved inside shoulder, which 403 does not have, and it has, on average, 50% wider medians. Is that a summary of what you said was the comparison?
Mr Garner: That's correct. Could I add one more point to that? In the value engineering exercise that we went through -- and this hasn't come out in the auditor's report, and since this happened three years ago, some of these things are now coming back into my mind -- one of the things that we did on the value engineering and the original layout for 407 was for a 10-lane concept. We said if we're having a toll highway, there is going to be some portion of the public that would have used the free road that will not use the toll highway. We determined that an ultimate eight-lane section would be more appropriate, so in the value engineering the 10 lanes were reduced to an eight-lane cross-section.
But as part of that we said -- and that's part of the objectives that we've alluded to throughout this process -- that we want to protect for other public policy initiatives, and one of those initiatives would be high-occupancy-vehicle lanes. That's lanes where two, three or more drivers or buses get that reserve lane. When you do that, you need a separation between that lane, because the assumption is that the traffic in that lane is free-flowing, against other lanes in which the traffic might be more congested. This is quite prevalent in the Los Angeles area. So we allowed an extra metre of pavement to separate those two lanes. In fact, you end up with a median -- initially because we're not building those HOV lanes -- that has an extra metre on either side, so therefore two extra metres.
Contrary to the impression that I think has been left in the press that the median was narrowed or something, in fact it was enlarged. That's why we have the range when we talk about between 22 and 24 metres. There was a section of grade already constructed by MTO that stayed at 22. The other area is, to make this allowance for HOV lanes, we've got 24. So you've got a wider median as a result of the value engineering.
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Mr Colle: Just in terms of the record, as we know, no matter what laws or rules you have on the roads, you're always going to have people who perhaps are either dangerous drivers or, sad to say, they may be drunken drivers who cause harm and injury to others. That's why the inquest into Tobias made certain recommendations. They could have easily said: "Well, Mr Tobias was a bad driver. He was drunk etc." They said, "That happens on our highways," and that's why they made recommendations for increased safety on 403.
I think that's the principle we should be adhering to, rather than saying: "Well, so-and-so was a poor driver. It wasn't anything to do with the highway." I think we look at the accidents and we say, "How can we make our highways safer?" I just want to put that on the record.
Getting back to the contracts, will you be awarding a maintenance contract for Highway 407?
Mr Galange: We have awarded a maintenance contract for Highway 407.
Mr Colle: Whom did you award it to?
Mr Galange: It has been awarded to the tolling consortium and it has been awarded to Canadian Highways.
Mr Colle: Was there any tender?
Mr Galange: It was part of the original competitive procurement as part of the original design, develop, build proposals. We selected the operating maintenance proposal from Canadian Highways and we selected the operating and maintenance piece for the tolling consortium that we also --
Mr Colle: But as you know, the auditor disagrees with you. He said that after you unbundled this -- in other words, you split it apart. Because the whole deal changed. As you know, originally it was supposed to be a public-private partnership and in that sense, what the deal is, the taxpayer is paying the whole shot. After you unbundled this, you had an opportunity to go out to the public again and say, "Are there any companies out there, outside of this monopoly, that will provide for maintenance on this highway?"
In the public interest, for saving dollars and getting the best contract possible, how could you not go out to public tender? You can't say in this case it's got to do with high technology, because this is maintenance.
Mr Galange: No, you're wrong, it does indeed. The majority of the operation and maintenance cost is related to that portion of operating and maintenance that pertains to the tolling system.
Mr Colle: What about the non-tolling maintenance?
Mr Galange: That's the smallest portion of the cost.
Mr Colle: So why wouldn't you tender that out?
Mr Galange: But hold on. The majority of that cost -- let's say the highway portion is a number of 100, to pick a number. The majority of that number 100, probably 80%, is going to be subcontracted out under a competitive process anyway, and they've already done that. For example, the winter maintenance was a complete tendering process that followed the guidelines and policies we directed. The vast majority of those components will be tendered out. All we're talking about is the general management of that, a small team, a small resource allocation by Canadian Highways to oversee that on our behalf. Why was that important? Because they're also integrating the tolling with the highway construction and they represent us on the decisions or are helping us with the decisions relating to tolling. So in the process of delivering the system, they're in the best position to identify how we should organize ourselves to carry out the maintenance.
Mr Colle: Yes, I'm beginning to wonder, what's the relationship here? Aren't you supposed to be protecting the public interest? Highways International is a private consortium, right?
Mr Galange: Yes.
Mr Colle: You seem to be basically defending them at every turn --
Mr Galange: I don't agree with that. How am I defending them at every turn?
Mr Colle: -- and justifying going out without tender for the tolling contract and maintenance contract. How is that according to basic common practice in the provincial government, going out without tender in these contracts?
Mr Galange: There was a competitive procurement process --
Mr Colle: No, no, you're playing with words now.
Mr Galange: -- with the original design, develop, build.
Mr Colle: I'm talking about tendering out to the public whereby this maintenance contract and this tolling technology contract is advertised and anybody can bid on it. You restricted the bidding to the consortium basically. That's what you did. I'm wondering, what is your role? What is the OTTC's role here? I asked you about the safety concerns of the OPP. Well, Highways International doesn't know, we don't know, MTO doesn't know. Who's looking after the public interest here?
Mr Galange: We are.
Mr Colle: So in going out without tender you're looking after the public interest. That's what you're saying.
Mr Galange: I don't think you appreciate properly the scope of what operation and maintenance means. With respect to the tolling system, with regard to the system being delivered, we've received extensive performance guarantees, representation, warranties from the toll supplier. For them to have extended those guarantees, they have to operate and maintain the system. They're not going to be on the hook for multimillions of dollars if this doesn't perform and somebody else out there is running the system for them.
Mr Colle: I think the public is on the hook --
Mr Galange: It's inextricably connected --
The Acting Chair: Thank you, gentlemen. Mr Pouliot, five minutes.
Mr Pouliot: Thank you kindly. In this case a young man dies in a traffic accident and an inquiry finds out that the young person unfortunately was impaired and furthermore wasn't licensed to drive. It poses a challenge, but I fail from a technical point of view to come up with the answer to defend against those unfortunate excesses. My colleague mentioned about competitive bids. Approximately how many companies were represented under each of the two consortiums?
Mr Galange: I believe over 30.
Mr Pouliot: Over 30. That would be 30, and 30 for the --
Mr Galange: I believe the total was over 30 companies.
Mr Pouliot: You were looking at 60 companies, with the consortium, let's say, having approximately 30 companies. That's competitive indeed.
It was also mentioned by my distinguished colleague Mr Colle that the taxpayers are -- I can't quote verbatim -- on the hook or they're paying for all this. My understanding is that the corporation was formed to facilitate and that, as you charge the toll, the money comes back to the people, to Ontarians, who fronted the money through the taxpayers. Is that not a good assumption?
Mr Galange: The toll revenues pay for all of these costs, and in addition to these costs we pay the debt associated with building the project.
Mr Pouliot: So it's user-pay. Right? Of course, you use it, you pay, and the money comes back. Well, one could say it's really not funded straight out of the public purse, like Highway 401 is totally paid for by the taxpayers. In this case, if you use it, you pay and the money goes back to pay back the loan.
The Acting Chair: It would look like, unless there is anything else for us to do today, we've covered the issue. Can I get agreement that we have adjournment?
The committee adjourned at 1159.