Ottawa settles with Siemens over scrapped LRT project

Written by William C. Vantuono, Editor-in-Chief
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Ottawa will pay Siemens Canada and two other contractors C$36.7 million (US$33.9 million) to settle a lawsuit triggered when the city abandoned efforts to build a C$1 billion north-south light rail line. The project had been approved by the city council, but rejected by the council in late 2006 after an election changed the body’s representation.

In response, Siemens and the other contractors, PCL Constructors and Ottawa LRT Corp., sued Ottawa for C$215 million in June 2007. Last month Ottawa officials offered a settlement package to the contractors. The proposed legal settlement includes $30 million in direct costs for the consortium and several million in lost profits.

siemens logoThe cost of the settlement, combined with no new rail infrastructure to show for it, could prove to be a contentious political issue in municipal elections set for next year. At issue is not just the C$36.7 million settlement, but also an additional C$54 million (US$50 million) Ottawa committed to the project prior to its being canceled. Legal costs generated so far will cost the capital city another C$2 million.

Siemens and the contractor consortium wants some conditions on the deal, including a lump-sum payment and some restrictions on what city officials can disclose publicly. The companies also seek assurance that they will have an equal chance to compete for future work with the city. Ottawa seeks to pay the settlement over several years, and city council members want to be able to discuss the matter freely.

The Ontario provincial government had supported the former north-south project, and has said no provincial funds are to be used to cover legal costs for the cancelled project. City taxpayers will cover the entire cost of the settlement.