Transit boss explains payment to LRT contractor

Transit boss explains payment to LRT contractor

A week after CBC reported the city paid Rideau Transit Maintenance (RTM) $4.5 million for September 2019 — when most people, including councillors, believed the LRT contractor hadn't received a penny since the Confederation Line's launch that same month — the city's general manager of transportation is explaining why the payment was required under the contract.

In a memo released late Friday afternoon, OC Transpo boss John Manconi laid out exactly what the city has paid since taking over the Confederation Line on Aug. 30, 2019.

On Nov. 15, 2019, the city cut a cheque to RTM for a total of $5,155,164,33 — a figure somewhat higher than $4,562,000 figure quoted to CBC by OC Transpo's director of operations, Troy Charter, last Friday.

There are two key reasons for this.

First, the $4.5-million payment for September reported by Charter did not include HST. Second, the Nov. 15 cheque included a monthly service payment for Aug. 31 in the amount of $165,661.65 (again, including HST).

CBC News

Deductions for poor performance

As reported by CBC, the contract allows for any adjustments for poor performance to be deducted from the next month's payment. Manconi elaborated on that process in his three-page memo.

"The first contract month of service consisted of one day, August 31, 2019," he wrote. That's because the city officially took ownership of the Confederation Line from Rideau Transit Group (RTG) on Aug. 30.

When the city received RTM's invoice for a September service payment, the city could only apply any deductions for issues that occurred in August — which were clearly not many, as the Confederation Line was only in operation (for a single day that month, and wasn't yet open to the public.

The issues that followed in September could only be deducted from the October invoice. RTM has not been paid for October's service, while the performance deductions for November and December are still under review, according to a memo sent by city manager Steve Kanellakos to council last weekend.

Both Kanellakos's weekend memo and Manconi's on Friday take pains to explain how the city had no choice but to pay that September bill.

"If the city does not make payments that it is obligated to make … [RTM] may allege that there is a payment default by the City which can lead to serious consequences," Manconi wrote in the memo.

But what shocked many wasn't the fact that the contract called for the payment, but that OC Transpo officials didn't fully explain how the contract worked, nor did they inform council after making the payment in mi-November, an omission Manconi apologized for at council last week.

It's not clear whether the city has had to pay any other sums to RTM since that November cheque. According to the memo, the city makes payments "that cannot be offset by the performance adjustments or deducted," such as insurance premiums, graffiti removal costs and station hydro costs.

And outside of the monthly maintenance service payments, the city also makes payments for "various outstanding capital and cash allowance works" and other items "unrelated to monthly maintenance services."