Public Values

TransLink overlooked errors by Vancouver's Canada Line P3 operator

Concessionaire won't be penalized for its past failings — or those until August.

We suspect most members of the public are unaware such a loophole exists in the Canada Line contractVancouver, BC, May 22, 2011: Transport Action BC members raised concerns about Canada Line service incidents that seriously affected its passengers, with no publicized action taken against the line's private sector operator (InTransit BC/Protrans BC) by TransLink.

The Canada Line is, possibly, the most vigorously debated of the provincial government's Public-Private Partnership (P3) projects. Under the P3 model, a private sector concessionaire may finance, design, build, and/or operate a specific project, and assumes some project risk, in return for a guaranteed investment return. However, the concessionaire contracts to provide a certain level of service. Penalties should be considered by the project's owner (in this case, TransLink), if contractual obligations are not met. Essentially, the concessionaire does a detailed risk-analysis and decides how best to do the project while minimizing its costs, maximizing its returns, and avoiding penalty payments.

Two incidents concern Transport Action BC. Both incidents resulted in significant and lengthy disruptions to Canada Line passengers.

  "We questioned the rationale for a 'learning curve' on P3 contracts. Concessionaires make design decisions based on risk-analyses and they should be responsible for those decisions and held accountable for any significant passenger impacts."

The first was the morning-long shutdown of the line on November 26, 2010, due to snow and ice build-up on the line's third rail. Transport Action BC felt that the Canada Line operator should have been able to handle a snowstorm that, while uncommon, can reasonably be expected in a Vancouver winter. The fact that TransLink's SkyTrain lines successfully operated under similar conditions shows that it could be done. Our concern was that the concessionaire had underestimated weather-related risks in the design of Canada Line elevated structures and inclement weather operating procedures. Under our understanding of a P3 scenario, this should have resulted in a penalty to the concessionaire.

The second incident was a series of late-night service reductions to the Canada Line for track maintenance in February, March, and April. Customers had to deal with reduced rapid transit service, shuttle trains, or use the parallel bus route (albeit with more frequent service). This level of maintenance was a concern because the line was barely 1½ years old. Was there some underlying design flaw that resulted from the concessionaire's risk analysis?

Transport Action BC sent letters to the TransLink Board of Directors after each of these incidents and received responses each time.

The first response indicated that the November 2010 shutdown was part of the two-year "learning curve" for the new transit project and penalties were not justified.

In addition to the track maintenance issue, our second letter questioned the rationale for a "learning curve" on a P3 contract. We felt that the concessionaire had made design decisions based on its risk-analysis. It should be responsible for those decisions and held accountable for any significant passenger impacts.

TransLink's response to this letter stated that its contract with InTransit BC/Protrans BC included a moratorium on performance penalties for the first two years (until August 12, 2011). This was a revelation to Transport Action BC and we suspect that most members of the public are unaware that such a loophole exists in the Canada Line contract.

There are several concerns with this. What is the reason for this contract concession? It certainly violates the spirit of the P3 mantra as presented by P3 supporters. Do other P3 contracts include similar conditions? And, most importantly, how would the customers affected by Canada Line service failures feel if they were told that, other than some bad publicity, the line's operator was not penalized for its failings?

Links and sources
  Canada Line P3 "Get out of jail free" card?

Posted: June 08, 2011

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