Public Accounts Committee on June 7th, 2018

[The Chair, Conservative, Kevin Sorenson]

I call the meeting to order. Good afternoon, colleagues.

This is meeting number 103 of the Standing Committee on Public Accounts on Thursday, June 7, 2018. We are here today in consideration of report 4 of the 2018 spring reports of the Auditor General of Canada, replacing Montreal's Champlain Bridge—Infrastructure Canada.

I would remind our committee and our audience here today that we are televised, so please silence your cellphones as it's much less disruptive if they are silenced right away.

We have with us this afternoon, from the Office of the Auditor General, Mr. Michael Ferguson, Auditor General of Canada, and Mr. Philippe Le Goff, principal.

Welcome.

From Infrastructure Canada we have Ms. Kelly Gillis, deputy minister, infrastructure and communities; Marc Fortin, assistant deputy minister, program operations; and Natalie Bossé, director general, major bridges.

We welcome all our guests.

We will have an opening testimony from our Auditor General, and then we will move to Ms. Gillis.

Welcome, Mr. Ferguson.

[Michael Ferguson, Auditor General of Canada, Office of the Auditor General]

Thank you.

Mr. Chair, thank you for this opportunity to discuss our report on replacing Montreal's Champlain Bridge.

This audit focused on whether Infrastructure Canada managed selected aspects of the new Champlain Bridge project to deliver a durable bridge on time and in a cost-effective manner.

In past audits, we stressed the importance of life-cycle management of government assets. This audit showed that, when the signs of asset deterioration were not identified, not understood, not communicated or not acted upon at the right time, the result was significant additional costs to taxpayers.

The Champlain Bridge opened in 1962, but 25 years later, the Jacques-Cartier and Champlain Bridges Incorporated, JCCBI, had to start major repairs because of serious structural problems that were abnormal for a bridge of that age.

In 1999 engineers reported the possibility of failure of an exterior girder. However, JCCBI didn't have a financial indicator that would compare the cost of maintaining the bridge with the cost of building a new one. Furthermore, it didn't identify that the bridge would have a shorter useful life than expected.

It was only in 2007 that JCCBI realized that the bridge was in urgent need of repairs, and it communicated that to the minister, but it didn't clearly explain the rapid deterioration of the bridge. At that time, JCCBI stated that the planning for the construction of a new bridge should be put in place to have an operational crossing by 2021.

In 2011 the government approved the construction of a new bridge to be opened in 2021. That time frame was consistent with the fact that the planning, procurement, and construction of a bridge of that size generally takes seven years. However, because of increased concern about the possible failure of some structural components, the government announced in 2013 that the project would be conducted according to an accelerated construction schedule to deliver a new bridge in 2018.

Had JCCBI identified and communicated the seriousness of the Champlain Bridge degradation in 2007, a new bridge could have been delivered by 2015. Because the decision to replace the Champlain Bridge wasn't made at the optimal time, the government will incur expenditures of more than $500 million that could have been avoided. This includes more than $300 million for major repairs to the existing bridge and more than $200 million that will have to be paid to the private partner for additional costs related to the construction of the new bridge.

Another issue we identified in our audit was that Infrastructure Canada analyzed procurement models two years after the government had decided to use a public-private partnership. The department's analysis was not based on reliable data and assumptions, and did not consider all key risks. A more thorough analysis would have indicated that a public-private partnership model could be more expensive than a traditional procurement model.

We found that Infrastructure Canada evaluated the technical proposals for the construction of the new bridge consistently and fairly. The department chose an approach that compressed the procurement process, so that the selected bidder would be able to proceed quickly with construction. However, this evaluation approach contained flaws that introduced major risks and uncertainties about the bidders' proposals on durability, design, operation, maintenance and rehabilitation.

For example, we found that all seven of the rated criteria were assigned the same weight, even though some were more important than others. In our view, the criteria on design and on operation, maintenance and rehabilitation should have been given more weight than other criteria such as the approach to manage the project.

Mr. Chair, we concluded that Infrastructure Canada didn't plan the replacement of the existing Champlain Bridge in a cost-effective manner. In our view, the new Champlain Bridge won't be delivered within budget, and delivering it on time will be very challenging.

We made five recommendations, and Infrastructure Canada agreed with them.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have. Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Ferguson.

We'll now turn to Ms. Gillis, please.

[Kelly Gillis, Deputy Minister, Infrastructure and Communities, Office of Infrastructure of Canada]

Good afternoon. Thank you for inviting me here today to speak to you about the Auditor General's report on replacing Montreal's Champlain Bridge.

I am joined by Marc Fortin, assistant deputy minister, program operations, and Natalie Bossé, director general, major bridges projects.

I'd like to thank the Auditor General and his staff for the work they have done in examining this important project. We recognize the opportunity this audit provides and how we can learn and improve our practices so we can continue to deliver high-quality infrastructure that provides value for Canadians.

The department accepts the Auditor General's recommendations, and I am pleased to confirm that steps have already taken place to address the findings. Further actions will also be incorporated in future projects and asset management strategies.

The new Champlain Bridge corridor project is one of the largest infrastructure projects currently under way in North America. The history and the events of the current Champlain Bridge are well known and have been articulated in the Auditor General's report.

After several studies were undertaken to understand the state of the bridge and the options of rehabilitation or replacement, a decision was made in 2011 to replace the Champlain Bridge while ensuring work would be undertaken so it could safely remain open until the new bridge was operational.

Given the complexity of this project, in 2012 private sector experts were engaged to support a multi-departmental team of professionals who developed a business case to determine the best delivery method for the replacement of the bridge. Based on their analysis, the government announced the decision to move with a P3 procurement model in December 2013, after which a competitive process using the latest methodology for P3s was undertaken in March 2014, concluding with a selection of a preferred proponent in April 2015, with Signature on the Saint Lawrence.

Critical to the procurement and management of this project was the comprehensive governance and oversight structure put in place, ranging from top-level senior ministerial and DM committees to technical working groups supported by private sector expert advisers with global experience in P3 infrastructure models.

Transparency and proactive communications, as well as working in partnership with the City of Montreal, the City of Brossard and the Government of Quebec, were also critical elements to the management of this project. As key milestones or issues were encountered, media and technical briefings were held to ensure all stakeholders had an opportunity to raise questions and be informed.

At our last media briefing in April, we provided details on the only cost increase to date on the project: the negotiated settlement of $235 million. The settlement agreement allowed for the recovery of construction delays due to various strikes outside SSL's control and settled all existing claims related to transportation permit issues that our independent arbitrator committee opined on. The agreement also paid for additional measures by SSL to meet the delivery date of the new Champlain Bridge as December 21, 2018. Lastly, it ended the lawsuit filed by SSL in Superior Court.

We are now in the late stages of construction. As you see from the picture that was distributed to the committee, we are at almost 80% completion. Infrastructure Canada will continue to work closely with our private sector partner, SSL, which has committed to delivering the bridge in December 2018 as planned.

Throughout construction of the new bridge and until it is operational, JCCBI has maintained and will continue to maintain the existing bridge safely open. They have demonstrated due diligence in ensuring its structural integrity as well as the safety and efficiency of the corridor while this project has been under way.

In conclusion, every effort has been made to ensure that the project has been rigorously and transparently managed.

We wish to thank the Auditor General again for his report, providing us with opportunities to learn from this project and improve on what we do.

It is an honour as a public servant to have the opportunity to participate in such an important project that will contribute to the Montreal area for the next 125 years.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Ms. Gillis.

We'll now move to the first round of questioning.

Mrs. Mendès, you have seven minutes.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Thank you very much, Mr. Chair.

I thank you all for being here today.

Since I am the member for Brossard—Saint-Lambert, this project is clearly very important to me and it has been for a very long time. During my first term, from 2008 and 2011—when I was part of the opposition—I spoke out a number of times in the House specifically to ask when the bridge would be replaced. For us, the people who use the bridge, it was no longer a matter of repairing it, but rather of replacing it. We were seeing it. It was visible to the naked eye. We were passing underneath and could see that concrete was falling down from all over. About every six months, reports by all sorts of independent firms were published, exposing the progression in the deterioration pretty clearly.

For someone who lives in Brossard and who, like me, uses the Champlain Bridge very regularly—I cannot say that it's every day because I am here during the week, but almost every day—it was clear that the bridge had needed tremendous attention for a number of years. Granted, there had been talk of repairs for a number of years, but people had already started to talk about replacing it in 2008.

Mr. Ferguson, did your audit help you identify the reason behind the reticence, between 2008 and 2011—during my term as member—to accept the fact that it was time to replace the bridge?

[Michael Ferguson]

It's somewhat difficult to say. We indicated that the Jacques Cartier and Champlain Bridges Incorporated, JCCBI, had found that it may be necessary to start planning the new bridge, but that the new bridge should be finished by 2021. So it seems that some of the information provided did not reflect a sense of urgency. We stated that, on a few occasions, the corporation expressed the need to replace the bridge. However, I think it was more urgent, at that time, to take care of the bridge's deterioration. It seems that it was difficult to find information indicating that the JCCBI had explained the situation and the bridge's deterioration.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

I would be the first to recognize that, to try to keep the current bridge in repair until the new bridge's construction was finished, Quebec engineers were brilliant in finding innovative solutions to support the bridge, such as the super beam.

What is shocking to me is that, for those who use the bridge, it seemed obvious that the bridge was falling apart. So how did people whose main responsibility is to ensure the maintenance of federal infrastructure spend so many years neglecting that?

You just told me that you could not answer that question, but I would like us to be able to come to a conclusion on that some day. I'm not talking about Infrastructure Canada officials, but more specifically about administrators and managers from the JCCBI, who are on the ground and should be able to clearly indicate the state of the bridges.

Ms. Gillis, do you have anything to add?

[The Chair, Conservative, Kevin Sorenson]

Go ahead, Ms. Gillis.

[Kelly Gillis]

According to the reports and the documentation we have obtained, since 2007 and 2008, the JCCBI has conducted studies to assess the state of bridges and plan the bridge's replacement.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

It did that much too late.

[Kelly Gillis]

It thought it had more time to replace the bridge and have it in place by 2020-2021.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

It's a little frustrating.

I know that's not what we should base such important decision on, but this was something people who were using the bridge had spoken out about for several years. They were saying that the bridge was unreliable and that it was clearly deteriorating. Pieces of concrete were falling on cars. So something was not working.

Studies were conducted, but what was their credibility if, three years later, we realized that they were completely off? How can we trust those studies? What should we do to correct the way those studies are carried out?

The question is for Mr. Ferguson or Mr. Le Goff.

[The Chair, Conservative, Kevin Sorenson]

Go ahead, Mr. Le Goff.

[Philippe Le Goff, Principal, Office of the Auditor General]

Thank you, Mr. Chair.

One of the key aspects of the project was the fact that the reinforcing steel was embedded in concrete. For engineers, it was a challenge to determine how serious the deterioration was, even though your constituents could see superficial deterioration of the bridge with piles of concrete getting detached from the structure.

I think that is partially to blame for the poor assessment of the seriousness of the bridge's deterioration and the deadline for replacement originally being set for 2020-2021.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

In terms of lessons learned, Ms. Gillis, what could we take out from this process and how we got there?

[Kelly Gillis]

Thank you for the question.

I think where we're at now—and it's something that the Auditor General recommended in his report—is the importance of life-cycle asset management. Over the last number of years, JCCBI has certainly improved and is working diligently on life-cycle management. Something else that's also important and is an opportunity now is technology. The Champlain Bridge now has many sensors and there's real-time understanding of the behaviour of the bridge and the state of the bridge. In the case of the Ponts Jacques-Cartier and Honoré-Mercier, those same types of technology are going to be applied to them. I think we have a real opportunity to understand the state of our assets now that we didn't have previously.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

That's reassuring, yes. Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mrs. Mendès.

We'll now move to Mr. Chong, please.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Kevin Sorenson]

Welcome to the committee.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you. I'm glad to be here.

Thank you to our witnesses for appearing today.

When I read the Auditor General's report on the Champlain Bridge, and also the report from your office from last fall regarding the government's climate change plans, I can only come to the conclusion that this bridge, which is one of the largest infrastructure initiatives undertaken by the Government of Canada, is not living up to the government's professed claim that it believes in economic, environmental, and socially sustainable development.

When I read the fall report from your office, Mr. Ferguson, it's clear that Environment and Climate Change Canada was not on track to meet the 2020 emission target and it shifted its focus to the 2030 emission target. In exhibit 1.5 of that same report, it's clear that the government's much-vaunted pan-Canadian framework on clean growth and climate change is not going to get us to Paris. It's not going to get us to 2030.

[The Chair, Conservative, Kevin Sorenson]

Go ahead, Mr. Massé.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

As a point of clarification, we're using this committee to study the report that is being provided by the professionals of the Bureau du vérificateur général.

I am trying to understand the objective of my colleague's question, since we are trying to get a good understanding of the observations and recommendations issued on the work that has been done and the previous government's decisions.

If people want to play politics, we can do that as well, but I would really like us to focus on....

[The Chair, Conservative, Kevin Sorenson]

I didn't really hear any political.... He referenced a report from last fall, but we are more specifically on the Champlain Bridge.

Mr. Chong, I know you're segueing into that, and we look forward to the transition into the Champlain Bridge.