Opt-out clauses in Carillion contract
By Chad Ingram
Published December, 2015
The contract between the Ontario government and Carillion contains clauses that allow the province to terminate the contract if work is not being performed properly.
Last winter, the Times requested a copy of the contract between the Ministry of Transportation and the multinational company responsible for the maintenance of provincial highways in the Huntsville district, which contains most of the portions of highways 35 and 118 located in Haliburton County.
The 11-year contract, worth $12 million a year, began in 2012 and since that time, county residents have noted a drop in the quality of winter maintenance of provincial highways to a level many consider dangerous.
In January of this year, county councillors along with MPP Laurie Scott met with MTO representatives at Queen’s Park, who told councillors that changes would be made to highway maintenance in the county.
In April, Ontario’s auditor general released a scathing report that concluded that the province’s changing performance standards to require less sanding, etc. as well as weakened oversight was putting Ontarians’ lives at risk and causing more weather-related traffic deaths.
The changes were made to reduce costs and numerous lawsuits have been filed against the province.
When the Times requested a copy of the contact, the paper was instructed by the MTO to file a Freedom of Information request, which it did.
In June the paper was informed that Carillion had appealed the release of the contract. The Times received no response from the company as to why it was appealing the release of the document.
After a mediation process with Ontario’s privacy commissioner, the Times was awarded a copy of the contract in the fall.
Among hundreds of pages are clauses allowing the provincial government to terminate part or all of the contractor’s right to work as well as terminate the entire contract with Carillion if it’s deemed the company is not performing its work properly.
“Upon the occurrence of an event of default, the ministry may, without prejudice to any other right or remedy the ministry may have, terminate the contractor’s right to continue the work in whole or in part by giving written notice to the contractor,” the document reads, listing actions from taking control of a work area to withholding payment to charging the contractor with damages.
Contractors are fined for not meeting performance requirements and that seems to happen frequently. For the winter of 2013/14, a total of $13.3 million in fines were levied against contractors in the province, with $4.8 million of those fines eventually being waived by the province.
Carillion – whose contracts in the province are worth $87 million per year – was fined $900,000 in 2014 for improper maintenance of the QEW during two snowstorms.
“Upon the occurrence of an event of default, the ministry may, without prejudice to any other right or remedy the ministry may have, terminate the contract by giving written notice of termination to the contractor, the surety and any trustee or receiver acting on behalf of the contractor’s estate or creditors,” the contract reads. “In addition, all rights of the contractor under this agreement shall cease and determine and the ministry shall be under no further obligation or liability whatsoever to the contractor with respect thereto. Without limiting the foregoing, the ministry shall be entitled without hindrance or interference, to enter into such contracts, agreements and instruments with such other person or persons (other than the contractor), as the ministry shall, in its sole discretion, determine with respect to the work, and the contractor, shall have no right or basis to make any claim or pursue, initiate or take any action against the ministry for so doing. If the ministry elects to terminate the contract, the ministry will provide the contractor and the trustee or receiver with a complete accounting to the date of termination.”
County resident Sean Pennylegion has been concerned about the low quality of winter highway maintenance and in October sent a letter, containing a number of questions, to transportation minister Steven Del Duca.
“Are you satisfied that these remarkable unsafe circumstances have been rectified?” Pennylegion wrote. “Have Carillion’s terms of reference and contractual obligations been amended to better reflect the severe winter driving conditions we experience in the Haliburton Highlands? Will there be sufficient vehicles and operators available in the Haliburton Highlands to keep our roads clear and safe?”
In November, Pennylegion received a response from Doug Rivers, area contracts engineer for the Huntsville district, on behalf of the ministry.
“The ministry has been in discussions with Carillion Canada Inc., the area maintenance contractor for the Huntsville area, to further improve winter maintenance performance,” River’s response reads. “Enhancements have focussed on winter readiness and performance. The contractor is required to provide a roster of drivers and to submit verification that their winter equipment is mechanically ready. The ministry will assess the performance of each of their drivers and pieces of equipment throughout the winter season in order to ensure equipment and staffing are maintained. In addition, in order to ensure that adequate equipment is available in case of breakdowns, the contractor has provided a significant number of spare vehicles for the area that are to be used as replacements, as needed.”
The correspondence goes on to read the ministry will be following many of the recommendations made in the auditor general’s report.
“Since the release of the auditor general’s report earlier this year, the Ministry of Transportation has moved to implement many of its recommendations,” Rivers wrote. “Other recommendations require longer-term implementation, such as those that involve the development of new software and winter driving education campaigns. Changes will be most visible to the public in the way information is made available to drivers.”
Among them is an updated Ontario 511 website www.ontario.ca/511 where drivers can check road conditions as well as an increase in the number of cameras showing live images of highway conditions.
In Haliburton County, one such camera has been installed along Highway 118 at Dover’s Hills just outside Haliburton Village.
“I think a lot of it relies on the patrol people,” said Dysart et al Reeve and County Warden Murray Fearrey, referring to provincial employees who monitor the highways and lagging response times.
“Time is of the essence when they get out there. We can get two, three inches of snow on Dover’s Hill in an hour.”
The contract also puts strict limitations on the company’s ability to discuss the contract and states that any media releases from the company must be vetted by the provincial government.
“Subject to the provisions and disclosure requirements of the Freedom of Information and Protection of Privacy Act, as amended, any disclosure required by law or any disclosure required in the course of enforcement or arbitration proceedings, or any disclosure permitted hereunder, no public disclosure of any kind shall be made or permitted in respect of the subject matter of this agreement by any party without consultation with and the consent of the other parties (such consent not to be unreasonable withheld),” the contract reads. “Proponents are advised to review the Freedom of Information and Protection of Privacy Act. Any press release to be issued by the contractor relating to this agreement, its subject matter or any agreement or transaction contemplated herein, shall be in form and substance as mutually agreed upon by the ministry and the contractor. The contractor shall not permit any public announcement or ceremony in connection with the work without approval of the ministry.”