Media confuse "construction cost" with "taxpayer cost" on Gordie Howe project

The fallout continues in the wake of the Federal government’s decision to release, without context, a Prime Ministerial briefing note regarding the Gordie Howe International Bridge project (see prior post “Gordie Howe’s mysterious $3.5 billion cost increase” Jan. 5-16).

Monday’s Canadian Press wire story has understandably caused the good people of Windsor, not to mention Ontario exporters, a great deal of consternation. The resulting media confusion about the true cost of the project to taxpayers — is it $0, $2.2B, $4.8B or $8.3B? — shouldn’t come as a surprise, given the lack of a PCO communications strategy in the hours and days that followed.

What is a disconcerting surprise is the rumour in the marketplace that someone in the Centre proactively suggested that CP journalist Jordan Press might want to apply for a certain bridge briefing note under Access to Information legislation. I usually discount such stuff, but you have to ask yourself: how many actual PM briefing notes have been released under Access legislation since the new government was sworn in? If I’m not mistaken, there have been two: the one about legalizing marijuana, plus the confusing Gordie Howe note. According to the Privy Council Office’s own ATIP website, they have yet to release a single 2015-era ATIP request to anyone. They are still working through requests from 2013 and 2014 (note the left hand column). Over at Transport Canada, they’ve not released anything about the bridge project (whether it is called DRIC, WDBA or Gordie Howe) under Access legislation since 2014.

Which makes the very recent chain of events so curious to those of us close to the project. Who in a position of political authority would do that? Would was their motivation? Why did they rush the traditionally protracted ATIP process so that CP could file the story (note CP is the obvious national print-oriented media outlet for a leak) on the first business day post the holiday period? And does any of this serve as a sign that the Ambassador Bridge Co. might be having some early success convincing the new team in Ottawa to go with their “free” bridge proposal rather than the Gordie Howe project, if in fact they’ve mounted such an effort?

Or is it all just the usual left-hand (PMO) not knowing what the right-hand (PCO) is doing during a quiet holiday period?

This morning’s Windsor Star article correctly describes a portion of the briefing letter I wrote to incoming Infrastructure Minister Amarjeet Sohi in early November. It is true that the P3 RFP was to be released on December 15, 2015, following the summer RFQ process. This has been public knowledge since last August, and the specific date was reconfirmed publicly by the WDBA Board of Directors prior to the recent Federal election. It is also true that the Nov. 4th letter advised Minister Sohi that a Dec. 15th release was crucial if the project teams were going to be well-positioned to meet the previous government’s 2020 opening date.

The fact that the new government chose to delay the crucial P3 RFP release, for whatever reason, is entirely its prerogative; it certainly wasn’t the WDBA’s call. Given the demands for immediate “shovels in the ground” infrastructure projects, you’d think this one was tailor-made for a new government that promised to dramatically increase Federal spending in this sector. With a personal site visit last month, Minister Sohi demonstrated the new government’s keen interest in what we had accomplished over the past 18 months. The Minister saw, first hand, that construction preparation for the eventual Canadian Customs plaza was actually underway: “dust was flying,” as they say. If I’m not mistaken, he even got to make some dust fly himself at the helm of a giant excavator.

The Minister might have heard that this “Early Works” initiative has not been in Transport Canada’s 2012-era bridge business case and that we had to push Tony Clement’s Treasury Board to approve it last Spring. Despite the fact that Parliament had approved this kind of capital via the 5-year WDBA funding envelope in the 2014 budget, and that the P3 consortia will pay the Crown back for the entire cost of this specific construction project soon after it signs the P3 procurement contract. (You can sense the frustration, I’m sure.) In a variety of ways, Minister Sohi would have seen with his own eyes the byproduct of the herculean effort that the new Crown Corp. has put into every facet of its mandate since July 2014.

Our exporters deserve no less.

Which is why it is such a shame that the public is being allowed to confuse the “cost of the bridge” with the “cost of the bridge to taxpayers.” They’re not the same thing, given the P3 proponent is putting up meaningful capital as well. That’s why I felt it necessary to write the original blog on Tuesday. But since I’m not trying to stir things up for the new folks, I declined every media request that came in the wake of the original CP story and the subsequent print, radio and TV follow-up about the alleged $2 billion – $3.5 billion cost increase. If you remember nothing else, remember this: whether the cost to construct the entire project (bridge, I-75 interchange, Canadian PoE and the U.S. PoE) is $3 billion, $4 billion or $5 billion, the private sector will be contributing anywhere from 50%-100% of the final price tag. And whatever money the taxpayer does have to initially contribute — and if it was up me it would be a very small percentage of the total cost — bridge tolls will pay those seed funds back over time.

Once the private sector formally bids under the RFP, the true cost of the construction project will be known. The Windsor Star quoted me correctly about that. Every government project needs to have an estimate, and this one is no different. Whether the Canadian dollar is at par, 80 cents or 65 cents will obviously have a bearing on the project’s eventual price tag given the amount of U.S. dollar-denominated procurement and labour involved. But the cost to the domestic economy of each additional year the bottleneck remains at Canada’s key export gateway is far higher. Every time an Ontario-based auto assembly plant or Tier One supplier moves to Mexico, think about what, if any, impact the multi-year delay in this project has had on the decision-making behind those major commercial decisions.

As for the opening date, it is true that a opening in Q4 2020 was “under pressure”, even if the P3 RFP was released last month. It is also true that a 2020 opening date is equally viable if the RFP is released today, for example, so in that way the Windsor Star unnecessarily torqued the thrust of my Nov. 4th letter with their “unlikely” headline. But, for every week that passes, it cannot be denied that a 2020 opening becomes all the more unlikely to deliver. And that’s a shame for not just the people of Windsor, but the entire Ontario economy.

As someone once said, and it is particularly relevant given the complicated sequencing of this project: “Nine women can’t make a baby in a month.” Sadly, no one in the bowels of either Ottawa or Lansing gets a haircut on their annual performance bonus if the bridge is late. And one can never forget that hundreds of people associated with firms advising on the project bill for their services by the hour. You can’t expect them to push to build early, which is why the WDBA became the only Wagonmaster in town.

The procurement process takes “18 months”, according to an Infrastructure Canada spokesman, and he assures the media that the process is in full flight. We pushed hard to get the P3 procurement process started last July. Some would have delayed the RFQ release until after the election, but we pushed back. And while it is true that the procurement should take 18 months, that suggests that the P3 RFP documents are released, completed, scored, negotiated, contracted and executed by January 2017. To hit January 2017, and give everyone in the private sector a year to get the process right, things need to be out the door now. Taking into account holidays and the usual lethargic government calendar, you needed to issue the RFP last month, right? Or today. But not, say, 10 weeks from now. The less time the private sector has to fine-tune their costs around the project, the more likely they are to come back later with multi-million dollar requests for more funding on account of “scope creep” or imprecise guidelines.

On this type of project, if every key deadline slips just 15-20%, and the overall project is projected to take about 5 more years, the opening can’t happen before late 2021. This is the sad reality. And that’s assuming the Ambassador Bridge Co. folks have no success with any of their ongoing court tactics.

Construction of the project is expected to take 42 months once the P3 team is on board, provided that Michigan Attorney General Bill Schuette delivers all of the Detroit-area land that he is supposed to be condemning on behalf of the project’s sponsors. As I saw with the BBTCA pedestrian tunnel project, and as everyone who has ever hired a contractor for even a small project around their house knows, these initial construction timeline estimates are rarely met. Imagine building over an international waterway! Add 42 months to January 2017 and you are at July 2020. Which leaves some slippage before December 2020 becomes impossible to meet.

But, it can’t be said enough: if we don’t start building the bridge, it’ll never be completed.

MRM