MONTREAL – Bombardier’s transportation division is facing another challenge to its reputation after being accused in a scathing report of “duping” London Transit about its ability to complete a signalling project in the British capital.
The report, prepared by the London Assembly’s budget and performance committee, said Bombardier (TSX:BBD.B) was unable to deliver on a 354-million-pound ($670 million) signalling contract awarded in 2011 that would allow more people to use the London Underground.
The contract was terminated in 2013.
“From Transport for London’s (TfL) perspective, it was Bombardier’s shameful performance that led to the program’s failure,” the report said.
London Mayor Boris Johnson told the committee that Bombardier “totally stuffed it up.”
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The transit authority, which also was criticized in the report, claimed it was “duped” from the outset by Bombardier about the company’s signalling expertise and experience.
“Bombardier’s inability to deliver the program will be hugely damaging to its reputation as a world-class signalling supply company, but even more damaging are claims of misrepresentation,” the committee report said.
Bombardier offered the lowest price and other terms that made it the winning bidder. But KPMG, which conducted an audit on the contract, said Bombardier’s ability to deliver the contract was not adequately “demonstrated or interrogated.”
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“If something sounds too good to be true it probably is,” the report said.
Bombardier spokesman Marc Laforge said the company doesn’t agree with findings in the report and described termination of the contract as an “amicable” decision that hasn’t given Bombardier a black eye in the industry.
“We’ve got 30 or so signalling contracts that we have either worked on or continued to work on so it has not had any impact really on our capability to bid the contracts with regards the signalling portion of our business,” he said in an interview.
Laforge added that Bombardier continues to have customer confidence in Britain and supplies the TfL with railway cars along with various other projects.
The two sides parted ways in 2013 with TfL paying Bombardier 85 million pounds or about $161 million to break the contract about two years before signing with France’s Thales to complete the project.
The transit authority said it paid Bombardier to avoid getting bogged down in lengthy litigation that would cause further delays. The work now is expected to be completed five years late in 2023 and cost 886 million pounds or $1.7 billion more than originally planned.
This isn’t the only Bombardier contract that has come under criticism. Bombardier is working its way through a series of problem contracts in Europe and faces a lawsuit from the Toronto Transit Commission over late deliveries related to a $1.2-billion contract for new streetcars.
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