Metro LRT update: City delivers default notice to Thales

Today, the City of Edmonton issued a Notice of Default to Thales, opening a new way ahead in the high-profile matter of the Metro Line signalling contract.

“We have a good opportunity right now to act and move toward getting the Metro Line right,” said Adam Laughlin, the Deputy City Manager of Integrated Infrastructure Services.

“Council has given us clear direction that continuing to wait for Thales to deliver on their contractual obligations is not acceptable.”

A default notice means Thales now has an opportunity to indicate how it intends to meet the conditions laid out by Council in a December 2017 motion that set April 30, 2018, as the deadline for full delivery of the intended Metro Line signalling system.

“This is a process complicated by the nature of being in a contract,” Laughlin said. “It is frustrating. We, along with Edmontonians, are frustrated. Today is an important step. But it’s not the final step.”

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At a media conference at Edmonton City Hall, Laughlin said Thales has not met the April 30 deadline.

“Today we provided Thales with a Notice of Default under the contract,” Laughlin told reporters. “The delay on the project as a whole is unreasonable. We will follow the process in the contract for resolution.”

If the signalling system schedule is not met, “the City will proceed with termination,” he said.

Laughlin told reporters “this will not be a quick process.”

The City awarded Thales the contract for the Metro signalling system in May, 2011. The contract is worth $55 million. The City intends to protect that investment through legal means, if necessary.

Laughlin spoke hours after the City formally notified Thales by letter and phone of the default notice, a move ratified in a motion endorsed by City Council.

“…continuing to wait for Thales to deliver on their contractual obligations is not acceptable.”

The Metro Line runs on communications-based train control (CBTC) technology. This is a signalling system that features communication between train and track. The Capital Line uses a fixed-block signalling system that divides the track into defined blocks and ensures there is always at least one empty block between trains.

The complex contractual challenge with Thales centres on the City’s concerns about the reliability of the Thales system. Without the ability to run the signalling system as intended, every third train on the Capital Line is currently a Metro train, impacting peak service on Capital Line.

City Council’s decision in endorsing the default notice also gave City administrators the ability to investigate a range of signalling options for Metro Line. The goal is to return Capital Line peak service to one train every five minutes, and to maintain, for now, Metro Line service at one train every 15 minutes.

“We will also be exploring other signalling options for use on Metro Line,” Laughlin said at the media conference.

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Laughlin said Metro Line remains safe for passengers, operators and surrounding road users. The City has added layers of safety on Metro Line operations, including limiting speed and introducing new operating procedures.

Laughlin stressed that the default notice is a legal step, and not the final step, toward an optimal Metro resolution, which could still be months away and could also involve a legal disputes resolution process between the City of Edmonton and Thales.

Public reports on signalling options and potential costs will go to City Council.

The media conference was streamed live on Facebook. Watch it from start to finish here:

After his remarks, Laughlin took questions, some of which are presented below, from reporters.

Passengers?
Laughlin was asked if passengers will notice any changes.
He said: “During this action, which is contractual in nature, our expectation is the service levels you see today would continue.”

Bottom line for folks?
Laughlin was asked what, for citizens, is actually happening with announcement of the default notice.
He said: “To protect the interests of the City, this is the next contractual step. And rushing to a conclusion that is termination does not put us in the best position. So using this step in the contract, or this contractual or legal step, puts us in the best position to get to a resolution, either with Thales or without.”

Timeline?
Laughlin was asked how long the process now will take. Six months? A year? Two years?
He said: “I don’t anticipate it being two years. It’s tough to provide a definitive date at this time because it’s in Thales’s court to respond based on that Notice of Default.
Laughlin was asked if we’re talking several months?
He said: “I anticipate that but it’s subject to Thales’s response to this.”

Finances
Laughlin was asked about how the status of the paid ($33 million) and withheld ($22 million) portions of the $55-million-value contract.
He said: “We continue to withhold because they have not met their contractual obligations. And, then, in terms of what’s the endgame related to that, it really depends on how Thales performs. There are claims. Like any other contract there are claims that are on this project, and I anticipate a lengthy process to resolve those claims.”

When will Metro be right?
Laughlin was asked if the Metro Line will ever run as intended.
He said: “This line is providing a service today. It carries close to 19,000 passengers a day. It isn’t achieving the interface that we want in the tunnel or at the at-grade crossings, and this step [Notice of Default] gives us some certainty that we’re going to get to a resolution, either with an alternate solution that Council has endorsed us to start investigating or with Thales meeting their contractual obligations.”

Alternate solution
Laughlin was asked why an alternate signalling solution would work, given current circumstances.
He said: “To be clear, going to an alternate solution doesn’t necessarily mean we’d be assuming it would be a communication-based train control signalling solution. It could be a signalling solution that we’re familiar with, in terms of the fixed-block system. Or another solution that is used on a regular basis for this type of system.”

Money
Laughlin was asked how much additional money the City has spent in staff overtime and project management tied to Metro signalling.
He said: “ Because this is a legal process, it’s not something that we’re going to disclose publicly because it’s part of negotiation, potential negotiation.”

Flash forward
Laughlin was asked what the ideal situation is six months from today’s Notice of Default.
He said: “That we have a definitive decision on Thales and whether we’re proceeding with them or we’re moving to a different solution.”

Consequences
Laughlin was asked what the public might perceive as the consequences for Thales.
He said: “Publicly, we put Thales on notice that they are in default and they have to remedy that situation in a time frame that’s acceptable to the City, and, if they don’t, we’re going to a different solution. If they do, we get that service that we originally asked for.”

Back to that time frame question…
Laughlin was asked again about how long the process ahead will be.
He said: “What I can tell you is it’s not going to be years. It’s something that we hope to accomplish within the year, but I can’t give you a definitive time frame until Thales responds.”

Final word
Laughlin: “We’ll have resolution to this within a year, with Thales or without.”

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