Montreal Transit Corporation

Date: Sept 18, 2018

Problem :

The procurement director at Montreal Transit Corporation (STM) has to decide which procurement method the company can use for the project of modernization of 336 metro cars with estimated cost over of $1 billion, Mr. Jean has two options as follow:

1. Sole-source contract through negotiation with Bombardier (Quebec multinational transportation company). 
2. Use FRQ, and invite 3 or more different companies such as Alstom Transport or Siemens.

Mr. Jean Beanger has to submit his recommendation to the Board of directors within few weeks, taking into account that, the sole-source could shorten the project's execution time, while RFQ as a long process may delay the project up to one year.

STM  is a public  transport agency, so such a decision will be very important in order to save the tax-payer money and taking into consideration some other environmental issues, and how this project will impact the city in general.

Cause:

The city of Montreal has a very old subway system which was introduced in 1966, moreover, the metro's cars use a rubber-tired which is less energy efficient, instead of steel-wheeled trains, the rubber-tired and old metro system created many maintenance issues and increase the budget from $675.5 million since 2000 to be $864.4 million, this increase in maintenance costs led to an increase in train fares.

It's critical decision for Mr. Jean, to award the contract to Bombardier and save time and efforts or via RFQ which is long process but more efficient for a public agency, as the  transparency is Important element in this situation.  

Analysis :

There are Strength and weaknesses for both Sole-Source and RFQ process, as Bombardier has a good repetition in the market, and technically they have international knowledge in manufacturing of planes and trains as well, in the other hand Bombardier has a factory (La Pocatiere) located in Quebec, and if this project awarded to Bombardier that will create more than 4600 direct and indirect jobs which will support the economy. Bombardier has innovated more environmentally-conscious products, and STM will only focus in negotiating the project's cost controls, terms of contract, train specifications and warranty only.