Item - 2024.GG18.24

The General Government Committee recommend that:

1. City Council, in accordance with section 71-11.1C of the City of Toronto Municipal Code Chapter 71 (Financial Control By-law), grant authority to amend Purchase Order 6047137 to fund the settlement of claims brought forth by North Tunnel Constructors ULC and to provide for additional contingency amounts for the construction services of the Coxwell Bypass Tunnel between Ashbridges Bay Treatment Plant and Coxwell Ravine Park by increasing the contract value by $25,000,000 net of all applicable taxes and charges ($25,440,000 net of Harmonized Sales Tax recoveries), revising the current Purchase Order value from $397,269,000 net of all applicable taxes and charges ($404,260,934 net of Harmonized Sales Tax recoveries) to $422,269,000 net of all applicable taxes and charges ($429,700,934 net of Harmonized Sales Tax recoveries).

2. City Council authorize the reallocation of cashflows within Toronto Water’s 2024 Capital Budget and 2025 - 2033 Capital Plan for acceleration and deferral of projects, as presented in Table 2 of the Financial Impact Statement, with a zero Budget impact to support the Purchase Order Amendment for the construction of the Coxwell Bypass Tunnel.

3. City Council direct that Confidential Attachment 1 to the report (November 5, 2024) from the Chief Engineer and Executive Director, Engineering and Construction Services, the General Manager, Toronto Water, and the Chief Procurement Officer, remain confidential in its entirety as it contains advice which is subject to solicitor-client privilege and relates to litigation or potential litigation by the City.

The General Government Committee recessed its public session to meet in closed session to consider this Item, as it pertains to litigation or potential litigation that affects the City of Toronto, including advice or communications that are subject to solicitor-client privilege and litigation privilege, and pertains to the position, plan, procedure, criteria or instruction to be applied to any negotiations carried on or to be carried on by or on behalf of the City.

The purpose of this report is to request instructions regarding a proposed settlement of claims that North Tunnel Constructors ULC is pursuing against the City of Toronto, which claims seek compensation for costs incurred arising out of and associated with the completion of the Coxwell Bypass Tunnel between Ashbridges Bay Treatment Plant and Cowell Ravine Park, pursuant to the contract awarded under Request for Tender Number 221-2017; Contract Number 17ECS-MI-04DC (the “Coxwell Bypass Tunnel Project”), and to seek authority to amend Purchase Order Number 6047137 issued to fund the proposed settlement.

These claims include claims for significant compensation in relation to the Coxwell Bypass Tunnel Project related to North Tunnel Constructors ULC’s having to negotiate an unknown site condition during the prosecution of the Contract work underneath 550 Bayview Avenue.   

A contingency allowance for any other unanticipated work, which may be identified prior to the project reaching Final Completion is also being sought as part of the within request for a Purchase Order Amendment.

The total value of the Purchase Order Amendment being requested is $25,000,000 net of all applicable taxes and charges ($25,440,000 net of Harmonized Sales Tax recoveries), revising the current Purchase Order value from $397,269,000 net of all applicable taxes and charges ($404,260,934 net of Harmonized Sales Tax recoveries) to $422,269,000 net of all applicable taxes and charges ($429,700,934 net of Harmonized Sales Tax recoveries).

It is noted that the Purchase Order Amendment represents an increase of 6.3 percent of the overall contract value.

Authority is also being requested to reallocate cashflows in Toronto Water's 2024 Capital Budget and 2025 - 2033 Capital Plan in the amount of $25,440,000 to support the Purchase Order Amendment for the construction of the Coxwell Bypass Tunnel.