1 Approval Process for the Siting of Waterfront Windmills

2 Request for Proposals for Selection of Vendors for Supply of Process Control Systems (SCADA) Software, Contract No. MWRFP199

3 Engagement of Professional Services to Undertake the Preliminary Design of Process Control Systems at the R.C. Harris, R.L. Clarke, F. J. Horgan and Island Water Treatment Plants

4 Engagement of Professional Services to Undertake the Preliminary Design of a Process Control System for the Water Transmission System

5 Results of the Request for Proposals for the Water Pollution Control Process Control System Detailed Design Project

6 Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract

7 Works Best Practices Program Recommendations of Audit Committee

8 Installation of Traffic Control Signals at O'Connor Drive at Northridge Avenue; O'Connor Drive at Glenwood Crescent; and O'Connor Drive at Four Oaks Gate (Ward 1, East York)

9 Prince Edward Viaduct -Measures to Deter Suicide Attempts

10 Review of Sub-Committees, Special Committees and Task Forces

11 Citizen Appointments to Toronto Pedestrian Committee

12 Sidewalk Snow Clearing

13 Expansion of the Snow Emergency Route Network (All Wards)

14 Winter Maintenance of City Sidewalks, Snow Clearing and Salting, District One - December 1, 1999 to March 31, 2003 Contracts Nos. T-79-99, T-80-99 and T-81-99 (East York, High Park, Trinity Niagara, Davenport, North Toronto, Midtown, Downtown, Don River, East Toronto, York Humber and York Eglinton

15 Rental of Equipment with Operators for Winter Maintenance of Toronto Roads (Snow Plowing and Removal) in District 2 for 1999/2000 to 2002/2003 Winter Seasons - Quotation No. 6032-99-01877

16 Advance Warning on W.R. Allen Road at Eglinton Avenue West (Ward 28, York-Eglinton; Ward 22, North Toronto)

17 Proposed Installation of Traffic Control Signals - Brentcliffe Road and Vanderhoof Avenue; Laird Drive and Vanderhoof Avenue; and Danforth Avenue and Thyra Avenue (Ward 1, East York)

18 Terms of Reference, Redway Road and Brentcliffe Road Extension Feasibility Study (Ward 1, East York)

19 Removal of Right-Turn Restriction - Victoria Park Avenue and Farmcrest Drive (Ward 14, Scarborough Wexford)

20 Reduction of Speed Limit from 60 km/h to 50 km/h Islington Avenue between Dundas Street West and The Queensway (Kingsway-Humber; Lakeshore-Queensway)

21 Guidelines Relating to Publication of Names of Companies Convicted of Contravening the City's Sewer Use By-law

22 Encroachment, Sanitary Discharge and Industrial Waste Surcharge Agreements with the Greater Toronto Airports Authority

23 Sanitary Discharge Agreement - Wellesley Central Hospital (Ward 24 - Downtown)

24 Additional Expenditures for Extra Work on Capital Projects Currently in Progress

25 Engineering Services to Complete the Replacement of Sludge Dewatering Centrifuges Contract at the Highland Creek Treatment Plant

26 Multiple Residential Properties - Sewer Drains

27 Replacement of Flow Meters and Automatic Samplers - Water and Wastewater Services

28 Apartment Recycling Pilot Project and OMG Media Bin Launch Event

29 Landfill Gas Control Excellence Gold Award for the Keele Valley Landfill Site

30 Other Items Considered by the Committee

(City Council on October 26 and 27, 1999, amended this Clause by:

(1) amending Recommendation No. B(4) of the Works Committee to read as follows:

"(4) Toronto Hydro and TREC, in consultation with the Commissioner of Works and Emergency Services, be requested to report back to the Works Committee for its meeting of December 1, 1999, if possible, on at least one preferred site in the City of Toronto where windmills could be located, and report within three months, on other potential sites throughout the City of Toronto where windmills can be located, with specific attention to the former stockyards and rail corridors, brown field sites, Hydro corridors and other potentially suitable sites.";

(2) adding to Recommendation No. B(6) of the Works Committee the words "such report to include parkland/open space", so that such recommendation shall now read as follows:

"(6) the question of not siting the windmills on lands zoned G, GR or GM, be referred to the Commissioner of Works and Emergency Services for a report back to the Committee when dealing with the specific siting, such report to include parkland/open space;";

(3) deleting from Recommendation No. B(7) of the Works Committee the words "Wychwood yards on Christie Street", so that such recommendation shall now read as follows:

"(7) notwithstanding Recommendation No. (6), TREC, in consultation with Works and Emergency Services Department staff, be requested to examine the following locations and report back to the Committee on these sites as part of the site selection process:

- 43 Junction Road;

- south embankment of Earlscourt Park;

- 115 Wiltshire Boulevard and northern property;

- 640 Lansdowne Avenue; and

- Union Street north of Turnberry;";and

(4) adding thereto the following:

"It is further recommended that:

(1) the City Solicitor be requested to submit a report to the Works Committee on any legal liability that the City of Toronto may have with respect to the joint venture between TREC, Toronto Hydro and the City; and

(2) if the final recommendation is for the windmills to be located on land owned or leased by the City, such land be provided at market value.")

The Works Committee:

(A) recommends the adoption of the report dated September 23, 1999, from the Commissioner of Works and Emergency Services, subject to:

(i) amending Recommendation No. (1) by deleting the word "waterfront" and adding thereto the words "for a maximum of three windmills";

(ii) striking out Recommendation No. (2); and

(iii) adding to Recommendation No. (3) the words "and Toronto Hydro" after "Toronto Renewable Energy Co-operative (TREC)";

so that such Recommendations read as follows:

"(1) That Council support, in principle, the potential use of City owned lands or lands leased by the City as sites for windmills (wind turbines) so that City owned or leased sites may be considered in the comparison of potential sites for a windmill under the Provincial Environmental Assessment process, for a maximum of three windmills;

(2) that the Toronto Renewable Energy Co-operative (TREC) and Toronto Hydro, be requested to provide a proposed environmental assessment Terms of Reference including public consultation procedures, in accordance with the requirements of the Provincial Environmental Assessment Act, for approval by City Council prior to proceeding within the environmental assessment study;

(3) that City staff be requested to report further in the event that City owned or leased lands are identified as preferred site locations through the environmental assessment process, and to clarify what, if any, additional approvals, leasing agreements, or zoning amendments would be required, and how best obtained, at that time;

(4) that Toronto Hydro and TREC be requested to take into account, as part of the environmental assessment, the comments and recommendations of City Council with respect to this matter;

(5) that this report be referred to the Economic Development and Parks Committee and each of the Community Councils for information; and

(6) that TREC and Toronto Hydro be advised that the City reserves the right to accept or reject the use of any City owned or leased lands for a windmill, irrespective of any environmental assessment process"; and

(B) further recommends that:

(1) neighbourhood consultation committees be established for communities that are affected to assist in the site selection process, the terms of reference for such environmental assessment processes as may be required, and such environmental assessment processes themselves;

(2) Toronto Hydro and TREC be requested to submit Terms of Reference for the formation of a public evaluation committee that would provide ongoing input and commentary on this demonstration project;

(3) this report be referred to the Toronto and Region Conservation Authority for ongoing comment;

(4) Toronto Hydro, in consultation with the Commissioner of Works and Emergency Services, be requested to report back to the Committee within three months, on potential sites throughout the City of Toronto where windmills can be located, with specific attention to the former stockyards and rail corridors, brown field sites, Hydro corridors and other potentially suitable sites;

(5) the Commissioner of Works and Emergency Services be requested to report to the Works Committee on a public consultation process that could be undertaken in the evaluation of such potential sites;

(6) the question of not siting the windmills on lands zoned G, GR or GM, be referred to the Commissioner of Works and Emergency Services for a report back to the Committee when dealing with the specific siting;

(7) notwithstanding Recommendation No. (6), TREC, in consultation with Works and Emergency Services Department staff, be requested to examine the following locations and report back to the Committee on these sites as part of the site selection process:

- 43 Junction Road;

- south embankment of Earlscourt Park;

- 115 Wiltshire Boulevard and northern property;

- 640 Lansdowne Avenue;

- Wychwood yards on Christie Street; and

- Union Street north of Turnberry;

(8) the City Solicitor be requested to submit a report to the Committee on the bonusing aspects of allowing the production of a saleable commodity on City-owned property; and

(9) the Commissioner of Works and Emergency Services be requested to submit a report to the Committee on noise levels produced by commonly used wind turbines.

The Works Committee reports, for the information of Council, having requested the Commissioner of Works and Emergency Services to submit a report directly to Council for its meeting on October 26, 27 and 28, 1999, on who the proponent for the windmill project will be, i.e., Toronto Hydro, TREC or the City of Toronto Works and Emergency Services Department, and to provide further information on TREC, including the membership of the Board of Directors, whether it is incorporated, its relationship with Toronto Hydro, and whether there is a legal agreement between them.

The Works Committee submits the following report (September 23, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

The purpose of this report is to seek Council's support in principle for the siting of waterfront electricity generating windmills (wind turbines) along the Toronto waterfront in areas that appear to best meet the selection criteria and that may be sited on City owned or leased lands, subject to the proponent's satisfactory completion of required environmental assessments including public consultation, and to clarify the approval process required to locate windmills on the Toronto waterfront.

Source of Funds:

There is no direct financial implication to the City associated with this report.

Recommendations:

(1) That Council support, in principle, the potential use of City owned lands or lands leased by the City as sites for waterfront windmills (wind turbines) so that City owned or leased sites may be considered in the comparison of potential sites for a windmill under the Provincial Environmental Assessment process;

(2) that the Toronto and Region Conservation Authority be requested to support, in principle, the use of its lands that are leased to the City as potential sites for waterfront windmills so that these sites may be considered in the comparison of potential sites for a windmill under the Provincial Environmental Assessment process;

(3) that the Toronto Renewable Energy Co-operative (TREC), be requested to provide a proposed environmental assessment Terms of Reference including public consultation procedures, in accordance with the requirements of the Provincial Environmental Assessment Act, for approval by City Council prior to proceeding within the environmental assessment study;

(4) that City staff be requested to report further in the event that City owned or leased lands are identified as preferred site locations through the environmental assessment process, and to clarify what, if any, additional approvals, leasing agreements, or zoning amendments would be required, and how best obtained, at that time;

(5) that Toronto Hydro and TREC be requested to take into account, as part of the environmental assessment, the comments and recommendations of City Council with respect to this matter;

(6) that this report be referred to the Economic Development and Parks Committee and each of the Community Councils for information; and

(7) that TREC and Toronto Hydro be advised that the City reserves the right to accept or reject the use of any City owned or leased lands for a windmill, irrespective of any environmental assessment process.

Report Request:

The Works Committee on July 14, 1999, had before it a communication (July 8, 1999) from Councillor Jack Layton, Vice-Chair, Toronto Hydro Board, recommending that the Commissioner of Works and Emergency Services report to the Works Committee in September 1999 on the siting of two wind turbines along the Toronto Waterfront (a.k.a. waterfront windmills). The Committee also received a communication (July 21, 1999) from Councillor Irene Jones (Lakeshore-Queensway) listing concerns of constituents and requesting that they be addressed in the report. Councillor Bill Saundercook, Chair, Works Committee, agreed in a communication (July 22, 1999) to Councillor Irene Jones that her constituents' issues should be taken into account in the staff report. Subsequently, TREC wrote to Councillor Saundercook (August 10, 1999) requesting that the report be forwarded to the October meeting of the Works Committee as a deputation item.

Specifically, the request was to identify the approval process required to locate two wind turbines (windmills) on the Toronto waterfront, including an outline of the process needed to obtain City and other agency approvals (including environmental assessment), the technical viability and environmental expectations to be satisfied, other environmental impacts and viability concerns, the public consultation and communication process to be followed and other legal and financial aspects including potential leasing arrangements.

This report addresses the original request and the supplementary request but deliberately does not fully address all issues in order to avoid prejudicing the appropriate environmental and planning approval processes, both of which require community consultation and input.

However, the report does indicate the criteria used to identify and select potential sites; the sites that appear to meet the selection criteria; the sites that meet the selection criteria and that are also City owned or leased; and the various site dependent approval processes required to permit the construction and operation of the waterfront windmills (wind turbines).

The report has been prepared in consultation with Toronto Hydro and Toronto Renewable Energy Co-operative.

Comments:

The City's Perspective:

City Council has adopted a commitment to achieve a reduction of 20 percent in carbon dioxide (CO₂) emissions from all sources by the year 2005 (Clause embodied in Report No. 26 of The Strategic Priorities and Policy Committee, as adopted by Council, December 16 and 17, 1999).

Locating windmills, as along the Toronto waterfront, is clearly supportive of this policy, since the use of wind for electrical generation reduces the need to burn fossil fuels and hence would contribute to the achievement of the City's 20 percent CO₂ emission reduction goal. The recommendations contained in this report are directed towards a process that will result in the implementation of a windmill project. However, the recommendations contained in this report do not pre-determine the site to be selected, nor do they resolve the apparent social conflicts over cluster area selection or conflicts with other environmental directions, such as use of public parkland areas. These questions will be addressed and resolved as part of an environmental assessment process complete with public consultation, and will be subject to subsequent Council review, including potential further public input if City lands are selected for the project and land use regulation amendments are required.

City Council has also adopted Report No. 26 of The Strategic Policies and Priorities Committee at its meeting of December 16 and 17, 1998, which included adopted recommendations for staff to report back on how to further "… facilitate the expeditious development of the …. TREC wind turbine and similar renewable energy projects as part of the City's overall sustainable energy strategy".

The Proponents:

The waterfront windmills project is a joint venture partnership of Toronto Hydro (through Toronto Hydro Energy Services Inc.) and Toronto Renewable Energy Co-operative, TREC (through Toronto Renewable Energy Windpower Co-op, TREC-WPC).

TREC was founded in 1997 by members of the North Toronto Green Community, a neighbourhood-based environmental group. The Co-operative was launched with grants from the Toronto Atmospheric Fund, a statutory agency of the City of Toronto whose mandate is to fund projects to help Toronto meet its commitment to lower carbon dioxide emissions.

Toronto Hydro was incorporated in May 1999. It has supported several local community-based green energy programs, and is committed to work with the City of Toronto to meet the 1990 United Nations Summit objective of reducing carbon dioxide emissions by 20 percent by 2005.

Proposal Concept:

Modern windmills are more technically called wind turbines (wheel driven by air flow) or a wind driven generator because they are used to generate electricity rather than mill grain. However, in more common parlance, the modern wind driven turbine is still referred to as a windmill, and that common use is continued here.

Modern windmills differ in appearance and purpose from their predecessors. The proposed waterfront windmills will consist of a white painted, hollow tubular supporting tower structure which is approximately 4 metres in diameter at its base, tapering to less at the top, and between 55 and 65 metres high (depending on specific local wind regime requirement). Mounted to the tower is a three-thin-bladed impeller (a reverse propeller) made of white fiberglass laminate with each blade being approximately 25 metres long (23.5 or 26 metres). The tower and blade (at blade zenith) together have an approximate maximum height of between 80 and 90 metres.

The proponents propose to construct two wind turbines each with a rated output between 660KW and 1MW. Within the anticipated wind regime of the Toronto waterfront, these will be sufficient to generate 2800 MWh (megawatt-hours) of electricity annually. This is sufficient to provide the electricity requirements of 500 to 600 households in Toronto. The "green electricity" obtained (i.e., non-fuel combusting or CO₂ releasing) from these turbines is equivalent to the benefit obtained by 400,000 medium sized trees sequestering carbon dioxide. For comparison, replacement of the power generated by the Lakeview Generating Station would require in the order of 1000 wind turbines.

The wind turbine generates electricity that can be added to the electricity grid. The recent restructuring of Ontario Hydro included generic permissions to allow local power utilities to generate power and provide it to the grid. This recent change provided TREC and Toronto Hydro with an opportunity that was not previously available. Power can be added to the grid directly and customers can be charged for that "green electricity" plus a "wheeling" or transmission fee. The wind turbine provides green power that can be purchased at a modest premium by anyone with a share in TREC, or by direct purchase through Toronto Hydro. Technically, TREC's shareholders each own a portion of the wind turbine structure rather than any share of the power output. Shareholders contribute to initial capital construction and to subsequent operating costs. TREC's shareholders will obtain a credit on their electricity bill as partial return of their investment.

Membership in the TRE Co-op (TREC-WPC) is open to all Toronto Hydro subscribers at a cost of $500.00 per share or "turbine unit". TREC-WPC members will regularly receive an energy credit on their Toronto Hydro bill for the amount of energy their portion of the turbine produces during its anticipated 25-year life.

At this time, Toronto Hydro and TREC are proposing to establish two waterfront windmills within the boundaries of Toronto. This not a pilot project because the technology is already proven and the business schemes have been demonstrated to be successful elsewhere (e.g., Copenhagen, Denmark where the municipal utility combined with a similar green energy co-operative). However, the project is a demonstration project in that it is a new concept for Toronto, and could contribute to building awareness in the City that power may be derived from a variety of sources and that green power, which is environmentally responsible, can also be economically viable and practically applied. The greater the success of the demonstration, the greater the likelihood of developing further community support for additional green energy projects in the City by Toronto Hydro, TREC and other organizations. The maximum economic success is hoped for by siting the wind turbines in as optimum a location as possible. Ideally, wind turbines should be sited where there is strong and undisturbed wind. In Toronto, this encourages their siting in the vicinity of Lake Ontario or at high elevations.

The capital costs for each turbine (approximately $1.2 million each) is to be provided in two ways: (i) by selling "turbine unit" shares, and (ii) by Toronto Hydro providing its share of the cost of the joint venture through its capital budget. The Government of Canada, through the Technology Early Action Measures component of the Climate Change Action Fund, is providing $330,000.00 to TREC, and through Environment Canada is also providing a further $98,500.00 in pre-purchased "turbine shares" for its Toronto offices and laboratories.

The Toronto Atmospheric Fund has also agreed to provide up to $800,000.00 in bridge financing to TREC for the project subject to certain conditions.

Environmental Assessment

Under any environmental assessment (EA), either federal or provincial, the proponent is responsible for ensuring that they comply with EA requirements. The proponent in this case is Toronto Hydro and TREC (TREC). This proposal could be subject to environmental assessment under both the federal and provincial legislation. The federal legislation is entitled the Canadian Environmental Assessment Act (CEAA). The provincial legislation is referred to as the Environmental Assessment Act (EAA).

Under the CEAA, an environmental assessment is required for projects for which the Federal Government is the proponent or where the project uses federal funds or lands. Where a project is subject to a federal EA, the applicable federal department assesses the project under the CEAA and ensures that the project fulfills the associated CEAA requirements including possible referral to mediation or a hearing. It is the federal department's responsibility to establish the scope of the project and the scope of assessment. As such, the proponent should contact the specific federal department and obtain confirmation of EA requirements.

The waterfront windmill proponents, TREC and Toronto Hydro, have already obtained details regarding the federal environmental assessment requirements from Environment Canada. The proponents are required to comply with the requirements of the Canadian Environmental Assessment Act (CEAA) because federal funds have been provided to the project.

Only municipal and other government agency projects similar to the windmill are statutorily required to comply with the provincial EAA. Therefore this project is only subject to the provincial EAA if the Province designates it under the Act (which is possible for private projects). If the Province does deem the undertaking subject to the EAA, then the proponent must make an application to the Ministry of the Environment for approval of the project. Such an application consists of proposed Terms of Reference submitted under section 6 (1) of the EAA and an Environmental Assessment submitted under Sub-section 6.2 (1) of the EAA. Generally speaking, the Terms of Reference is the plan or road map for the actual environmental assessment. In it, the proponent describes how their process will address the requirements of the EAA including the consultation done in developing the Terms of Reference. Regarding the requirements of the provincial environmental assessment itself, the project must include a description of the purpose.

The proponents have requested a ruling from the Ontario Ministry of Environment (MOE) to determine whether or not the waterfront windmill project is to be officially subject to the Province's Environmental Assessment Act. The proponents have indicated that they wish to follow the provincial environmental assessment process irrespective of the decision of the MOE. The Ministry has indicated that it will not oversee any environmental assessment if it is not "designated" by the Ministry.

As noted above, if the Ministry of the Environment does not "designate" the project as subject to provincial requirements the proponents have indicated that they will still informally follow, to the fullest extent possible, the guidance provided by the provincial environmental assessment process while ensuring that they satisfy the federal environmental assessment requirements. However, if the project is formally "designated" by the Province, a more formal melding of the two processes will be developed. Regardless of the outstanding Ministry of the Environment decision, the proponents have already initiated a joint study and public communication program to satisfy both the Canadian Environmental Assessment Act and the provincial Environmental Assessment Act. They are also developing a procedure to address all identified aspects of both. The expanded study, communication and reporting procedure is intended to ensure the appropriateness of the project and to ensure that appropriate public consultation takes place. The study process, including the public consultation process, should be approved by City Council before being proceeded with.

Use of City Owned or Other Sites for Windmill:

It could be considered prejudicial to the environmental assessment process if the City were to recognize and approve of any sites without an appropriate environmental assessment being conducted. Therefore, at this stage only the use of public land for the purpose of installing wind turbines (windmills) should be supported in principle.

Further municipal approvals related to municipal planning and ownership may be required. Potential sites may need Official Plan and Zoning By-Law Amendments before a Building Permit can be issued.

If the yet-to-be-identified preferred site is City owned or leased, the proponent will require the City's approval subject to a satisfactory leasing agreement.

Most of the City's remaining unbuilt waterfront lands are "open space" and are in public ownership. The waterfront windmill proponents have not established ownership as a selection criteria, but the application of other comparative criteria, plus the apparent shortage of siting opportunities on private lands on the waterfront, indicates that serious consideration should be given to siting the project on public lands.

In the City of Toronto, such public open space is most commonly associated with one of the following categories:

(a) lands used for public works (sewage treatment, water filtration);

(b) lands used for recreation (public parks);

(c) lands with restricted use (environmentally sensitive areas, natural areas); and

(d) lands that are vacant (abandoned or undeveloped industrial lands).

The use of several publicly owned sites will also require additional approvals and/or comments to be obtained from Toronto and Region Conservation Authority (in areas of Lake Ontario shoreline flooding), from the Waterfront Regeneration Trust (in areas proximate to the Waterfront Trail), public liaison committees, the Greater Toronto Airports Authority (in flight path zones of Lester B. Pearson Airport), Toronto Port Authority (in flight path zones of the Toronto City Centre Airport on the Toronto Islands), Transport Canada and NavCan (in proximity to navigation equipment for both airports).

Public Consultation and Communication Process:

TREC and Toronto Hydro have been conducting ongoing public consultation on the proposed wind turbine siting project since May 1998. TREC and Toronto Hydro have advised that public involvement and consultation has four goals:

- raising awareness and educating the public about wind turbines as a sound source of "green energy";

- scoping issues of public concern related to the proposal;

- addressing and responding to concerns using educational material, oral responses, research of issues, and where needed, further study to develop factual responses; and

- development of public acceptance of wind turbine sites on publicly owned land in the City of Toronto.

Toronto Hydro and TREC have indicated that public consultation activities are directed to site-specific interested parties, to create early involvement of those groups in the siting process, and to the broad city-wide public for the purposes of building public awareness about wind turbines as a renewable source of energy. Toronto Hydro and TREC have indicated that through its public consultation activities, it will address public concerns, propose mitigation and develop a critical level of public acceptance for wind turbines in the City of Toronto.

Toronto Hydro and TREC's public consultation activities have included a tour of a wind turbine in Kincardine, Ontario, presentations to stakeholders and environmental groups, and two public meetings. Toronto Hydro and TREC have held public meetings in those areas where they are of the opinion that the siting for the wind turbines appears favourable. One meeting was held in the east end of Toronto near to the Ashbridges Bay Treatment Plant and the other in the west end of Toronto near the Colonel Samuel Smith Park/R.L. Clark Water Filtration Plant.

A City staff review of the consultation process to date indicates that the public is generally not aware of key decision making points in the process, or when and how its input should be given.

Toronto Hydro and TREC have indicated that public consultation activities to date have been done in support of their federal environmental assessment requirements. As noted above, Toronto Hydro and TREC have already indicated that they will adopt the guidance provided by the provincial EA Act, including all public consultation, even though they may have no obligation to do so. City Council should confirm its endorsement of this arrangement.

Potential Windmill Locations:

A. Site Selection Criteria Proposed for use by TREC and Toronto Hydro:

A number of site selection criteria developed by TREC and Toronto Hydro effectively scope the proposal to a limited set of sites. The criteria fall into two groups: those which must be met (i.e., they are essential) and those that are deemed preferred (i.e., they are desirable but not essential). The essential site selection criteria group consists of those criteria that must be satisfied, a site must:

(a) be in Toronto Hydro's grid connection area and billing zone;

(b) have adequate wind regime;

(c) be compatible with present and future land uses;

(d) comply with Official Plan and Zoning requirements;

(e) have landowner's permission to use the site; and

(f) be more than 200 metres from the nearest residence.

The preferred criteria group identified by Toronto Hydro and TREC includes those criteria that encourage a speedier approval, and minimize avoidable extra costs and problems, as well as maximize benefits. Wherever possible a site should preferably:

(g) not require soil clean-up;

(h) not require to be flood-proofed;

(i) have suitable soil and groundwater conditions to support the required structure;

(j) require minimum connection requirements (length) to grid;

(k) be accessible to the public for educational purposes; and

(l) receive local community support.

Toronto Hydro and TREC have indicated that the project has to be located in the City of Toronto in order to connect to the Toronto Hydro grid. Early regional wind studies were undertaken in the Toronto area by Zephyr North on behalf of the Federal Government. Zephyr North's study indicated the desirability of choosing a site in close proximity to the waterfront. More recently, TREC commissioned Zephyr North to confirm their findings for the Toronto Waterfront and to undertake further analysis of local wind regime in site cluster areas.

B. Preliminary Site Search:

A number of City owned sites have been previously ruled out in a preliminary assessment by Toronto Hydro and TREC for various reasons such as: land stability and suitability for foundation requirements, Transport Canada height restrictions as a result of the operation of Toronto Island Airport, poor or obstructed wind regime, close proximity to residences and cost prohibition. Also, a number of City owned and leased sites have been identified by TREC and Toronto Hydro as suitable for further investigation.

C. Site Selection Conflicts to be Resolved:

The potential City owned and leased candidate sites includes parklands owned by the Toronto and Region Conservation Authority (TRCA) and operated by the City. The agreement of the TRCA as landowner and of the City as operator needs to be obtained prior to final approval. The City should consider providing its support in principle for locating windmills in the City and on City lands and requesting similar support from the TRCA, subject to the proposed site being identified through an appropriate environmental assessment process.

A number of potential conflicts need to be considered in locating a windmill in, or near to, any parklands. These issues include but are not limited to recreational issues, such as kite flight and picnicking, environmental issues, such as possible impacts on bird and butterfly migrations, and impacts on adjacent natural areas (conservation lands), plus the visual impacts, if a windmill is sited in or near a park, that could detract from park users enjoyment.

Clearly, although the provision and use of "green energy" is likely to be environmentally beneficial, there are other environmental aspects that should be considered. All such issues will be addressed and resolved as part of the intended Environmental Assessment process, including holding public meetings and consulting with affected agencies. Support in principle to consider the use of City owned or leased lands, in the context outlined above, would help to facilitate the environmental assessment process but not pre-determine its outcome.

The potential use of the City's Water Filtration Plant or Wastewater Treatment Plant lands are also complicated by future operational expansion requirements, ongoing environmental assessments, and related matters, including community approval. These issues will be further explored and resolved as part of the environmental process.

Project Viability:

The general technical validity of the proposed installations has been proven at numerous sites in Europe, California, Alberta and elsewhere. The sufficiency of the expected local wind regime to generate wind energy has been proven by analysis of anemometer readings taken in the west and east ends of the City.

The financial viability depends on the market price for electricity. Preliminary assessment by the proponent indicates that wind power might have to be sold at a premium. Accordingly, in the case that the City of Toronto enters into a land lease agreement with the proponent, such an agreement should stipulate the requirement of dismantling the turbine by the proponent when the operation of the turbine is terminated.

The viability of the project from a community standpoint, as identified from public meetings which have already been held, appears to focus on concerns regarding noise, birds, and ice shedding plus a further concern regarding visual aesthetics. The literature regarding wind turbines suggests that additional noise associated with such installations is virtually inaudible beyond a 200 metre radius in urban environments. The potential for birds to fly into the tower, or into the surface of the rotating blades is apparent, especially during storm conditions, however, the literature suggests birds can normally see and avoid such installations during less active weather conditions.

Ice shedding, from tower and blades, is possible following periods of freezing rain or following windless periods where ambient air temperatures are below the freezing point and the air is saturated or supersaturated such that rime coatings develop. The occurrence of freezing rain or rime (i.e., ice) coatings will occur similar to any unheated structure, tower or tree. What is different is the potential for ice to be "thrown" from the windmill's blades as they turn.

However, wind turbines installed in comparable European installations in similar climates are governed by sensors that close down the turbine in the event of ice build-up on the blades. This is a standard operating procedure and precautionary measure to prevent damage to the turbine unit by unbalanced blade weights causing uneven rotation, but it also acts to address ice on blades being "thrown" off. Maintenance people attending on site are required to restart the windmill. Heated blades are another possible option for the waterfront windmills. There is every reason to assume that with appropriate facility design and operation, ice thrown from windmill blades should not occur.

In order to address perception and acceptance of the visual aesthetics of wind turbines, Toronto Hydro and TREC are encouraging and facilitating guided visits to the Ontario Hydro installation on the Bruce Peninsula to allow people to judge the visual impacts for themselves, as well as to experience the additional noise levels created by similar installations, albeit in a non-urban setting.

The proponent has indicated that all of these potential concerns will be fully addressed as an integral part of the project's environmental assessment.

Conclusions:

Waterfront windmills (wind turbines) are a renewable power source (green energy). Their use assists in meeting Council's commitments to reduce generation of greenhouse gases and reduce the use of air polluting and smog producing power sources.

Conceptually, the proposal is potentially environmentally beneficial and technically viable as exemplified by many installations in Europe, California, Alberta and elsewhere. The specific location(s) at which such wind turbines can be installed will be determined as part of an environmental assessment process including appropriate public consultation.

It is recommended that in order to better facilitate the use and acceptance of electricity generating windmills in Toronto, Council should support in principle, subject to the conclusions of an environmental assessment, the installation of waterfront windmills in Toronto, in support of Council's own commitment to a 20 percent carbon dioxide (CO₂ ) reduction by the year 2005.

Further, prior to the environmental assessment being proceeded with, its Terms of Reference should be submitted to City Council for approval.

Also, to facilitate the evaluation of siting options under the environmental assessment process, it is recommended that Council support, in principle, the potential use of City owned or leased land for two waterfront windmills.

City Council's support, in principle, should be subject to the satisfactory completion of an appropriate site selection process in keeping with the principles of the provincial environmental assessment process, and in keeping with provincial requirements if the project is "designated" by the MOE. The environmental assessment should also comply with federal environmental legislation, and be in compliance with local by-laws (or amendments to these by-laws should be sought).

It is also recommended that staff be requested to report back on the completion of the site selection process and the determination of the preferred site(s) resulting from the CEAA and EA process, and the details of any required lease arrangement and land use regulation changes that are required. Public meetings should be held by the proponent rather than City staff in order to avoid any perceived conflict of interest.

This report has been prepared in consultation with the Commissioner of Economic Development, Culture and Tourism.

Contact Name:

Christopher Morgan

Senior Specialist - Air Quality Improvement Branch

Technical Services

Tel. 392-6903

The Works Committee reports, for the information of Council, having also had before it during consideration of the foregoing matter the following communications and submissions:

(i) (September 7, 1999) addressed to Mr. Don Barnett, Toronto Ornithological Club, from the Ministry of the Environment in response to his communication with respect to the announcement by the Toronto Renewable Energy Co-operative and Toronto Hydro of their intention to build up to three 660 KW wind turbines on the Toronto lakefront; and expressing reservations with respect to the site selections in the proposal;

(ii) (September 23, 1999) from Mr. Bryan Young, General Manager, Toronto Renewable Energy Co-operative, and Ms. Joyce McLean, Manager, Green Energy Services, Toronto Hydro, requesting that the report regarding the windmill project be listed as a deputation item;

(iii) (October 2, 1999) from Ms. Kate Chung, Toronto, Ontario, in support of the wind turbine proposal of the Toronto Renewable Energy Co-operative;

(iv) (October 4, 1999) from Mr. W. H. Bayley, Scarborough, Ontario, requesting the City to support the Toronto Renewable Energy Co-operative proposal for approval, in principle, of the siting of wind turbines on City lands;

(v) (October 4, 1999) from Mr. William J. Mathews, Toronto, Ontario, requesting approval of the process for Toronto Renewable Energy Co-operative to install a wind turbine on municipal land, as soon as possible;

(vi) (October 4, 1999) from Mr. Barrie Gray, Toronto, Ontario, urging the support of the wind turbine project;

(vii) (October 4, 1999) from Mr. Wilf Moll, Renewable Energy Solutions, commenting on the TREC wind turbine proposal, the suitability of the Ashbridges Bay Treatment Plant site, and the impact on birds;

(viii) (October 4, 1999) from Ms. Liz White, Director, Animal Alliance of Canada, advising that the Animal Alliance of Canada supports the recommendations in the staff report, and the Toronto Renewable Energy Co-operative and Toronto Hydro in their decision to satisfy the requirements of both the Canadian Environmental Assessment Act and the Provincial Environmental Assessment Act;

(ix) (October 5, 1999) from Mr. H. Bruce Crofts, Toronto, Ontario, advising that he and his wife strongly endorse the wind turbine project for the Toronto waterfront;

(x) (October 5, 1999) from Mr. Michael Harrison, President, Citizens Concerned about the Future of the Etobicoke Waterfront, expressing concern with respect to the approval process for the siting of waterfront windmills, including the use of public lands for private businesses to generate profit, the use of the Colonel Samuel Smith Park and other waterfront parks, and the impact of the proposal on avian wildlife;

(xi) (October 5, 1999) from Ms. Ruth Richardson, Manager, Environmental and Corporate Affairs, Lever Pond's, advising that Lever Pond's supports the generation of renewable energy such as wind energy within the City of Toronto as a means to help combat issues of urban smog and global climate change and the issuing of a site approval for the proposed Toronto Renewable Energy Co-operative wind turbine on City of Toronto property;

(xii) (October 5, 1999) from Ms. Gillian Hegge, Danforth Massage Therapy Clinic, requesting that the Committee approve in principle the idea of siting wind turbines on public land, subject to approval from the provincial and federal governments;

(xiii) (October 5, 1999) from the Toronto Environmental Alliance, submitting briefing notes in support of the approval process for the siting of a waterfront windmill;

(xiv) (October 5, 1999) from Dr. Sheela V. Basrur, Medical Officer of Health, Toronto Public Health, expressing support, in principle, of the approval process for the siting of waterfront windmills provided that the appropriate studies are undertaken through the environmental assessment process regarding the siting of these facilities, and provided that these studies take into account community, public health and environmental concerns;

(xv) (October 5, 1999) from Mr. Mark Pomerantz, Pharmacist, encouraging support for the proposal that Council approve, in principle, the siting of two wind turbines on City land;

(xvi) (October 6, 1999) from Ms. Karey Shinn, Chair, Safe Sewage Committee, raising questions and concerns with respect to the approval process for the siting of waterfront windmills;

(xvii) (October 6, 1999) from Mr. Richard Brault and Ms. Dianne Croteau, Studio Innova Inc., expressing full support for the construction of two wind turbines on Toronto's waterfront;

(xviii) (October 6, 1999) from Ms. Karen Buck, Toronto, Ontario, expressing concern with respect to the approval process for the siting of waterfront windmills;

(xv) (undated) from Mr. Robert Mew, President, Hurricane Canvas Inc., in support of the Toronto Renewable Energy Co-operative initiative, and the siting of the turbine on public land;

(xvi) (undated) from Mr. Brian Milani, Eco-Materials Group, in support of the TREC/Toronto Hydro proposal to erect wind turbines on the Toronto waterfront;

(xvii) (October 6, 1999) from Mr. Bryan Young, General Manager, Toronto Renewable Energy, and Ms. Joyce McLean, Manager, Green Energy Services, Toronto Hydro, submitting copies of their deputations and additional material with respect to the Waterfront Wind Turbine Project; and

(xviii) (October 6, 1999) from Ms. Jennifer Morrow, Toronto Atmospheric Fund, submitting a copy of her presentation.

The following persons appeared before the Works Committee in connection with the foregoing matter:

- Mr. Bryan Young, General Manager, Toronto Renewable Energy Co-operative, and submitted material with respect thereto;

- Ms. Joyce McLean, Manager, Green Energy Services, Toronto Hydro, and submitted material with respect thereto;

- Ms. Shirley Farlinger, United Nations Association of Canada;

- Mr. Oliver Carroll, Toronto, Ontario;

- Mr. Tooker Gomberg, Energy & Climate Campaigner, Greenpeace;

- Ms. Jennifer Morrow, Toronto Atmospheric Fund, and submitted a copy of her presentation;

- Mr. Dan McDermott, Director, The OntAIRio Campaign;

- Mr. Jose Etcheverry, Sustainable Energy Group, University of Toronto;

- Mr. Peter Schrama, Toronto, Ontario;

- Mr. Glenn McTaggart, Etobicoke, Ontario;

- Ms. Lois Corbett, Toronto Environmental Alliance;

- Mr. Ken Ogilvie, Executive Director, Pollution Probe;

- Mr. Boris Mather, Past President/Director, Citizens for Lakeshore Greenway;

- Ms. Karey Shinn, Chair, Safe Sewage Committee, and submitted a communication with respect thereto;

- Mr. John Carley, Co-Chair, Friends of the Spit;

- Mr. Douglas Buck, Toronto, Ontario;

- Ms. Karen Buck, Toronto, Ontario, and submitted a communication with respect thereto;

- Ms. Sara Bjorkquist, Vice-Chair, Ontario Clean Air Alliance;

- Ms. Liz White, Director, Animal Alliance of Canada, and submitted a communication with respect thereto;

- Mr. Cameron Miller, Toronto, Ontario;

- Councillor Sandra Bussin, East Toronto; and

- Councillor Irene Jones, Lakeshore Queensway.

(City Council on October 26 and 27, 1999, had before it, during consideration of the foregoing Clause, the following communication (October 26, 1999) from Councillor Jack Layton:

Recommendation:

To amend B (4) to read as follows (additions in bold):

Toronto Hydro and TREC, in consultation with the Commissioner of Works and Emergency Services, be requested to report back to the Works Committee for its meeting of December 1, if possible, on at least one preferred site in the City of Toronto where windmills could be located and report within three months, on other potential sites throughout the City of Toronto where windmills can be located, with specific attention to the former stockyards and rail corridors, brown field sites, Hydro corridors and other potentially suitable sites.

Rationale:

The December 1, 1999 date is necessary in order for Toronto Hydro and TREC to meet March 31, 2000 deadlines set by the Federal and Provincial governments:

(a) Fulfilling the anticipated harmonization of the Federal and Provincial Environmental Assessment process deadlines (this requires site specific approval by City Council by mid January).

(b) Meeting Federal Government funding requirements that require Toronto Hydro and TREC to put an order in for a turbine (there is a 6 month production queue).

To Meet the March 31, 2000 deadline the following actions should occur.

Dec. 1:

Works Committee considers various reports on neighbourhood consultation, Terms of Reference on the Environmental Assessment, legal issues, etc…(ie reports asked in the clause) and a recommendation for at least one specific site.

Dec. 14:

Council considers approval of one or more specific sites, with any necessary conditions if outstanding issues still exist. (This needs to be done for Toronto Hydro and TREC to proceed with the EA process)

Mid January:

TREC and Toronto Hydro must complete site specific studies and analysis in order to complete the EA documentation in early February.

First week in February:

(a) TREC and Toronto Hydro must complete EA documentation on a specific site or sites; and

(b) TREC and Toronto Hydro need to post final EA document for a 30 day review to fulfill EBR provincial requirements.

First week in March:

Toronto Hydro and TREC make final changes and respond to any concerns to meet March 31 deadline.)

(City Council also had before it, during consideration of the foregoing Clause, the following report (October 25, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

The purpose of this report is to satisfy the Works Committee's request for further information identifying the proponents of the windmill project and their corporate relationship and joint contractual arrangements.

Financial Implications and Impact Statement:

There are no direct financial impacts on the City resulting from consideration of this report.

Recommendations:

That this report be received for information.

Background:

The Works Committee, at its meeting on October 6, 1999 considered a staff report of September 23, 1999 entitled, "Approval Process for the Siting of Waterfront Windmills" and

"(C) requested the Commissioner of Works and Emergency Services to submit a report directly to Council for its meeting on October 26, 27 and 28, 1999, on who the proponent for the windmill project will be, i.e. Toronto Hydro TREC or the City of Toronto Works and Emergency Services Department, and to provide further information on TREC, including the membership of the Board of Directors, whether it is incorporated, its relationship with Toronto Hydro, and whether there is a legal agreement between them."

Comments:

(1) Proponents of the Windmill Project

No department of the City of Toronto is involved as a proponent of this project.

The official co-proponents for the windmill (wind turbine) project are the TREC Wind Power Co-operative (TREC-WPC) and Toronto Hydro Energy Services Inc. who have formed a joint venture partnership to further the project.

TREC-WPC is an affiliated co-operative corporation of Toronto Renewable Energy Co-operative (TREC), both of which are separately incorproated. TREC-WPC is the company in which members will own windmill related assests. TREC is the company which acts on behalf of the TREC-WPC to execute the project development.

The incorporation of Toronto Hydro Corporation, which occurred as a result of a City of Toronto transfer by-law in accordance with the Province of Ontario's Electricity Competition Act (Bill 35) on July 1, 1999, created both the new holding company of Toronto Hydro Corporation and Toronto Hydro Energy Services Inc., as one of two subsidiary companies. Toronto Energy Services Inc. is the competitive company dedicated to the retailing of electricity and related businesses.

(2) TREC-WPC and TREC - their Boards of Directors

(a) TREC-WPC - Board of Directors

President Judith Ramsay

Secretary/Treasurer Rob Macdonald

Director Graham Mudge

Director Jim Salmon

Director TJ Schur

Director Edward Hale

Director Gregory Allen

Director Mario Kani

Director Brian Iler

(b) TREC - Board of Directors

President Ed Hale

Secretary/Treasuer Gregory Allen

Director Mario Kani

Director Brian Iler

Director Judith Ramsay

(3) TREC-WPC and TREC's - Incorporation Status

TREC-WPC

Incorporation # 1103813

Incorporated April 16^th 1999

TREC

Incorporation # 1086617

Incorporated June 10^th 1998

(4) TREC-WPC and TREC's Relationship with Toronto Hydro Energy Service Inc and Toronto Hydro Corporation

All four companies are separate entities with different shareholders.

(5) Agreements between TREC-WPC and Toronto Hydro Energy Services Inc

The two proponent companies are presently operating together under a Memorandum of Understanding (MOU) and are still in the process of creating a formal legal agreement.

Conclusions:

It is recommended that this report be received for information in association with the staff report of September 23, 1999, entitled "Approval Process for the Siting of Waterfront Windmills" as was before the Works Committee at its meeting on October 6, 1999 and as before City Council at its meeting of October 26, 27 and 28 1999.

TREC, on behalf of TREC-WPC, and Toronto Hydro Energy Services have been consulted in the preparation of this report.

Contact:

Christopher Morgan

Senior Specialist - Air Quality Improvement Branch

Technical Services

Tel. 392-6903

Fax. 392-0816

E-mail address: cmorgan1@toronto.ca)

(City Council also had before it, during consideration of the foregoing Clause, a communication (October 5, 1999) from Mr. Michael Harrison, President, Citizens Concerned About the Future of the Etobicoke Waterfront (CCFEW), expressing concern about the proposal from Toronto Renewable Energy Cooperative (TREC) and Toronto Hydro to construct two wind turbines on the Toronto Waterfront.)

(City Council on October 26 and 27, 1999, adopted this Clause, without amendment.)

The Works Committee recommends:

(1) the adoption of the report dated September 27, 1999, from the Commissioner of Works and Emergency Services; and

(2) that under no circumstances are there to be reductions in water quality and that continued improvements of quality should be considered an ongoing objective.

The Works Committee reports, for the information of Council, having considered together the following reports related to the Works Best Practices Program:

(i) (September 27, 1999) from the Commissioner of Works and Emergency Services, headed "Request for Proposals for Selection of Vendors for Supply of Process Control Systems (SCADA) Software, Contract No. MWRFP199";

(ii) (September 22, 1999) from the Commissioner of Works and Emergency Services, headed

"Engagement of Professional Services to Undertake the Preliminary Design of Process Control Systems at the R.C. Harris, R.L. Clark, F.J. Horgan and Island Water Treatment Plants";

(iii) (September 22, 1999) from the Commissioner of Works and Emergency Services, headed"Engagement of Professional Services to Undertake the Preliminary Design of a ProcessControl System for the Water Transmission System";

(iv) (September 28, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer, headed "Results of the Request for Proposals for the

Water Pollution Control Process Control System Detailed Design Project"; and

(v) (September 27, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer, headed "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract";

and having directed that:

(1) a meeting of the Works Best Practices Program Work Group be convened prior to the Council meeting scheduled for October 26, 27 and 28, 1999;

(2) Union representatives be formally invited to meetings respecting Best Practices when these involve Toronto Civic Employees' Union Local 416 members, and that confirmation that invitations were received be obtained; especially important will be Local 416 and Local 79 involvement in all Teams, particularly items (4) "Organizational Services" and (5) "Integrated Works Area Implementation" under the Program Integration and Coordination Services for Phase 2;

(3) a written statement, to Council, be requested from EMA Canada concerning the firm's position on water quality as a part of Works Best Practices development and Union involvement in best practices development and implementation;

(4) the City Auditor be requested to report directly to Council on the aforementioned report headed "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract", wherein seven expressions of interest were received, two firms were given the opportunity to bid and one of those withdrew; and

(5) the Commissioner of Works and Emergency Services be requested to submit a report directly to City Council on the aforementioned reports, which outlines in simple terms the number of persons that are being hired under these contracts, the number of hours and hourly rate of pay of those persons, and the type of performance analysis to be undertaken as this project proceeds.

The Works Committee submits the following report (September 27, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

The purpose of this report is to present the results of the Request for Proposals for the supply of software for use in process control systems (commonly referred to as Supervisory Control and Data Acquisition, or SCADA) to be implemented in the Water and Wastewater Services Division under the Works Best Practices Program, and to provide the rationale for awarding the contract to Intellution Inc. of Norwood, Massachusetts.

Funding Sources:

On March 2, 3, and 4, 1999, City of Toronto Council adopted Clause No. 1, Report No. 3 of The Strategic Policies and Priorities Committee, thereby approving the 1999 - 2003 Capital Budget and Five-Year Capital Program, which contained funding for the Works Best Practices Program including funds for the purchase of process controller equipment and associated software to be installed in Water and Wastewater treatment facilities. Accordingly, funds are available in the Water and Wastewater Services Division, Water Pollution Control Capital Account No. C-WP001 and Water Supply Capital Account No. C-WS026.

Recommendations:

It is recommended that:

(1) Contract No. MWRFP199 for the supply and delivery of SCADA software for use by Water and Wastewater facilities be awarded to Intellution Inc., at a maximum total cost of $1,427,604.70 including Goods and Services Tax, and subject to cost reductions of up to $500,000.00 for existing licences; and

(2) the appropriate City officials be authorized to take the necessary action to give effect thereto.

Council Reference/Background/History:

On July 2 and 3, 1997, the former Metropolitan Council adopted Clause No. 3 of Report No. 13 of The Financial Priorities Committee authorizing the implementation of the Works Best Practices Program (WBPP) in the Works Department.

A Process Control System (PCS) User Group was established comprising representatives from Water and Wastewater Services Division and Technical Services Division, with support from the WBPP industry experts and EMA Canada Inc. This PCS User Group evaluated functional and technical requirements across the Water Supply and Water Pollution Control operating facilities, and recommended that standard controller and programming software technologies be adopted for use in all Water Pollution Control and Water Supply process control systems. At its meeting of May 11, 12 and 13, 1999, City Council adopted Clause No. 10 of Report No. 7 of The Works and Utilities Committee, thereby approving award of contract to Guiltech Automation for the provision of standard controller hardware. The software selection and procurement exercise was carried out in a parallel timeframe.

Comments and/or Discussion and /or Justification:

To facilitate the selection and procurement of the required process control systems software, a Request for Proposals (RFP) process was developed and carried out with the direction and assistance of the Technical Services Division of Works and Emergency Services. The scope of the RFP was the provision of standardized software development and operating components, as well as training, maintenance and support services. The specific use of this type of software is to provide water and wastewater facility operators the ability to "program" the process control systems, which perform the actual plant operations functions of opening and closing valves, controlling pump operation, and so on, and control the application of resources such as energy and chemicals. The software also provides team coordinators and managers with a system to display all aspects of plant operations in both graphical and textual form, including flow and process data and the status of all equipment and devices (for example, valves may be shown as open or closed, flow and pressure readings are shown, etc.). These systems differ from the Performance and Operations Management systems (POMS) in that they operate in "real time" mode, reflecting and controlling plant operations at the time they occur. POMS addresses the longer term requirements in terms of trend analysis, improvements tracking, and ongoing resource management.

In April of 1998, proposals were requested in response to Request for Proposals MWRFP199 to select process control systems (SCADA) software and related training and support services. The RFP clearly defined the specifications of the required software and related services, and indicated the key areas upon which the Proposals evaluation would focus. Of the proposals received in response to the RFP, all but one failed to meet the minimum mandatory requirements specified by the City. The Selection Committee concluded that a single proposal would not allow effective application of the overall technical and financial assessment designed to compare multiple proposals. As a result, the remaining proposal was returned with its pricing envelope unopened. It was decided that the RFP specifications would be revised and the RFP reissued.

In May of 1999, three proposals were received in response to the revised Request for Proposals. Proposals were submitted by Guiltech Automation (for GE Fanuc software), Intellution Inc., and Quindar Inc. The proposals were examined for compliance with minimum mandatory technical criteria specified in the RFP. The proposal by Quindar did not meet all the prescribed mandatory technical criteria, while the other two were fully compliant.

Formal presentations and bench testing were performed on the Guiltech and Intellution proposed software products. The City's Y2K Team for Works and Emergency Services also tested both vendors' products and both were accepted. After the combined demonstration and bench testing, the Selection Committee met to complete the technical evaluation. The technical evaluation did not consider price, but focused on functionality, flexibility, performance, compatibility with existing systems, and other technical aspects, all in the context of the planned implementation in Water and Wastewater Services. The Selection Committee completed its technical evaluation, awarding the Intellution proposal a Technical Evaluation Score of 96 out of a possible 100, and the Guiltech proposal a Technical Evaluation Score of 76. These scores reflected the significant advantages of the Intellution software product, in terms of the modern technology employed, the corresponding superior performance, the significant ease of use and overall greater functionality.

Best value as predefined in the formal evaluation process was to be determined based on the proposal with the lowest unit value, that being the total price divided by the Technical Evaluation Score. Note that pricing information was provided in separate, sealed envelopes, which were not opened until after the Technical Evaluation Scores were established.

The original price submissions and prices, adjusted for arithmetic error in making unit price extensions, are shown in Table 1, below.

The proposal evaluation was completed by dividing the Adjusted Price by the Technical Evaluation Score. The final scores are shown in Table 2, below. The Intellution proposal was determined to be the best overall value for the City (i.e., the least cost for the required functionality).

Table 2: PROPOSAL Evaluation (Technical Evaluation and Price)

Both of the cost proposals are based on replacing and upgrading all of the existing Intellution SCADA software and providing all new required software licences, as specified in the Request for Proposals. However, because the inventory of Intellution SCADA software licences already in use in the department was upgraded under the Y2K program, Intellution indicated in their cost proposal that they would give credit for those existing licences. As a result, a substantial cost reduction is anticipated over the life of the SCADA software contract. With the present preliminary estimates of eligible licence quantities, the actual total expenditure against the Intellution contract may be reduced by up to $500,000.00.

Guiltech also indicated in their cost proposal that they would replace and upgrade the existing Intellution software licences. The corresponding cost reduction associated with the Guiltech proposal is estimated to be up to $400,000.00.

The Intellution proposal is the best value to the City, with or without consideration of credit for existing licences. Once the detailed design and construction activities establish the exact requirement for new and replaced licences, the final expenditure level can be determined by the City, and purchases limited accordingly.

Under the terms of the proposed agreement, Intellution will provide 34 full licences for use of the Intellution software product suite, including a wide range of technical components which facilitate operation of the software in the planned WBPP technical environment. The term of the contract is to be eight years. Extensive staff training will be included in the agreement, as well as the use of an onsite "applications engineer". The agreement also covers the software maintenance requirements, including software version "releases" and upgrades, for the implementation period.

Conclusion:

The use of standardized software for use in developing and operating process control systems in all the water and wastewater facilities is an important part of the Works Best Practices Program. A fair and complete process of evaluation and selection of the best product and supplier for the City of Toronto has been made. This report recommends that Contract No. MWRFP199 be awarded to Intellution Inc. for the supply and delivery of SCADA software to the Water and Wastewater Services Division.

Contact Name and Telephone Number:

Jim Coe

Program Manager, Works Best Practices

Water and Wastewater Services Division

Telephone No. (416) 392-3141

The Works Committee reports, for the information of Council, having also had before it during consideration of the foregoing matter the following communications:

(1) (October 6, 1999) from Mr. Brian Cochrane, President, Toronto Civic Employees' Union, Local 416, expressing concerns with respect to the Works Best Practices Program, and the implications of the reports for approval of expenditures on Process Control Systems, in particular the quality of services being jeopardized as a potential outcome of downsizing; and

(ii) (October 6, 1999) from Mr. Brian Cochrane, President, Toronto Civic Employees' Union, Local 416, in opposition to the selection of EMA Canada Inc. to assist the City with the implementation of the Works Best Practices Program; recommending that if the City must continue with the Program, the changes be made using City employees on an "in-house" basis; and further recommending that if the Committee approves the recommendation to retain EMA Canada Inc., EMA be directed to proceed in a manner that recognizes Local 416 as having an integral role in any operational changes.

The following persons appeared before the Works Committee in connection with the foregoing matter:

- Mr. Peter Leiss, Executive Vice-President, and Ms. Gina Gignac, National Representative, Toronto Civic Employees' Union, Local 416; and

- Ms. Karen Buck, Toronto, Ontario.

(City Council on October 26 and 27, 1999, had before it, during consideration of the foregoing Clause, the following report (October 15, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

The purpose of this report is to provide further information, as directed by Works Committee, on the type of contract performance analysis and on the consulting resources, including number of persons, hours and rate, associated with the Works Best Practices Program Phase 2 initial contract award recommendations.

Funding Sources, Financial Implications and Impact Statement:

There is no direct financial impact from this report.

Recommendations:

It is recommended that this report be received for information.

Council Reference/Background/History:

At its meeting of March 2, 3 and 4, 1999, City Council reaffirmed continuance of the Works Best Practices Program (WBPP) in the Water and Wastewater Services Division of Works and Emergency Services. At its meeting of October 6, 1999, The Works Committee, by adoption of their agenda items numbered 4, 4(a), 4(b), 4(c), and 4(d), is recommending to Council awards of contracts to seven firms for the supply and delivery of software components (one contract) and for the performance of various work activities relating to process control systems preliminary design (two contracts), detailed design, software development, general administration and construction site supervision (three contracts), and program integration and coordination services (one contract). The Works Committee further directed that the Commissioner of Works and Emergency Services be requested to submit a report directly to City Council on reports 4, 4(a), 4(b), 4(c) and 4(d), which outlines in simple terms the number of persons that are being hired under these contracts, the number of hours and hourly rate of pay of those persons, and the type of performance analysis to be undertaken as this project proceeds.

Comments and/or Discussion and/or Justification:

As the Works Best Practices Program (WBPP) enters Phase 2, its major implementation phase, a number of key work packages must be contracted in order for planned work to proceed. These work packages relate to all implementation areas of the Program. New process control systems, providing industry-standard levels of automation, control, maintainability, and reliability to facility operations, need to go through the detailed stages of design and into construction and commissioning. Organizational changes need to be rolled out across approximately thirty-two "workareas" (a discrete team unit defines the bounds of a workarea, such as solids handling at the Highland Creek Treatment Plant), involving staff selection, development, and training in the new ways of operating and maintaining modern water and wastewater facilities. Supporting operational, information and management systems technologies need to be rolled out across the organization to provide people with the right information, quickly and accurately, to make decisions which will best ensure high quality, reliable service delivery at the lowest cost. All this work needs to be done efficiently and in a coordinated and fully integrated manner in order that the planned results may be achieved.

The work packages required to commence Phase 2 include the following:

- preliminary design for new process control systems in the four Water Supply plants;

- preliminary design for new process control systems in the water transmission system;

- detailed design, software development, general administration and construction site supervision for new process control systems in the three major Water Pollution Control plants; and

- program integration and coordination services for Phase 2 of the Program.

An additional requirement exists to establish a supply contract for Supervisory Control and Data Acquisition (SCADA) software to be used on a standardized basis in all new process control systems.

As reported in the WBPP Spring 1999, WBPP Status Report (Council Meeting of May 11, 12, and 13 - Clause No. 14(f) of Report No. 5 of the Works and Utilities Committee), the Program is ahead of schedule with respect to operating cost reductions achieved. The above work packages are an integral part of the next step in Program implementation and must proceed in parallel in order to continue progress as planned and in order to ensure proper integration of best practices across the Water Supply and Water Pollution Control sections of the Water and Wastewater Services Division. Formal procurement activities have been carried out for each of these work packages so as to ensure Phase 2 work begins as planned and on time.

The seven contracts recommended are listed in Table 1, below. These contracts are numbered "A" through"G" for purposes of referencing in the body of this report.

TABLE 1: Recommended Contracts

Contract Deliverables and Resources

This section of the report will discuss the nature of products and services provided for each of these contracts and the approach to charging and payment.

Contracts "A" and "B" are for the delivery of process control systems preliminary designs for the four water treatment plants and for the water transmission system. In these types of assignments, payment is on a scheduled lump sum basis for the completion of specific, pre-agreed design and documentation services. Appendices "A" and "B" provide the dollar values for the required preliminary design components. Proposal evaluation and consultant selection is based on the proposed overall cost for the prescribed design deliverables, and as such does not take into account specific time and costs for individual consultant personnel.

Contracts "C", "D", and "E" are for the development of detailed design (drawings and specifications) for the process control systems and related equipment (instruments and field devices), general administration and site supervision for construction, and the programming and commissioning, including training and full documentation, of the new process control systems and related equipment. As in the case of preliminary design contracts, payment is on a scheduled deliverable basis. Appendices "C", "D" and "E" provide the dollar values for the required contract components. Again, proposal evaluation and consultant selection is based on the proposed overall cost for the prescribed deliverables, and as such does not take into account specific time and costs for individual consultant personnel.

Contract "F" is for the provision of professional and technical services required to manage and implement the Works Best Practices Program across all of Water Supply and Water Pollution Control. In virtually every instance, consultant personnel will be teamed with staff to produce prescribed implementation deliverables through the application of standardized methods and technologies developed in Phase 1. Approximately 32 integrated workarea implementations will be performed, with each involving a number of inter-related areas of activity. These include the establishment of the redesigned team unit, the introduction, application and development of total productive operations, program-driven maintenance and flexible workforce practices, and the configuring and implementing of the work management system and the performance management system, as well as their supporting technology infrastructure. Training and knowledge transfer to staff are emphasized in all areas of activity. In addition, quality control and systems integration functions will be performed for all of the process control systems design, construction, commissioning, training and handover activities, covering all Water Supply and Water Pollution Control operating facilities.

Program integration and coordination (PIC) services support and manage every aspect of WBPP implementation, including those under the other work packages (contracts) discussed in this report. PIC is vital to the success of the Program and the achievement of its committed goals and objectives. The scope of the PIC assignment, the term of which coincides with completion of full WBPP implementation, was developed in Phase 1, and has been designed to minimize the use of consultants and maximize the use of staff resources. The approach taken to accomplish this was to identify the work to be done in Phase 2, to isolate those activities which require external resourcing, and to trim the days of effort to be acquired (by more than one-third) in order to ensure best use of consultants, an optimal degree of knowledge transfer to staff, and acceptable probability of success.

The PIC contract will incorporate prescribed deliverables, with charges to be based on time and materials to an upset limit (contract value). Appendix "F" to this report includes a table which shows the major PIC functions, the roles and resources to be provided under the contract, a brief description of the activities and responsibilities of each role/resource, the estimated number of hours of work required to complete the prescribed deliverables, and the average hourly rate for each role/resource.

The consultant selection process has been described in the contract recommendation report, titled "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program" (September 27, 1999). That report, which also lists the prescribed deliverables and the estimated ceiling cost for each, is one of the five contract award recommendation reports forwarded by The Works Committee to the same Council meeting as this information report. The proposed PIC assignment provides the appropriate resources to accomplish the required work at rates which are competitive based on comparison with Phase 1 rates for similar services and reasonable inflationary indexing. Clearly, it would have been preferable to have more than one proposal for the work. However, the process of qualification based selection addresses this eventuality by focusing on the ability and demonstrated experience of the proponent to carry out the assignment with a high probability of success, with attendant consideration of timeliness and budget. This rationale was described in Clause No. 5(g) of Report No. 9 of the Works and Utilities Committee (Council meeting of June 9, 10 and 11, 1999).

Contract "G" is for the provision of software products only and requires no provision for consultant services and corresponding rates.

It should be noted that the recommended contract awards incorporate the ability for the City to make adjustments, as work proceeds, to work package components and to specific resource requirements, within upset limits. This will ensure that the best overall value for money expended will be achieved, in terms of minimizing costs and maximizing the quality of the results.

Contract Performance

Contract performance for contracts "A" through "E" (process control systems) will be monitored in two ways. First, the WBPP Program Management Office, with the day-to-day support of the Process Control Systems Implementation Team, will review progress against planned design and implementation deliverables and address delays or performance problems as they are encountered. Second, major deliverables as they are developed must be signed off prior to approval of final invoice payment by the Technical Services Division, who will be represented on the Process Control Systems Implementation Team. Further performance management of these and all contracts will be performed through the functions of the Quality Assurance Team, as described in the section below titled, "Quality Assurance".

For contract "F", contract performance management is as for Contracts "A" through "E", described above. In addition, there are additional performance management provisions to be incorporated into the contract, as described in the contract award report ("Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program"). Those provisions effectively retain a portion of the fees for services, totaling approximately $800,000.00, in a Performance Fund from which those retained fees will be disbursed to the contractor as Program goals are achieved and demonstrated.

Under Contract "G", the SCADA Software contract, no services are provided, and, as a result, no corresponding services performance management component is included. Performance of the software itself is addressed in the warranty and support components of the proposal and will be included in the agreement.

Quality Assurance

Phase 2 will employ an adaptation of the Phase 1 Quality Assurance (QA) methodology. It will be designed to address the specific challenges of multiple, simultaneous, integrated workarea implementations across all Water Supply and Water Pollution Control organizational units and facilities. The QA methodology employs a ten-step cycle for the creation and pre-approval of detailed workplans (including interim and final deliverables), the monitoring of progress against those workplans, the establishment of quality control teams for purposes of deliverables review, feedback and acceptance, and the final review, acceptance and signoff of completed deliverables. The payment approval process will be integrated with the QA methodology to ensure payments are released only in accordance with completed effort and receipt of prescribed deliverables. Discussions are underway with senior representatives of the Audit Department to identify and operationalize the appropriate role of Audit in the overall QA process.

Conclusions:

This report is provided to Council, as directed by The Works Committee, to present supplementary information concerning the recommendations for contract awards to seven firms for process control preliminary and detailed design, SCADA software supply, and program integration and coordination services components necessary for the commencement of Phase 2, the major implementation phase, of the Works Best Practices Program. These contract recommendations are the result of formal procurement processes carried out in accordance with approved corporate practice, and are consistent with approved funding levels. It is necessary to proceed with these assignments at this time in order to comply with Council's reaffirmation of the Works Best Practices Program and to maintain progress against committed Program benefit goals.

Contact Name:

Jim Coe

Program Manager, Works Best Practices

Water and Wastewater Services Division

Telephone No. (416) 392-3141)

APPENDIX "A"

CONTRACT FOR:

Preliminary Design for R.C. Harris, R.L. Clark, F.J. Horgan, and Island Water Treatment Plants

RECOMMENDED FIRM:

The Greater Toronto Consulting Group

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "B"

CONTRACT FOR:

Preliminary Design for Water Transmission System

RECOMMENDED FIRM:

Simcoe Engineering Group Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "C"

CONTRACT FOR:

Detailed Design and Construction Management for Ashbridges Bay Treatment Plant

RECOMMENDED FIRM:

CH2M Gore & Storrie Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "D"

CONTRACT FOR:

Detailed Design and Construction Management for Humber Treatment Plant

RECOMMENDED FIRM:

Azurix North America

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "E"

CONTRACT FOR:

Detailed Design and Construction Management for Highland Creek Treatment Plant

RECOMMENDED FIRM:

Earth Tech (Canada) Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "F"

CONTRACT ("F") FOR:

Program Integration and Coordination Services ("PIC") for Phase 2

RECOMMENDED FIRM:

EMA Canada Inc. (lead of six-firm consortium)

CONTRACT BASED ON TIME AND MATERIALS PER PRESCRIBED DELIVERABLES TO A CEILING COST

(City Council also had before it, during consideration of the foregoing Clause, the following report (October 21, 1999) from the City Auditor:

Reference:

On October 6, 1999, the Works Committee had before it a report from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer recommending a contract award to EMA Canada at a maximum cost of $14.5 million for program co-ordination and integration services related to Phase 2 of the Works Best Practices (WBP) Program. In considering this report, the Committee requested the City Auditor to report directly to Council on the procurement process with respect to these services.

Our review of this matter included an examination of relevant documents and records pertaining to the procurement process as well as discussions with Works, Legal and Purchasing staff, and certain proponents involved in the competition.

Recommendation:

It is recommended that this report be received for information.

Comments:

The WBP Program is a long term improvement initiative undertaken by the Water and Wastewater Services Division of the Works and Emergency Services Department. The objective of the program is to ensure that the Division provides the most cost effective and efficient service to its customers. Phase 1 of the project focused on the design of new work practices, new technologies and organizational change. Phase 2 includes full implementation of redesigned work practices and organizational units, integrated business and operations systems and technologies, detailed design, and construction and commissioning work for new process control systems across the major water and wastewater operating facilities. Staff estimate that annual savings of approximately $36 million will be realized upon completion of the project.

Procurement Process:

The process for the procurement of Program Integration and Co-ordination (PIC) services in Phase 2 of the WBP Program was reported to the Works and Utilities Committee on May 19, 1999 and subsequently forwarded to Council for information.

The process involves four main stages as outlined below:

1. Request for Expression of Interest

To identify and select qualified and interested firms for participation in subsequent stages of the process.

2. Request for Proposals

To assess the background, qualifications, experience, key resources, work approach and plan, and professional services rate structure of each proponent and to rank proponents for the next step in the process.

3. Work Plan Negotiation

To develop on a joint basis with the lead-ranked proponent an agreed work plan and associated resourcing and payment schedule, implementation scope and overall cost.

4. Approvals and Contract Development

To gain approvals from Committee and Council to enter into a contractual agreement with the recommended proponent.

The Water and Wastewater Services Division of Toronto Works and Emergency Services established an internal Selection Committee consisting of Works staff to carry out the procurement of PIC Services relating to Phase 2 of the WBP Program. While representatives from the Purchasing and Materials Management Division were involved in overseeing the process to ensure a fair and open competition, they were not involved in the actual evaluation of expressions of interests or proposals, which considering the technical nature of the services is appropriate.

A public Request for Expression of Interest (REOI) was issued on April 26, 1999 to identify and short list a limited number of interested and qualified consulting engineering firms for receipt of the Request for Proposal (RFP). Proponents were asked to indicate their interest in participating in the RFP process by providing evidence of qualification for the provision of the types of services relevant to the WBP Program implementation phase. At this stage, contract price and rates were not requested.

The Selection Committee established pre-defined evaluation criteria for this stage of the process, which focused on the proponent's demonstrated understanding of the underlying philosophies and methods of a major transformational process like the WBP Program, which involves:

(a) multi-disciplinary, large scale project integration, management and support in a water/wastewater operating environment;

(b) process control design and construction management;

(c) organizational design, training and change management;

(d) unionized, municipal-based operations;

(e) technology architecture and integration;

(f) team-oriented best practices implementation;

(g) work management systems implementation; and

(h) performance management systems implementation.

Seven responses to the REOI were received. Another respondent's submission was not received at the office of Purchasing and Materials Management by the 12:00 noon deadline on May 7, 1999, due to a courier problem. The respondent wrote to the Chief Financial Officer and Treasurer and requested that an exception be made and provided a letter from the courier company indicating that the tardiness of the submission was due to no fault on the part of the respondent. Works staff consulted with representatives from City Purchasing and Legal Services on this matter and were advised that in order to protect the integrity of the process any submission received after the deadline could not be considered. The Purchasing and Materials Management Division advised the respondent accordingly.

The Selection Committee reviewed and ranked the seven submissions against pre-defined criteria and identified two proponents that qualified to advance to the RFP stage. The RFP was issued to the two pre-qualified firms on May 14, 1999. The evaluation criteria included:

(a) corporate viability and background;

(b) relevant experience;

(c) understanding of WBPP principles, core methods and goals;

(d) key resources;

(e) proposed approach; and

(f) competitiveness of rates.

It should be noted that the evaluation of the RFP submissions was based mainly (80%) on qualifications, with the competitiveness of rates and price being a secondary consideration. Works staff indicate that a selection process that focuses on qualifications and key resources of the proponents as opposed to a bottom line price was adopted due to the complexity of the assignment, the unpredictability of some of the work, and the need for flexibility in scheduling of work area implementations across the division. In addition, Works staff felt that the possible lack of familiarity of most of the RFP participants with its operations and personnel would limit the participants' ability to make valid assumptions upon which to base a detailed work plan and therefore place them at a disadvantage compared to the incumbent Phase 1 consultant's background knowledge. Therefore, the Works Department felt that a qualifications based approach would be fairer to all potential proponents and would also be more appropriate for the department in terms of better ensuring overall project success.

In a letter to the Program Manager, WBPP dated, May 26, 1999, one of the two remaining proponents expressed concern of a lack of a level playing field in the competition due to the fact that the other proponent, being the incumbent consultant in Phase 1, had a natural advantage. The proponent also indicated that they would not be able to submit a competitive proposal and requested a meeting with Works staff to discuss suggestions to modify the process in order to facilitate a more effective competition, particularly since the proponents were already short listed at the REOI stage based on qualifications. In a letter dated June 1, 1999, the proponent proposed that the competition be enhanced to include significant consideration of work program, delivery schedule and fee budget, and suggested a facilitated workshop designed to put the proponents on an equal footing with respect to background knowledge. Works staff reviewed the suggestions with staff from Purchasing and Legal, and concluded that the current process was still appropriate.

In a letter dated June 11, 1999, the proponent advised the Chief Financial Officer and Treasurer of their formal withdrawal from the competition. As there would now only be one bidder in the competition, Works staff consulted with representatives from Purchasing and Legal on this matter. Based on these discussions, it was decided that the process should proceed.

On June 21, 1999, a proposal was received from a consortium led by EMA Canada Inc., which was the lead consultant in Phase 1. The Selection Committee performed an evaluation on the proposal and EMA qualified to proceed to the work plan development stage. At this stage, a series of negotiation meetings took place which involved developing a work plan, resourcing schedule, project scope, overall cost and contract performance management process. Audit Services staff were invited and attended some of these meetings. Through this process, an overall workplan and costs were developed for PIC services and a report recommending a contract award to EMA Canada at a maximum cost of $14.5 million, was forwarded to the October 1999 Works Committee meeting.

Conclusion:

The selection process for program integration and co-ordination services was developed by Works staff in consultation with senior management of Water and Wastewater Services. It was also reviewed by staff of the Purchasing and Materials Management Division and Legal Services. In addition, Works staff consulted with both Purchasing and Legal on any issues that arose at various stages in the process. The process that was being followed was also reported to the Works and Utilities Committee and Council for information in May 1999.

EMA, as the Phase 1 incumbent consultant, was involved in the development of the preliminary work plan for Phase 2 and had detailed knowledge of the WBP Program. Although the process that was followed by the Works Department was fair and open, it is our opinion that it would have been difficult for any proponent to overcome the advantage that EMA had as a result of their in-depth involvement in Phase 1.

It would also be difficult to determine whether a higher weighting on price would have altered the results of the competition. Works staff indicate that basing the competition mainly on price could compromise the success of the project since price would take precedence over the qualifications of the consortium and their ability to do the job.

It should also be noted that the RFP only required proponents to provide proposed per diem rates for various levels of consulting staff and not a total price. The actual negotiations leading to a total contract price were determined during the work plan development stage, at which point EMA knew that they were the only bidder. While this would have been the case with any successful proponent, because there was no other bidder that the City could fall back on if an agreement could not be reached with the top ranked proponent, the City's leverage in contract negotiations may have been reduced. Given that there was only one bidder, it is difficult to determine the reasonableness of the recommended contract award to EMA of $14.5 million as there is no benchmark against which to evaluate the competitiveness of the bid, including the proposed rates. While we are concerned that the proposed rates charged under this contract appear high, Works staff indicate that the rates proposed by EMA are in line with those charged in Phase 1 (adjusted for inflation). It should also be noted that the rates to be charged under this contact were acquired in a competitive context where price was stated to be a consideration in the evaluation of proposals. In addition, the proponent that withdrew at the RFP stage indicated that they would keep their withdrawal confidential.

The REOI was advertised in a national newspaper as well as on the City's web site. While the selection process did not result in the level of competition expected for a contract of this magnitude, the Works Department had little control over the circumstances that led to a situation where there was only one bidder. Works staff indicate that they are comfortable with the proposal put forward by EMA. However, it is important at this point, that attention be focused on the value of the services to be provided under this contract, especially in light of the Council imposed moratorium on layoffs. While Works staff have no control over this development, it may affect the estimated savings resulting from this project as most of the projected savings are based on staff reductions from streamlined work practices. Works staff have indicated that they will be reporting to the Works Committee on the financial impact of the Council imposed moratorium as well as any issues related to the new Local 416 agreement.

Contact Name and Telephone Number:

Tony Veneziano, Senior Audit Manager, 392-8353)

(City Council also had before it, during consideration of the foregoing Clause, a communication (October 19, 1999) from Rienk deVries, EMA Canada, Inc., submitting, as requested by the Works Committee, an outline of EMA's Canadian position on water quality and union involvement in the Works Best Practices Program; advising of the principles upon which EMA has built its leadership position and expressing its intention to continue working with the City for the success of the Works Best Practices Program.)

(City Council on October 26 and 27, 1999, adopted this Clause, without amendment.)

The Works Committee recommends:

(1) the adoption of the report dated September 22, 1999, from the Commissioner of Works and Emergency Services; and

(2) that under no circumstances are there to be reductions in water quality and that continued improvements of quality should be considered an ongoing objective.

The Works Committee reports, for the information of Council, having considered together the following reports related to the Works Best Practices Program:

(i) (September 27, 1999) from the Commissioner of Works and Emergency Services, headed "Request for Proposals for Selection of Vendors for Supply of Process Control Systems (SCADA) Software, Contract No. MWRFP199";

(ii) (September 22, 1999) from the Commissioner of Works and Emergency Services, headed

"Engagement of Professional Services to Undertake the Preliminary Design of Process Control Systems at the R.C. Harris, R.L. Clark, F.J. Horgan and Island Water Treatment Plants";

(iii) (September 22, 1999) from the Commissioner of Works and Emergency Services, headed"Engagement of Professional Services to Undertake the Preliminary Design of a ProcessControl System for the Water Transmission System";

(iv) (September 28, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer, headed "Results of the Request for Proposals for the

Water Pollution Control Process Control System Detailed Design Project"; and

(v) (September 27, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer, headed "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract";

and having directed that:

(1) a meeting of the Works Best Practices Program Work Group be convened prior to the Council meeting scheduled for October 26, 27 and 28, 1999;

(2) Union representatives be formally invited to meetings respecting Best Practices when these involve Toronto Civic Employees' Union Local 416 members, and that confirmation that invitations were received be obtained; especially important will be Local 416 and Local 79 involvement in all Teams, particularly items (4) "Organizational Services" and (5) "Integrated Works Area Implementation" under the Program Integration and Coordination Services for Phase 2;

(3) a written statement, to Council, be requested from EMA Canada concerning the firm's position on water quality as a part of Works Best Practices development and Union involvement in best practices development and implementation;

(4) the City Auditor be requested to report directly to Council on the aforementioned report headed "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract", wherein seven expressions of interest were received, two firms were given the opportunity to bid and one of those withdrew; and

(5) the Commissioner of Works and Emergency Services be requested to submit a report directly to City Council on the aforementioned reports, which outlines in simple terms the number of persons that are being hired under these contracts, the number of hours and hourly rate of pay of those persons, and the type of performance analysis to be undertaken as this project proceeds.

The Works Committee submits the following report (September 22, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

To present the results of the Request for Proposals for the selection of professional services to carry out the preliminary design of process control systems for the R.C. Harris, R.L. Clark, F.J. Horgan and Island Water Treatment Plants, and to obtain approval to award the consulting assignment to The Greater Toronto Consulting Group.

Funding Sources, Financial Implications and Impact Statement:

During the meeting of March 2, 3 and 4, 1999, City of Toronto Council adopted Clause No. 1 of Report No. 3 of The Strategic Priorities and Planning Committee approving the 1999-2003 Capital Budget and Five-Year Capital Programs. This contained funding for various projects in the Works Best Practices Program including the preliminary design of the process control systems for the R.C. Harris, R.L. Clark, F.J. Horgan and Island Water Treatment Plants. These funds are available in the Water and Wastewater Services Division, Water Supply Section Account No. C-WS026.

Recommendations:

It is recommended that:

(1) the assignment for preliminary design of process control systems for the R.C. Harris, R.L. Clark, F.J. Horgan and Island Water Treatment Plants be awarded to The Greater Toronto Consulting Group at a cost not to exceed $1,146,000.00 including Goods and Services Tax (GST) plus a contingency allowance of $115,000.00 including GST to cover potential additional engineering work required, if necessary, and as authorized by the Commissioner of Works and Emergency Services; and

(2) the appropriate City officials be authorized to take the necessary actions to give effect thereto.

Council Reference/Background/History:

On July 2 and 3, 1997, the former Metropolitan Council adopted Clause No. 3 of Report No. 13 of The Financial Priorities Committee authorizing the implementation of the Works Best Practices Program (WBPP) in the Works Department.

On October 28, 1998, Toronto City Council through adoption of Clause No. 14 of Report No. 18 of The Strategic Policies and Priorities Committee endorsed the continuance of the Works Best Practices Program and authorized funds required to continue implementation of the program.

The WBPP is a process control and operations technology, information technology and optimization program integrating redesign of key business practices. A key component of this program is the replacement of aging process control systems within the four water treatment plants, and the transmission system in the Water Supply Section.

The four water treatment plants comprise the R.C. Harris, R.L. Clark, F.J. Horgan and Island Plants. Collectively these plants produce all of the drinking water supplied to the City of Toronto and by agreement for a major portion of the Region of York. Process control systems at the plants are required to enable effective control of water treatment unit processes including process chemical addition, the control and backwash of filters and the monitoring and control of various parameters. There are numerous individual systems and their control as part of a continuous operation requires complex process control technology. The existing systems are aged, generally installed in the 1970's or 1980's, and require replacement. Furthermore, as part of Works Best Practices new systems are required in order to enable process automation and optimization of hydro, chemical and staff costs. These are required to achieve operating budget reduction targets. Considering the condition of the existing equipment and the overall project schedule, the preliminary design for the process control systems of the four plants must be undertaken at this time.

Comments and/or Discussion and/or Justification:

The Terms of Reference to undertake this work were issued to several companies on March 9, 1999. On April 9, 1999, Works and Emergency Services received proposals including separate sealed cost proposals from The Greater Toronto Consulting Group and XCG Consultants Ltd. for the preliminary design of the process control systems for the water treatment plants.

The proposals were reviewed by a staff selection committee comprised of staff from Water Supply and Technical Services based on a predetermined selection process of evaluating the proposals against specified criteria. The details of the selection process are outlined in Appendix A. Following detailed review of the technical aspects of the submissions, both firms qualified for further consideration and the price envelopes were opened.

Interviews were held with the firms in order to clarify and finalize the specific scope of work required and the related costs involved. These costs were assessed to confirm they were fair and reasonable. Further dialogue and communication took place after the interviews. As indicated in Appendix A, the staff selection committee concluded that the proposal by The Greater Toronto Consulting Group satisfied the overall project requirements at a reasonable cost.

Conclusions:

A thorough selection procedure has been followed consistent with corporate practices.

It is recommended that The Greater Toronto Consulting Group be awarded the assignment to undertake the preliminary design of the process control systems for the four treatment plants.

Contact Name:

Hiroshi Taniguchi

Director, Water Supply

Phone: (416) 392-8220; Fax: (416) 392-3639

E-mail: htaniguchi@metrodesk.metrotor.on.ca

(1) A two-stage process was undertaken whereby Expressions of Interest were requested first followed up by a Request for Proposals from the short-listed proponents.

(2) Twelve firms with experience in similar work were chosen from a roster of qualified companies and invited to submit Expressions of Interest. One firm declined to submit proposals. Of the remaining 11 firms, four banded together to form one consortium and another three banded together to form a second consortium such that six responses were submitted in total. The responses were evaluated according to a set of pre-established criteria by representatives from the Water and Wastewater Services and Technical Services Divisions of the Works and Emergency Services Department.

(3) Using a threshold level of 75 percent of the maximum attainable score as a criterion, evaluation of the Expressions of Interest resulted in a short list of four firms. Detailed written proposals, including separate sealed cost proposals, were requested and received from the four firms. Two firms submitted proposals for the preliminary design of the process control systems at the four water treatment plants.

(4) A formal staff selection committee was struck to evaluate the detailed proposals. As with the Expressions of Interest, the committee was comprised of representatives from the Water and Wastewater Services and Technical Services Divisions of the Department.

(5) The technical submissions were reviewed first independently and then jointly by members of the selection committee, and were evaluated according to a set of pre-established criteria. Once again, a threshold level of 75 percent of the maximum attainable score had been previously established as the criterion for the next step which was a review of the separately submitted sealed cost proposals.

(6) Accordingly, both firms qualified for further consideration and their cost proposals were reviewed.

(7) The two firms were then interviewed in order to clarify and finalize the specific scope of work required and the related costs involved. Further dialogue and communication took place after the interviews and proponents were requested to provide written clarification to proposal items as required.

(8) On completion of all of the above, the selection committee concluded that The Greater Toronto Consulting Group submission had the "lowest cost/point" based on the costs in the fee proposal and the points awarded in the technical evaluation and was, therefore, ranked first.

(9) It was recommended that the preliminary design of the process control systems at the four water treatment plants be awarded to The Greater Toronto Consulting Group.

The Works Committee reports, for the information of Council, having also had before it during consideration of the foregoing matter the following communications:

(i) (October 6, 1999) from Mr. Brian Cochrane, President, Toronto Civic Employees' Union, Local 416, expressing concerns with respect to the Works Best Practices Program, and the implications of the reports for approval of expenditures on Process Control Systems, in particular the quality of services being jeopardized as a potential outcome of downsizing; and

(ii) (October 6, 1999) from Mr. Brian Cochrane, President, Toronto Civic Employees' Union, Local 416, in opposition to the selection of EMA Canada Inc. to assist the City with the implementation of the Works Best Practices Program; recommending that if the City must continue with the Program, the changes be made using City employees on an "in-house" basis; and further recommending that if the Committee approves the recommendation to retain EMA Canada Inc., EMA be directed to proceed in a manner that recognizes Local 416 as having an integral role in any operational changes.

The following persons appeared before the Works Committee in connection with the foregoing matter:

- Mr. Peter Leiss, Executive Vice-President, and Ms. Gina Gignac, National Representative, Toronto Civic Employees' Union, Local 416; and

- Ms. Karen Buck, Toronto, Ontario.

(City Council on October 26 and 27, 1999, had before it, during consideration of the foregoing Clause, the following report (October 15, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

The purpose of this report is to provide further information, as directed by Works Committee, on the type of contract performance analysis and on the consulting resources, including number of persons, hours and rate, associated with the Works Best Practices Program Phase 2 initial contract award recommendations.

Funding Sources, Financial Implications and Impact Statement:

There is no direct financial impact from this report.

Recommendations:

It is recommended that this report be received for information.

Council Reference/Background/History:

At its meeting of March 2, 3 and 4, 1999, City Council reaffirmed continuance of the Works Best Practices Program (WBPP) in the Water and Wastewater Services Division of Works and Emergency Services. At its meeting of October 6, 1999, The Works Committee, by adoption of their agenda items numbered 4, 4(a), 4(b), 4(c), and 4(d), is recommending to Council awards of contracts to seven firms for the supply and delivery of software components (one contract) and for the performance of various work activities relating to process control systems preliminary design (two contracts), detailed design, software development, general administration and construction site supervision (three contracts), and program integration and coordination services (one contract). The Works Committee further directed that the Commissioner of Works and Emergency Services be requested to submit a report directly to City Council on reports 4, 4(a), 4(b), 4(c) and 4(d), which outlines in simple terms the number of persons that are being hired under these contracts, the number of hours and hourly rate of pay of those persons, and the type of performance analysis to be undertaken as this project proceeds.

Comments and/or Discussion and/or Justification:

As the Works Best Practices Program (WBPP) enters Phase 2, its major implementation phase, a number of key work packages must be contracted in order for planned work to proceed. These work packages relate to all implementation areas of the Program. New process control systems, providing industry-standard levels of automation, control, maintainability, and reliability to facility operations, need to go through the detailed stages of design and into construction and commissioning. Organizational changes need to be rolled out across approximately thirty-two "workareas" (a discrete team unit defines the bounds of a workarea, such as solids handling at the Highland Creek Treatment Plant), involving staff selection, development, and training in the new ways of operating and maintaining modern water and wastewater facilities. Supporting operational, information and management systems technologies need to be rolled out across the organization to provide people with the right information, quickly and accurately, to make decisions which will best ensure high quality, reliable service delivery at the lowest cost. All this work needs to be done efficiently and in a coordinated and fully integrated manner in order that the planned results may be achieved.

The work packages required to commence Phase 2 include the following:

- preliminary design for new process control systems in the four Water Supply plants;

- preliminary design for new process control systems in the water transmission system;

- detailed design, software development, general administration and construction site supervision for new process control systems in the three major Water Pollution Control plants; and,

- program integration and coordination services for Phase 2 of the Program.

An additional requirement exists to establish a supply contract for Supervisory Control and Data Acquisition (SCADA) software to be used on a standardized basis in all new process control systems.

As reported in the WBPP Spring 1999, WBPP Status Report (Council Meeting of May 11, 12, and 13 - Clause No. 14(f) of Report No. 5 of the Works and Utilities Committee), the Program is ahead of schedule with respect to operating cost reductions achieved. The above work packages are an integral part of the next step in Program implementation and must proceed in parallel in order to continue progress as planned and in order to ensure proper integration of best practices across the Water Supply and Water Pollution Control sections of the Water and Wastewater Services Division. Formal procurement activities have been carried out for each of these work packages so as to ensure Phase 2 work begins as planned and on time.

The seven contracts recommended are listed in Table 1, below. These contracts are numbered "A" through"G" for purposes of referencing in the body of this report.

TABLE 1: Recommended Contracts

Contract Deliverables and Resources

This section of the report will discuss the nature of products and services provided for each of these contracts and the approach to charging and payment.

Contracts "A" and "B" are for the delivery of process control systems preliminary designs for the four water treatment plants and for the water transmission system. In these types of assignments, payment is on a scheduled lump sum basis for the completion of specific, pre-agreed design and documentation services. Appendices "A" and "B" provide the dollar values for the required preliminary design components. Proposal evaluation and consultant selection is based on the proposed overall cost for the prescribed design deliverables, and as such does not take into account specific time and costs for individual consultant personnel.

Contracts "C", "D", and "E" are for the development of detailed design (drawings and specifications) for the process control systems and related equipment (instruments and field devices), general administration and site supervision for construction, and the programming and commissioning, including training and full documentation, of the new process control systems and related equipment. As in the case of preliminary design contracts, payment is on a scheduled deliverable basis. Appendices "C", "D" and "E" provide the dollar values for the required contract components. Again, proposal evaluation and consultant selection is based on the proposed overall cost for the prescribed deliverables, and as such does not take into account specific time and costs for individual consultant personnel.

Contract "F" is for the provision of professional and technical services required to manage and implement the Works Best Practices Program across all of Water Supply and Water Pollution Control. In virtually every instance, consultant personnel will be teamed with staff to produce prescribed implementation deliverables through the application of standardized methods and technologies developed in Phase 1. Approximately 32 integrated workarea implementations will be performed, with each involving a number of inter-related areas of activity. These include the establishment of the redesigned team unit, the introduction, application and development of total productive operations, program-driven maintenance and flexible workforce practices, and the configuring and implementing of the work management system and the performance management system, as well as their supporting technology infrastructure. Training and knowledge transfer to staff are emphasized in all areas of activity. In addition, quality control and systems integration functions will be performed for all of the process control systems design, construction, commissioning, training and handover activities, covering all Water Supply and Water Pollution Control operating facilities.

Program integration and coordination (PIC) services support and manage every aspect of WBPP implementation, including those under the other work packages (contracts) discussed in this report. PIC is vital to the success of the Program and the achievement of its committed goals and objectives. The scope of the PIC assignment, the term of which coincides with completion of full WBPP implementation, was developed in Phase 1, and has been designed to minimize the use of consultants and maximize the use of staff resources. The approach taken to accomplish this was to identify the work to be done in Phase 2, to isolate those activities which require external resourcing, and to trim the days of effort to be acquired (by more than one-third) in order to ensure best use of consultants, an optimal degree of knowledge transfer to staff, and acceptable probability of success.

The PIC contract will incorporate prescribed deliverables, with charges to be based on time and materials to an upset limit (contract value). Appendix "F" to this report includes a table which shows the major PIC functions, the roles and resources to be provided under the contract, a brief description of the activities and responsibilities of each role/resource, the estimated number of hours of work required to complete the prescribed deliverables, and the average hourly rate for each role/resource.

The consultant selection process has been described in the contract recommendation report, titled "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program" (September 27, 1999). That report, which also lists the prescribed deliverables and the estimated ceiling cost for each, is one of the five contract award recommendation reports forwarded by The Works Committee to the same Council meeting as this information report. The proposed PIC assignment provides the appropriate resources to accomplish the required work at rates which are competitive based on comparison with Phase 1 rates for similar services and reasonable inflationary indexing. Clearly, it would have been preferable to have more than one proposal for the work. However, the process of qualification based selection addresses this eventuality by focusing on the ability and demonstrated experience of the proponent to carry out the assignment with a high probability of success, with attendant consideration of timeliness and budget. This rationale was described in Clause No. 5(g) of Report No. 9 of the Works and Utilities Committee (Council meeting of June 9, 10 and 11, 1999).

Contract "G" is for the provision of software products only and requires no provision for consultant services and corresponding rates.

It should be noted that the recommended contract awards incorporate the ability for the City to make adjustments, as work proceeds, to work package components and to specific resource requirements, within upset limits. This will ensure that the best overall value for money expended will be achieved, in terms of minimizing costs and maximizing the quality of the results.

Contract Performance

Contract performance for contracts "A" through "E" (process control systems) will be monitored in two ways. First, the WBPP Program Management Office, with the day-to-day support of the Process Control Systems Implementation Team, will review progress against planned design and implementation deliverables and address delays or performance problems as they are encountered. Second, major deliverables as they are developed must be signed off prior to approval of final invoice payment by the Technical Services Division, who will be represented on the Process Control Systems Implementation Team. Further performance management of these and all contracts will be performed through the functions of the Quality Assurance Team, as described in the section below titled, "Quality Assurance".

For contract "F", contract performance management is as for Contracts "A" through "E", described above. In addition, there are additional performance management provisions to be incorporated into the contract, as described in the contract award report ("Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program"). Those provisions effectively retain a portion of the fees for services, totaling approximately $800,000.00, in a Performance Fund from which those retained fees will be disbursed to the contractor as Program goals are achieved and demonstrated.

Under Contract "G", the SCADA Software contract, no services are provided, and, as a result, no corresponding services performance management component is included. Performance of the software itself is addressed in the warranty and support components of the proposal and will be included in the agreement.

Quality Assurance

Phase 2 will employ an adaptation of the Phase 1 Quality Assurance (QA) methodology. It will be designed to address the specific challenges of multiple, simultaneous, integrated workarea implementations across all Water Supply and Water Pollution Control organizational units and facilities. The QA methodology employs a ten-step cycle for the creation and pre-approval of detailed workplans (including interim and final deliverables), the monitoring of progress against those workplans, the establishment of quality control teams for purposes of deliverables review, feedback and acceptance, and the final review, acceptance and signoff of completed deliverables. The payment approval process will be integrated with the QA methodology to ensure payments are released only in accordance with completed effort and receipt of prescribed deliverables. Discussions are underway with senior representatives of the Audit Department to identify and operationalize the appropriate role of Audit in the overall QA process.

Conclusions:

This report is provided to Council, as directed by The Works Committee, to present supplementary information concerning the recommendations for contract awards to seven firms for process control preliminary and detailed design, SCADA software supply, and program integration and coordination services components necessary for the commencement of Phase 2, the major implementation phase, of the Works Best Practices Program. These contract recommendations are the result of formal procurement processes carried out in accordance with approved corporate practice, and are consistent with approved funding levels. It is necessary to proceed with these assignments at this time in order to comply with Council's reaffirmation of the Works Best Practices Program and to maintain progress against committed Program benefit goals.

Contact Name:

Jim Coe

Program Manager, Works Best Practices

Water and Wastewater Services Division

Telephone No. (416) 392-3141)

APPENDIX "A"

CONTRACT FOR:

Preliminary Design for R.C. Harris, R.L. Clark, F.J. Horgan, and Island Water Treatment Plants

RECOMMENDED FIRM:

The Greater Toronto Consulting Group

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "B"

CONTRACT FOR:

Preliminary Design for Water Transmission System

RECOMMENDED FIRM:

Simcoe Engineering Group Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "C"

CONTRACT FOR:

Detailed Design and Construction Management for Ashbridges Bay Treatment Plant

RECOMMENDED FIRM:

CH2M Gore & Storrie Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "D"

CONTRACT FOR:

Detailed Design and Construction Management for Humber Treatment Plant

RECOMMENDED FIRM:

Azurix North America

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "E"

CONTRACT FOR:

Detailed Design and Construction Management for Highland Creek Treatment Plant

RECOMMENDED FIRM:

Earth Tech (Canada) Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "F"

CONTRACT ("F") FOR:

Program Integration and Coordination Services ("PIC") for Phase 2

RECOMMENDED FIRM:

EMA Canada Inc. (lead of six-firm consortium)

CONTRACT BASED ON TIME AND MATERIALS PER PRESCRIBED DELIVERABLES TO A CEILING COST

(City Council also had before it, during consideration of the foregoing Clause, the following report (October 21, 1999) from the City Auditor:

Reference:

On October 6, 1999, the Works Committee had before it a report from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer recommending a contract award to EMA Canada at a maximum cost of $14.5 million for program co-ordination and integration services related to Phase 2 of the Works Best Practices (WBP) Program. In considering this report, the Committee requested the City Auditor to report directly to Council on the procurement process with respect to these services.

Our review of this matter included an examination of relevant documents and records pertaining to the procurement process as well as discussions with Works, Legal and Purchasing staff, and certain proponents involved in the competition.

Recommendation:

It is recommended that this report be received for information.

Comments:

The WBP Program is a long term improvement initiative undertaken by the Water and Wastewater Services Division of the Works and Emergency Services Department. The objective of the program is to ensure that the Division provides the most cost effective and efficient service to its customers. Phase 1 of the project focused on the design of new work practices, new technologies and organizational change. Phase 2 includes full implementation of redesigned work practices and organizational units, integrated business and operations systems and technologies, detailed design, and construction and commissioning work for new process control systems across the major water and wastewater operating facilities. Staff estimate that annual savings of approximately $36 million will be realized upon completion of the project.

Procurement Process:

The process for the procurement of Program Integration and Co-ordination (PIC) services in Phase 2 of the WBP Program was reported to the Works and Utilities Committee on May 19, 1999 and subsequently forwarded to Council for information.

The process involves four main stages as outlined below:

1. Request for Expression of Interest

To identify and select qualified and interested firms for participation in subsequent stages of the process.

2. Request for Proposals

To assess the background, qualifications, experience, key resources, work approach and plan, and professional services rate structure of each proponent and to rank proponents for the next step in the process.

3. Work Plan Negotiation

To develop on a joint basis with the lead-ranked proponent an agreed work plan and associated resourcing and payment schedule, implementation scope and overall cost.

4. Approvals and Contract Development

To gain approvals from Committee and Council to enter into a contractual agreement with the recommended proponent.

The Water and Wastewater Services Division of Toronto Works and Emergency Services established an internal Selection Committee consisting of Works staff to carry out the procurement of PIC Services relating to Phase 2 of the WBP Program. While representatives from the Purchasing and Materials Management Division were involved in overseeing the process to ensure a fair and open competition, they were not involved in the actual evaluation of expressions of interests or proposals, which considering the technical nature of the services is appropriate.

A public Request for Expression of Interest (REOI) was issued on April 26, 1999 to identify and short list a limited number of interested and qualified consulting engineering firms for receipt of the Request for Proposal (RFP). Proponents were asked to indicate their interest in participating in the RFP process by providing evidence of qualification for the provision of the types of services relevant to the WBP Program implementation phase. At this stage, contract price and rates were not requested.

The Selection Committee established pre-defined evaluation criteria for this stage of the process, which focused on the proponent's demonstrated understanding of the underlying philosophies and methods of a major transformational process like the WBP Program, which involves:

(a) multi-disciplinary, large scale project integration, management and support in a water/wastewater operating environment;

(b) process control design and construction management;

(c) organizational design, training and change management;

(d) unionized, municipal-based operations;

(e) technology architecture and integration;

(f) team-oriented best practices implementation;

(g) work management systems implementation; and

(h) performance management systems implementation.

Seven responses to the REOI were received. Another respondent's submission was not received at the office of Purchasing and Materials Management by the 12:00 noon deadline on May 7, 1999, due to a courier problem. The respondent wrote to the Chief Financial Officer and Treasurer and requested that an exception be made and provided a letter from the courier company indicating that the tardiness of the submission was due to no fault on the part of the respondent. Works staff consulted with representatives from City Purchasing and Legal Services on this matter and were advised that in order to protect the integrity of the process any submission received after the deadline could not be considered. The Purchasing and Materials Management Division advised the respondent accordingly.

The Selection Committee reviewed and ranked the seven submissions against pre-defined criteria and identified two proponents that qualified to advance to the RFP stage. The RFP was issued to the two pre-qualified firms on May 14, 1999. The evaluation criteria included:

(a) corporate viability and background;

(b) relevant experience;

(c) understanding of WBPP principles, core methods and goals;

(d) key resources;

(e) proposed approach; and

(f) competitiveness of rates.

It should be noted that the evaluation of the RFP submissions was based mainly (80%) on qualifications, with the competitiveness of rates and price being a secondary consideration. Works staff indicate that a selection process that focuses on qualifications and key resources of the proponents as opposed to a bottom line price was adopted due to the complexity of the assignment, the unpredictability of some of the work, and the need for flexibility in scheduling of work area implementations across the division. In addition, Works staff felt that the possible lack of familiarity of most of the RFP participants with its operations and personnel would limit the participants' ability to make valid assumptions upon which to base a detailed work plan and therefore place them at a disadvantage compared to the incumbent Phase 1 consultant's background knowledge. Therefore, the Works Department felt that a qualifications based approach would be fairer to all potential proponents and would also be more appropriate for the department in terms of better ensuring overall project success.

In a letter to the Program Manager, WBPP dated, May 26, 1999, one of the two remaining proponents expressed concern of a lack of a level playing field in the competition due to the fact that the other proponent, being the incumbent consultant in Phase 1, had a natural advantage. The proponent also indicated that they would not be able to submit a competitive proposal and requested a meeting with Works staff to discuss suggestions to modify the process in order to facilitate a more effective competition, particularly since the proponents were already short listed at the REOI stage based on qualifications. In a letter dated June 1, 1999, the proponent proposed that the competition be enhanced to include significant consideration of work program, delivery schedule and fee budget, and suggested a facilitated workshop designed to put the proponents on an equal footing with respect to background knowledge. Works staff reviewed the suggestions with staff from Purchasing and Legal, and concluded that the current process was still appropriate.

In a letter dated June 11, 1999, the proponent advised the Chief Financial Officer and Treasurer of their formal withdrawal from the competition. As there would now only be one bidder in the competition, Works staff consulted with representatives from Purchasing and Legal on this matter. Based on these discussions, it was decided that the process should proceed.

On June 21, 1999, a proposal was received from a consortium led by EMA Canada Inc., which was the lead consultant in Phase 1. The Selection Committee performed an evaluation on the proposal and EMA qualified to proceed to the work plan development stage. At this stage, a series of negotiation meetings took place which involved developing a work plan, resourcing schedule, project scope, overall cost and contract performance management process. Audit Services staff were invited and attended some of these meetings. Through this process, an overall workplan and costs were developed for PIC services and a report recommending a contract award to EMA Canada at a maximum cost of $14.5 million, was forwarded to the October 1999 Works Committee meeting.

Conclusion:

The selection process for program integration and co-ordination services was developed by Works staff in consultation with senior management of Water and Wastewater Services. It was also reviewed by staff of the Purchasing and Materials Management Division and Legal Services. In addition, Works staff consulted with both Purchasing and Legal on any issues that arose at various stages in the process. The process that was being followed was also reported to the Works and Utilities Committee and Council for information in May 1999.

EMA, as the Phase 1 incumbent consultant, was involved in the development of the preliminary work plan for Phase 2 and had detailed knowledge of the WBP Program. Although the process that was followed by the Works Department was fair and open, it is our opinion that it would have been difficult for any proponent to overcome the advantage that EMA had as a result of their in-depth involvement in Phase 1.

It would also be difficult to determine whether a higher weighting on price would have altered the results of the competition. Works staff indicate that basing the competition mainly on price could compromise the success of the project since price would take precedence over the qualifications of the consortium and their ability to do the job.

It should also be noted that the RFP only required proponents to provide proposed per diem rates for various levels of consulting staff and not a total price. The actual negotiations leading to a total contract price were determined during the work plan development stage, at which point EMA knew that they were the only bidder. While this would have been the case with any successful proponent, because there was no other bidder that the City could fall back on if an agreement could not be reached with the top ranked proponent, the City's leverage in contract negotiations may have been reduced. Given that there was only one bidder, it is difficult to determine the reasonableness of the recommended contract award to EMA of $14.5 million as there is no benchmark against which to evaluate the competitiveness of the bid, including the proposed rates. While we are concerned that the proposed rates charged under this contract appear high, Works staff indicate that the rates proposed by EMA are in line with those charged in Phase 1 (adjusted for inflation). It should also be noted that the rates to be charged under this contact were acquired in a competitive context where price was stated to be a consideration in the evaluation of proposals. In addition, the proponent that withdrew at the RFP stage indicated that they would keep their withdrawal confidential.

The REOI was advertised in a national newspaper as well as on the City's web site. While the selection process did not result in the level of competition expected for a contract of this magnitude, the Works Department had little control over the circumstances that led to a situation where there was only one bidder. Works staff indicate that they are comfortable with the proposal put forward by EMA. However, it is important at this point, that attention be focused on the value of the services to be provided under this contract, especially in light of the Council imposed moratorium on layoffs. While Works staff have no control over this development, it may affect the estimated savings resulting from this project as most of the projected savings are based on staff reductions from streamlined work practices. Works staff have indicated that they will be reporting to the Works Committee on the financial impact of the Council imposed moratorium as well as any issues related to the new Local 416 agreement.

Contact Name and Telephone Number:

Tony Veneziano, Senior Audit Manager, 392-8353)

(City Council also had before it, during consideration of the foregoing Clause, a communication (October 19, 1999) from Rienk deVries, EMA Canada, Inc., submitting, as requested by the Works Committee, an outline of EMA's Canadian position on water quality and union involvement in the Works Best Practices Program; advising of the principles upon which EMA has built its leadership position, and expressing its intention to continue working with the City for the success of the Works Best Practices Program.)

(City Council on October 26 and 27, 1999, adopted this Clause, without amendment.)

The Works Committee recommends:

(1) the adoption of the report dated September 22, 1999, from the Commissioner of Works and Emergency Services; and

(2) that under no circumstances are there to be reductions in water quality and that continued improvements of quality should be considered an ongoing objective.

The Works Committee reports, for the information of Council, having considered together the following reports related to the Works Best Practices Program:

(i) (September 27, 1999) from the Commissioner of Works and Emergency Services, headed "Request for Proposals for Selection of Vendors for Supply of Process Control Systems (SCADA) Software, Contract No. MWRFP199";

(ii) (September 22, 1999) from the Commissioner of Works and Emergency Services, headed

"Engagement of Professional Services to Undertake the Preliminary Design of Process Control Systems at the R.C. Harris, R.L. Clark, F.J. Horgan and Island Water Treatment Plants";

(iii) (September 22, 1999) from the Commissioner of Works and Emergency Services, headed"Engagement of Professional Services to Undertake the Preliminary Design of a ProcessControl System for the Water Transmission System";

(iv) (September 28, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer, headed "Results of the Request for Proposals for the

Water Pollution Control Process Control System Detailed Design Project"; and

(v) (September 27, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer, headed "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract";

and having directed that:

(1) a meeting of the Works Best Practices Program Work Group be convened prior to the Council meeting scheduled for October 26, 27 and 28, 1999;

(2) Union representatives be formally invited to meetings respecting Best Practices when these involve Toronto Civic Employees' Union Local 416 members, and that confirmation that invitations were received be obtained; especially important will be Local 416 and Local 79 involvement in all Teams, particularly items (4) "Organizational Services" and (5) "Integrated Works Area Implementation" under the Program Integration and Coordination Services for Phase 2;

(3) a written statement, to Council, be requested from EMA Canada concerning the firm's position on water quality as a part of Works Best Practices development and Union involvement in best practices development and implementation;

(4) the City Auditor be requested to report directly to Council on the aforementioned report headed "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract", wherein seven expressions of interest were received, two firms were given the opportunity to bid and one of those withdrew; and

(5) the Commissioner of Works and Emergency Services be requested to submit a report directly to City Council on the aforementioned reports, which outlines in simple terms the number of persons that are being hired under these contracts, the number of hours and hourly rate of pay of those persons, and the type of performance analysis to be undertaken as this project proceeds.

The Works Committee submits the following report (September 22, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

To present the results of the Request for Proposals for the selection of professional services to carry out the preliminary design of a process control system for the water transmission system, and to obtain approval to award the assignment to Simcoe Engineering Group Ltd.

Funding Sources, Financial Implications and Impact Statement:

During the meeting of March 2, 3 and 4, 1999, City of Toronto Council adopted Clause No. 1 of Report No. 3 of The Strategic Priorities and Planning Committee approving the 1999-2003 Capital Budget and Five-Year Capital Programs. This contained funding for various projects in the Works Best Practices Program including the preliminary design of a process control system for the water transmission system. These funds are available in the Water and Wastewater Services Division, Water Supply Section Account No. C-WS026.

Recommendations:

It is recommended that:

(1) the assignment for the preliminary design of the Water Transmission Process Control System be awarded to the firm of Simcoe Engineering Group Ltd. at a cost not to exceed $545,000.00 including Goods and Services Tax (GST) and a contingency allowance of $55,000.00 including GST to cover potential additional engineering work required, if necessary, and as authorized by the Commissioner of Works and Emergency Services; and

(2) the appropriate City officials be authorized to take the necessary actions to give effect thereto.

Council Reference/Background/History:

On July 2 and 3, 1997, the former Metropolitan Council adopted Clause No. 3 of Report No. 13 of The Financial Priorities Committee authorizing the implementation of the Works Best Practices Program (WBPP) in the Works Department.

On October 28, 1998, Toronto City Council through adoption of Clause No. 14 of Report No. 18 of The Strategic Policies and Priorities Committee endorsed the continuance of the Works Best Practices Program and authorized funds required to continue implementation of the program.

The WBPP is a process control and operations technology, information technology and optimization program integrating redesign of key business practices. A major component of this program is the replacement of aging process control systems within the four water treatment plants, and the transmission system in the Water Supply Section.

The Water Supply transmission system is an integrated network comprised of treated water pumps at four water treatment plants, 18 pumping stations, ten major underground reservoirs, four elevated tanks and 487 kilometres of water main ranging in size up to 2250 millimetres in diameter. This infrastructure is geographically located throughout the City of Toronto and in York Region. The overall monitoring and control of the Water Supply transmission system is provided from one central pumping control facility. From this location, remote control of pumps, continuous monitoring of pressures, flows, and levels takes place, enabling supply of water at sufficient pressure and flow to all residents of the City of Toronto, and by agreement to York Region. Furthermore, overall water supply building security is monitored from this location.

Replacement of the existing system installed in the mid 1980's is required due to its age and as an integral part of the WBPP. The new system using state-of-the-art equipment and technology will provide significant improvements to water transmission monitoring, controlling, reporting and data logging capabilities. It will also improve system efficiency and reliability, and in turn reduce operating costs through reduced hydro consumption and staff required for system operations. Centralized monitoring of building heating and ventilating systems, alarm systems, and machinery will provide enhanced protection of assets and equipment.

Considering the need for and benefits of the new process control system and the overall project schedule, the preliminary design must be undertaken at this time.

Comments and/or Discussion and/or Justification:

The Terms of Reference to undertake this work were issued to several companies on March 9, 1999. On April 9, 1999, Works and Emergency Services received proposals, including separate sealed cost proposals, from Proctor and Redfern Ltd. and Simcoe Engineering Group Ltd., for the preliminary design of the water transmission process control system.

The proposals were reviewed by a staff selection committee comprised of staff from Water Supply and Technical Services based on a predetermined selection process of evaluating the proposals against specified criteria. The details of the selection process are outlined in Appendix A. Following detailed review of the technical aspects of the submissions, only one firm qualified for further consideration and the price envelope was opened.

An interview was held with the firm in order to clarify and finalize the specific scope of work required and the related costs involved. These costs were assessed to confirm they were fair and reasonable. Further dialogue and communication took place after the interview. As indicated in Appendix 'A', the staff selection committe concluded that the proposal by Simcoe Engineering Group Ltd. satisfied the overall project requirements at a reasonable cost.

Conclusions:

A thorough selection procedure has been followed consistent with corporate practices.

It is recommended that Simcoe Engineering Group Ltd. be awarded the assignment to undertake the preliminary design of the water transmission system.

Contact Name:

Hiroshi Taniguchi

Director, Water Supply

Phone: (416) 392-8220

Fax: (416) 392-3639

E-mail: htaniguchi@metrodesk.metrotor.on.ca

(1) A two-stage process was undertaken whereby Expressions of Interest were requested first followed up by a Request for Proposals from the short-listed proponents.

(2) Twelve firms with experience in similar work were chosen from a roster of qualified companies and invited to submit Expressions of Interest. One firm declined to submit proposals. Of the remaining 11 firms, four banded together to form one consortium and another three banded together to form a second consortium such that six responses were submitted in total. The responses were evaluated according to a set of pre-established criteria by representatives from the Water and Wastewater Services and Technical Services Divisions of the Works and Emergency Services Department.

(3) Using a threshold level of 75 percent of the maximum attainable score as a criterion, evaluation of the Expressions of Interest resulted in a short list of four firms. Detailed written proposals, including separate sealed cost proposals, were requested and received from the four firms. Two firms submitted proposals for the preliminary design of a process control system for the water transmission system.

(4) A formal staff selection committee was struck to evaluate the detailed proposals. As with the Expressions of Interest, the committee was comprised of representatives from the Water and Wastewater Services and Technical Services Divisions of the Department.

(5) The technical submissions were reviewed first independently and then jointly by members of the selection committee, and were evaluated according to a set of pre-established criteria. Once again, a threshold level of 75 percent of the maximum attainable score had been previously established as the criterion for the next step which was a review of the separately submitted sealed cost proposals.

(6) Accordingly, only one firm qualified for further consideration and its cost proposal was reviewed.

(7) The firm was then interviewed in order to clarify and finalize the specific scope of work required and the related costs involved. Further dialogue and communication took place after the interview and the proponent was requested to provide written clarification to proposal items as required.

(8) On completion of all of the above, the selection committee concluded that the proposal submitted satisfied the overall project requirements at a reasonable cost by demonstrating an appropriate level of effort to properly address the critical elements of the work.

(9) It was recommended that the preliminary design of a process control system for the water transmission system be awarded to Simcoe Engineering Group Ltd.

The Works Committee reports, for the information of Council, having also had before it during consideration of the foregoing matter the following communications:

(1) (October 6, 1999) from Mr. Brian Cochrane, President, Toronto Civic Employees' Union, Local 416, expressing concerns with respect to the Works Best Practices Program, and the implications of the reports for approval of expenditures on Process Control Systems, in particular the quality of services being jeopardized as a potential outcome of downsizing; and

(ii) (October 6, 1999) from Mr. Brian Cochrane, President, Toronto Civic Employees' Union, Local 416, in opposition to the selection of EMA Canada Inc. to assist the City with the implementation of the Works Best Practices Program; recommending that if the City must continue with the Program, the changes be made using City employees on an "in-house" basis; and further recommending that if the Committee approves the recommendation to retain EMA Canada Inc., EMA be directed to proceed in a manner that recognizes Local 416 as having an integral role in any operational changes.

The following persons appeared before the Works Committee in connection with the foregoing matter:

- Mr. Peter Leiss, Executive Vice-President, and Ms. Gina Gignac, National Representative, Toronto Civic Employees' Union, Local 416; and

- Ms. Karen Buck, Toronto, Ontario.

(City Council on October 26 and 27, 1999, had before it, during consideration of the foregoing Clause, the following report (October 15, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

The purpose of this report is to provide further information, as directed by Works Committee, on the type of contract performance analysis and on the consulting resources, including number of persons, hours and rate, associated with the Works Best Practices Program Phase 2 initial contract award recommendations.

Funding Sources, Financial Implications and Impact Statement:

There is no direct financial impact from this report.

Recommendations:

It is recommended that this report be received for information.

Council Reference/Background/History:

At its meeting of March 2, 3 and 4, 1999, City Council reaffirmed continuance of the Works Best Practices Program (WBPP) in the Water and Wastewater Services Division of Works and Emergency Services. At its meeting of October 6, 1999, The Works Committee, by adoption of their agenda items numbered 4, 4(a), 4(b), 4(c), and 4(d), is recommending to Council awards of contracts to seven firms for the supply and delivery of software components (one contract) and for the performance of various work activities relating to process control systems preliminary design (two contracts), detailed design, software development, general administration and construction site supervision (three contracts), and program integration and coordination services (one contract). The Works Committee further directed that the Commissioner of Works and Emergency Services be requested to submit a report directly to City Council on reports 4, 4(a), 4(b), 4(c) and 4(d), which outlines in simple terms the number of persons that are being hired under these contracts, the number of hours and hourly rate of pay of those persons, and the type of performance analysis to be undertaken as this project proceeds.

Comments and/or Discussion and/or Justification:

As the Works Best Practices Program (WBPP) enters Phase 2, its major implementation phase, a number of key work packages must be contracted in order for planned work to proceed. These work packages relate to all implementation areas of the Program. New process control systems, providing industry-standard levels of automation, control, maintainability, and reliability to facility operations, need to go through the detailed stages of design and into construction and commissioning. Organizational changes need to be rolled out across approximately thirty-two "workareas" (a discrete team unit defines the bounds of a workarea, such as solids handling at the Highland Creek Treatment Plant), involving staff selection, development, and training in the new ways of operating and maintaining modern water and wastewater facilities. Supporting operational, information and management systems technologies need to be rolled out across the organization to provide people with the right information, quickly and accurately, to make decisions which will best ensure high quality, reliable service delivery at the lowest cost. All this work needs to be done efficiently and in a coordinated and fully integrated manner in order that the planned results may be achieved.

The work packages required to commence Phase 2 include the following:

- preliminary design for new process control systems in the four Water Supply plants;

- preliminary design for new process control systems in the water transmission system;

- detailed design, software development, general administration and construction site supervision for new process control systems in the three major Water Pollution Control plants; and,

- program integration and coordination services for Phase 2 of the Program.

An additional requirement exists to establish a supply contract for Supervisory Control and Data Acquisition (SCADA) software to be used on a standardized basis in all new process control systems.

As reported in the WBPP Spring 1999, WBPP Status Report (Council Meeting of May 11, 12, and 13 - Clause No. 14(f) of Report No. 5 of the Works and Utilities Committee), the Program is ahead of schedule with respect to operating cost reductions achieved. The above work packages are an integral part of the next step in Program implementation and must proceed in parallel in order to continue progress as planned and in order to ensure proper integration of best practices across the Water Supply and Water Pollution Control sections of the Water and Wastewater Services Division. Formal procurement activities have been carried out for each of these work packages so as to ensure Phase 2 work begins as planned and on time.

The seven contracts recommended are listed in Table 1, below. These contracts are numbered "A" through"G" for purposes of referencing in the body of this report.

TABLE 1: Recommended Contracts

Contract Deliverables and Resources

This section of the report will discuss the nature of products and services provided for each of these contracts and the approach to charging and payment.

Contracts "A" and "B" are for the delivery of process control systems preliminary designs for the four water treatment plants and for the water transmission system. In these types of assignments, payment is on a scheduled lump sum basis for the completion of specific, pre-agreed design and documentation services. Appendices "A" and "B" provide the dollar values for the required preliminary design components. Proposal evaluation and consultant selection is based on the proposed overall cost for the prescribed design deliverables, and as such does not take into account specific time and costs for individual consultant personnel.

Contracts "C", "D", and "E" are for the development of detailed design (drawings and specifications) for the process control systems and related equipment (instruments and field devices), general administration and site supervision for construction, and the programming and commissioning, including training and full documentation, of the new process control systems and related equipment. As in the case of preliminary design contracts, payment is on a scheduled deliverable basis. Appendices "C", "D" and "E" provide the dollar values for the required contract components. Again, proposal evaluation and consultant selection is based on the proposed overall cost for the prescribed deliverables, and as such does not take into account specific time and costs for individual consultant personnel.

Contract "F" is for the provision of professional and technical services required to manage and implement the Works Best Practices Program across all of Water Supply and Water Pollution Control. In virtually every instance, consultant personnel will be teamed with staff to produce prescribed implementation deliverables through the application of standardized methods and technologies developed in Phase 1. Approximately 32 integrated workarea implementations will be performed, with each involving a number of inter-related areas of activity. These include the establishment of the redesigned team unit, the introduction, application and development of total productive operations, program-driven maintenance and flexible workforce practices, and the configuring and implementing of the work management system and the performance management system, as well as their supporting technology infrastructure. Training and knowledge transfer to staff are emphasized in all areas of activity. In addition, quality control and systems integration functions will be performed for all of the process control systems design, construction, commissioning, training and handover activities, covering all Water Supply and Water Pollution Control operating facilities.

Program integration and coordination (PIC) services support and manage every aspect of WBPP implementation, including those under the other work packages (contracts) discussed in this report. PIC is vital to the success of the Program and the achievement of its committed goals and objectives. The scope of the PIC assignment, the term of which coincides with completion of full WBPP implementation, was developed in Phase 1, and has been designed to minimize the use of consultants and maximize the use of staff resources. The approach taken to accomplish this was to identify the work to be done in Phase 2, to isolate those activities which require external resourcing, and to trim the days of effort to be acquired (by more than one-third) in order to ensure best use of consultants, an optimal degree of knowledge transfer to staff, and acceptable probability of success.

The PIC contract will incorporate prescribed deliverables, with charges to be based on time and materials to an upset limit (contract value). Appendix "F" to this report includes a table which shows the major PIC functions, the roles and resources to be provided under the contract, a brief description of the activities and responsibilities of each role/resource, the estimated number of hours of work required to complete the prescribed deliverables, and the average hourly rate for each role/resource.

The consultant selection process has been described in the contract recommendation report, titled "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program" (September 27, 1999). That report, which also lists the prescribed deliverables and the estimated ceiling cost for each, is one of the five contract award recommendation reports forwarded by The Works Committee to the same Council meeting as this information report. The proposed PIC assignment provides the appropriate resources to accomplish the required work at rates which are competitive based on comparison with Phase 1 rates for similar services and reasonable inflationary indexing. Clearly, it would have been preferable to have more than one proposal for the work. However, the process of qualification based selection addresses this eventuality by focusing on the ability and demonstrated experience of the proponent to carry out the assignment with a high probability of success, with attendant consideration of timeliness and budget. This rationale was described in Clause No. 5(g) of Report No. 9 of the Works and Utilities Committee (Council meeting of June 9, 10 and 11, 1999).

Contract "G" is for the provision of software products only and requires no provision for consultant services and corresponding rates.

It should be noted that the recommended contract awards incorporate the ability for the City to make adjustments, as work proceeds, to work package components and to specific resource requirements, within upset limits. This will ensure that the best overall value for money expended will be achieved, in terms of minimizing costs and maximizing the quality of the results.

Contract Performance

Contract performance for contracts "A" through "E" (process control systems) will be monitored in two ways. First, the WBPP Program Management Office, with the day-to-day support of the Process Control Systems Implementation Team, will review progress against planned design and implementation deliverables and address delays or performance problems as they are encountered. Second, major deliverables as they are developed must be signed off prior to approval of final invoice payment by the Technical Services Division, who will be represented on the Process Control Systems Implementation Team. Further performance management of these and all contracts will be performed through the functions of the Quality Assurance Team, as described in the section below titled, "Quality Assurance".

For contract "F", contract performance management is as for Contracts "A" through "E", described above. In addition, there are additional performance management provisions to be incorporated into the contract, as described in the contract award report ("Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program"). Those provisions effectively retain a portion of the fees for services, totaling approximately $800,000.00, in a Performance Fund from which those retained fees will be disbursed to the contractor as Program goals are achieved and demonstrated.

Under Contract "G", the SCADA Software contract, no services are provided, and, as a result, no corresponding services performance management component is included. Performance of the software itself is addressed in the warranty and support components of the proposal and will be included in the agreement.

Quality Assurance

Phase 2 will employ an adaptation of the Phase 1 Quality Assurance (QA) methodology. It will be designed to address the specific challenges of multiple, simultaneous, integrated workarea implementations across all Water Supply and Water Pollution Control organizational units and facilities. The QA methodology employs a ten-step cycle for the creation and pre-approval of detailed workplans (including interim and final deliverables), the monitoring of progress against those workplans, the establishment of quality control teams for purposes of deliverables review, feedback and acceptance, and the final review, acceptance and signoff of completed deliverables. The payment approval process will be integrated with the QA methodology to ensure payments are released only in accordance with completed effort and receipt of prescribed deliverables. Discussions are underway with senior representatives of the Audit Department to identify and operationalize the appropriate role of Audit in the overall QA process.

Conclusions:

This report is provided to Council, as directed by The Works Committee, to present supplementary information concerning the recommendations for contract awards to seven firms for process control preliminary and detailed design, SCADA software supply, and program integration and coordination services components necessary for the commencement of Phase 2, the major implementation phase, of the Works Best Practices Program. These contract recommendations are the result of formal procurement processes carried out in accordance with approved corporate practice, and are consistent with approved funding levels. It is necessary to proceed with these assignments at this time in order to comply with Council's reaffirmation of the Works Best Practices Program and to maintain progress against committed Program benefit goals.

Contact Name:

Jim Coe

Program Manager, Works Best Practices

Water and Wastewater Services Division

Telephone No. (416) 392-3141)

APPENDIX "A"

CONTRACT FOR:

Preliminary Design for R.C. Harris, R.L. Clark, F.J. Horgan, and Island Water Treatment Plants

RECOMMENDED FIRM:

The Greater Toronto Consulting Group

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "B"

CONTRACT FOR:

Preliminary Design for Water Transmission System

RECOMMENDED FIRM:

Simcoe Engineering Group Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "C"

CONTRACT FOR:

Detailed Design and Construction Management for Ashbridges Bay Treatment Plant

RECOMMENDED FIRM:

CH2M Gore & Storrie Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "D"

CONTRACT FOR:

Detailed Design and Construction Management for Humber Treatment Plant

RECOMMENDED FIRM:

Azurix North America

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "E"

CONTRACT FOR:

Detailed Design and Construction Management for Highland Creek Treatment Plant

RECOMMENDED FIRM:

Earth Tech (Canada) Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "F"

CONTRACT ("F") FOR:

Program Integration and Coordination Services ("PIC") for Phase 2

RECOMMENDED FIRM:

EMA Canada Inc. (lead of six-firm consortium)

CONTRACT BASED ON TIME AND MATERIALS PER PRESCRIBED DELIVERABLES TO A CEILING COST

(City Council also had before it, during consideration of the foregoing Clause, the following report (October 21, 1999) from the City Auditor:

Reference:

On October 6, 1999, the Works Committee had before it a report from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer recommending a contract award to EMA Canada at a maximum cost of $14.5 million for program co-ordination and integration services related to Phase 2 of the Works Best Practices (WBP) Program. In considering this report, the Committee requested the City Auditor to report directly to Council on the procurement process with respect to these services.

Our review of this matter included an examination of relevant documents and records pertaining to the procurement process as well as discussions with Works, Legal and Purchasing staff, and certain proponents involved in the competition.

Recommendation:

It is recommended that this report be received for information.

Comments:

The WBP Program is a long term improvement initiative undertaken by the Water and Wastewater Services Division of the Works and Emergency Services Department. The objective of the program is to ensure that the Division provides the most cost effective and efficient service to its customers. Phase 1 of the project focused on the design of new work practices, new technologies and organizational change. Phase 2 includes full implementation of redesigned work practices and organizational units, integrated business and operations systems and technologies, detailed design, and construction and commissioning work for new process control systems across the major water and wastewater operating facilities. Staff estimate that annual savings of approximately $36 million will be realized upon completion of the project.

Procurement Process:

The process for the procurement of Program Integration and Co-ordination (PIC) services in Phase 2 of the WBP Program was reported to the Works and Utilities Committee on May 19, 1999 and subsequently forwarded to Council for information.

The process involves four main stages as outlined below:

1. Request for Expression of Interest

To identify and select qualified and interested firms for participation in subsequent stages of the process.

2. Request for Proposals

To assess the background, qualifications, experience, key resources, work approach and plan, and professional services rate structure of each proponent and to rank proponents for the next step in the process.

3. Work Plan Negotiation

To develop on a joint basis with the lead-ranked proponent an agreed work plan and associated resourcing and payment schedule, implementation scope and overall cost.

4. Approvals and Contract Development

To gain approvals from Committee and Council to enter into a contractual agreement with the recommended proponent.

The Water and Wastewater Services Division of Toronto Works and Emergency Services established an internal Selection Committee consisting of Works staff to carry out the procurement of PIC Services relating to Phase 2 of the WBP Program. While representatives from the Purchasing and Materials Management Division were involved in overseeing the process to ensure a fair and open competition, they were not involved in the actual evaluation of expressions of interests or proposals, which considering the technical nature of the services is appropriate.

A public Request for Expression of Interest (REOI) was issued on April 26, 1999 to identify and short list a limited number of interested and qualified consulting engineering firms for receipt of the Request for Proposal (RFP). Proponents were asked to indicate their interest in participating in the RFP process by providing evidence of qualification for the provision of the types of services relevant to the WBP Program implementation phase. At this stage, contract price and rates were not requested.

The Selection Committee established pre-defined evaluation criteria for this stage of the process, which focused on the proponent's demonstrated understanding of the underlying philosophies and methods of a major transformational process like the WBP Program, which involves:

(a) multi-disciplinary, large scale project integration, management and support in a water/wastewater operating environment;

(b) process control design and construction management;

(c) organizational design, training and change management;

(d) unionized, municipal-based operations;

(e) technology architecture and integration;

(f) team-oriented best practices implementation;

(g) work management systems implementation; and

(h) performance management systems implementation.

Seven responses to the REOI were received. Another respondent's submission was not received at the office of Purchasing and Materials Management by the 12:00 noon deadline on May 7, 1999, due to a courier problem. The respondent wrote to the Chief Financial Officer and Treasurer and requested that an exception be made and provided a letter from the courier company indicating that the tardiness of the submission was due to no fault on the part of the respondent. Works staff consulted with representatives from City Purchasing and Legal Services on this matter and were advised that in order to protect the integrity of the process any submission received after the deadline could not be considered. The Purchasing and Materials Management Division advised the respondent accordingly.

The Selection Committee reviewed and ranked the seven submissions against pre-defined criteria and identified two proponents that qualified to advance to the RFP stage. The RFP was issued to the two pre-qualified firms on May 14, 1999. The evaluation criteria included:

(a) corporate viability and background;

(b) relevant experience;

(c) understanding of WBPP principles, core methods and goals;

(d) key resources;

(e) proposed approach; and

(f) competitiveness of rates.

It should be noted that the evaluation of the RFP submissions was based mainly (80%) on qualifications, with the competitiveness of rates and price being a secondary consideration. Works staff indicate that a selection process that focuses on qualifications and key resources of the proponents as opposed to a bottom line price was adopted due to the complexity of the assignment, the unpredictability of some of the work, and the need for flexibility in scheduling of work area implementations across the division. In addition, Works staff felt that the possible lack of familiarity of most of the RFP participants with its operations and personnel would limit the participants' ability to make valid assumptions upon which to base a detailed work plan and therefore place them at a disadvantage compared to the incumbent Phase 1 consultant's background knowledge. Therefore, the Works Department felt that a qualifications based approach would be fairer to all potential proponents and would also be more appropriate for the department in terms of better ensuring overall project success.

In a letter to the Program Manager, WBPP dated, May 26, 1999, one of the two remaining proponents expressed concern of a lack of a level playing field in the competition due to the fact that the other proponent, being the incumbent consultant in Phase 1, had a natural advantage. The proponent also indicated that they would not be able to submit a competitive proposal and requested a meeting with Works staff to discuss suggestions to modify the process in order to facilitate a more effective competition, particularly since the proponents were already short listed at the REOI stage based on qualifications. In a letter dated June 1, 1999, the proponent proposed that the competition be enhanced to include significant consideration of work program, delivery schedule and fee budget, and suggested a facilitated workshop designed to put the proponents on an equal footing with respect to background knowledge. Works staff reviewed the suggestions with staff from Purchasing and Legal, and concluded that the current process was still appropriate.

In a letter dated June 11, 1999, the proponent advised the Chief Financial Officer and Treasurer of their formal withdrawal from the competition. As there would now only be one bidder in the competition, Works staff consulted with representatives from Purchasing and Legal on this matter. Based on these discussions, it was decided that the process should proceed.

On June 21, 1999, a proposal was received from a consortium led by EMA Canada Inc., which was the lead consultant in Phase 1. The Selection Committee performed an evaluation on the proposal and EMA qualified to proceed to the work plan development stage. At this stage, a series of negotiation meetings took place which involved developing a work plan, resourcing schedule, project scope, overall cost and contract performance management process. Audit Services staff were invited and attended some of these meetings. Through this process, an overall workplan and costs were developed for PIC services and a report recommending a contract award to EMA Canada at a maximum cost of $14.5 million, was forwarded to the October 1999 Works Committee meeting.

Conclusion:

The selection process for program integration and co-ordination services was developed by Works staff in consultation with senior management of Water and Wastewater Services. It was also reviewed by staff of the Purchasing and Materials Management Division and Legal Services. In addition, Works staff consulted with both Purchasing and Legal on any issues that arose at various stages in the process. The process that was being followed was also reported to the Works and Utilities Committee and Council for information in May 1999.

EMA, as the Phase 1 incumbent consultant, was involved in the development of the preliminary work plan for Phase 2 and had detailed knowledge of the WBP Program. Although the process that was followed by the Works Department was fair and open, it is our opinion that it would have been difficult for any proponent to overcome the advantage that EMA had as a result of their in-depth involvement in Phase 1.

It would also be difficult to determine whether a higher weighting on price would have altered the results of the competition. Works staff indicate that basing the competition mainly on price could compromise the success of the project since price would take precedence over the qualifications of the consortium and their ability to do the job.

It should also be noted that the RFP only required proponents to provide proposed per diem rates for various levels of consulting staff and not a total price. The actual negotiations leading to a total contract price were determined during the work plan development stage, at which point EMA knew that they were the only bidder. While this would have been the case with any successful proponent, because there was no other bidder that the City could fall back on if an agreement could not be reached with the top ranked proponent, the City's leverage in contract negotiations may have been reduced. Given that there was only one bidder, it is difficult to determine the reasonableness of the recommended contract award to EMA of $14.5 million as there is no benchmark against which to evaluate the competitiveness of the bid, including the proposed rates. While we are concerned that the proposed rates charged under this contract appear high, Works staff indicate that the rates proposed by EMA are in line with those charged in Phase 1 (adjusted for inflation). It should also be noted that the rates to be charged under this contact were acquired in a competitive context where price was stated to be a consideration in the evaluation of proposals. In addition, the proponent that withdrew at the RFP stage indicated that they would keep their withdrawal confidential.

The REOI was advertised in a national newspaper as well as on the City's web site. While the selection process did not result in the level of competition expected for a contract of this magnitude, the Works Department had little control over the circumstances that led to a situation where there was only one bidder. Works staff indicate that they are comfortable with the proposal put forward by EMA. However, it is important at this point, that attention be focused on the value of the services to be provided under this contract, especially in light of the Council imposed moratorium on layoffs. While Works staff have no control over this development, it may affect the estimated savings resulting from this project as most of the projected savings are based on staff reductions from streamlined work practices. Works staff have indicated that they will be reporting to the Works Committee on the financial impact of the Council imposed moratorium as well as any issues related to the new Local 416 agreement.

Contact Name and Telephone Number:

Tony Veneziano, Senior Audit Manager, 392-8353)

(City Council also had before it, during consideration of the foregoing Clause, a communication (October 19, 1999) from Rienk deVries, EMA Canada, Inc., submitting, as requested by the Works Committee, an outline of EMA's Canadian position on water quality and union involvement in the Works Best Practices Program; advising of the principles upon which EMA has built its leadership position, and expressing its intention to continue working with the City for the success of the Works Best Practices Program.)

(City Council on October 26 and 27, 1999, adopted this Clause, without amendment.)

The Works Committee recommends:

(1) the adoption of the joint report dated September 28, 1999, from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer; and

(2) that under no circumstances are there to be reductions in water quality and that continued improvements of quality should be considered an ongoing objective.

The Works Committee reports, for the information of Council, having considered together the following reports related to the Works Best Practices Program:

(i) (September 27, 1999) from the Commissioner of Works and Emergency Services, headed "Request for Proposals for Selection of Vendors for Supply of Process Control Systems (SCADA) Software, Contract No. MWRFP199";

(ii) (September 22, 1999) from the Commissioner of Works and Emergency Services, headed

"Engagement of Professional Services to Undertake the Preliminary Design of Process Control Systems at the R.C. Harris, R.L. Clark, F.J. Horgan and Island Water Treatment Plants";

(iii) (September 22, 1999) from the Commissioner of Works and Emergency Services, headed"Engagement of Professional Services to Undertake the Preliminary Design of a ProcessControl System for the Water Transmission System";

(iv) (September 28, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer, headed "Results of the Request for Proposals for the

Water Pollution Control Process Control System Detailed Design Project"; and

(v) (September 27, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer, headed "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract";

and having directed that:

(1) a meeting of the Works Best Practices Program Work Group be convened prior to the Council meeting scheduled for October 26, 27 and 28, 1999;

(2) Union representatives be formally invited to meetings respecting Best Practices when these involve Toronto Civic Employees' Union Local 416 members, and that confirmation that invitations were received be obtained; especially important will be Local 416 and Local 79 involvement in all Teams, particularly items (4) "Organizational Services" and (5) "Integrated Works Area Implementation" under the Program Integration and Coordination Services for Phase 2;

(3) a written statement, to Council, be requested from EMA Canada concerning the firm's position on water quality as a part of Works Best Practices development and Union involvement in best practices development and implementation;

(4) the City Auditor be requested to report directly to Council on the aforementioned report headed "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract", wherein seven expressions of interest were received, two firms were given the opportunity to bid and one of those withdrew; and

(5) the Commissioner of Works and Emergency Services be requested to submit a report directly to City Council on the aforementioned reports, which outlines in simple terms the number of persons that are being hired under these contracts, the number of hours and hourly rate of pay of those persons, and the type of performance analysis to be undertaken as this project proceeds.

The Works Committee submits the following joint report (September 28, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer:

Purpose:

The purpose of this report is to present the results of the Request for Proposals (RFP) for the selection of professional services to carry out Process Control System (PCS) detailed design work in the City of Toronto's three major wastewater treatment plants, and to obtain approval to award the assignments to the successful firms.

Executive Summary:

The Works Best Practices Program (WBPP) was approved by Council in 1999 for continuation as per the revised plan that called for completion in 2003, and requiring estimated funds of $110 million with a net annual saving of $36 million when fully implemented. As part of the implementation, the next step is to hire the professional service companies that will carry out the detailed design of the process control system necessary for the full automation of the three main wastewater treatment plants.

During the preliminary design stage, it was identified that the plant heating, ventilation and air conditioning (HVAC), plus plant water and air systems as well as employee/facility protection systems could be added for automation and additional savings would be achieved. It was decided to include this work in the RFP and then review the cost benefit of doing the work as part of this phase. Funding has not been approved at this time for this work. We will be including these increased costs to our 2000 Capital Budget submission, along with the revised cost benefit analysis which will support the inclusion of this work. Since this scope was identified in the Request for Proposal, we will be seeking authority, upon approval of the 2000 Capital Works Program, for the assignment of this work to recommended firms.

Based on the analysis of the proposals we are recommending the PCS detailed design be awarded to the following companies:

* Includes GST but not contingencies.

Funding Sources, Financial Implications and Impact Statement:

On March 2, 3, and 4, 1999, City of Toronto Council adopted Clause No. 1 of Report No. 3 of The Strategic Priorities and Planning Committee, approving the 1999 - 2003 Capital Budget and Five-Year Capital Program which included approval of funding in the amount of $110,192,000.00 after Municipal GST Rebate for the Works Best Practices Program (WBPP). These funds are available in the Water and Wastewater Services Division, Water Supply Capital Account No. C-WS026 and Water Pollution Control Capital Accounts Nos. C-WP001, WP096, WP115, and WP160.

Additional funds are required to provide for automation of environmental and employee/facility protection systems not originally in the 1994 WBPP scope of work. The additional funds will be included in the 2000 Capital Works Submission. The cost benefit analysis will be provided in further reports, which will support the inclusion of this work as part of the PCS implementation.

Recommendations:

It is recommended that:

(1) the assignment for process control system detailed design at the Ashbridges Bay Treatment Plant be awarded to the firm of CH2M Gore & Storrie Limited at a cost of $10,140,256.00 including the Goods and Services Tax (GST) to meet the current savings target;

(2) the assignment for process control system detailed design at the Humber Treatment Plant be awarded to Azurix North America (formerly Thorburn Penny Limited) at a cost of $5,103,403.00 including GST to meet the current savings target;

(3) the assignment for process control system detailed design at the Highland Creek Treatment Plant be awarded to Earth Tech (Canada) Inc. (formerly Proctor & Redfern Limited) at a cost of $2,734,549.00 including GST to meet the current savings target;

(4) subject to the approval of Recommendations Nos. (1), (2), and (3), a contingency amount of $500,000.00 be provided for each of the assignments to CH2M Gore & Storrie Limited and to Azurix North America and $250,000.00 be provided for the assignment to Earth Tech (Canada) Inc. for a total amount of $1,250,000.00, to cover any additional design services, if necessary and as authorized by the Commissioner of Works and Emergency Services; and

(5) the appropriate City officials be authorized to take the necessary action to give effect thereto.

Council Reference/Background/History:

On July 2 and 3, 1997, the former Metropolitan Council adopted Clause No. 3 of Report No. 13 of The Financial Priorities Committee authorizing implementation of the Works Best Practices Program in the Works Department.

In the wastewater area of the Water and Wastewater Services Division, process control system preliminary design work was completed in 1997. A two-stage process of Expressions of Interest followed by a Request for Proposals was then put in place to select consultants for the process control system detailed design at the Ashbridges Bay, Humber, and Highland Creek Treatment Plants. The details of this professional service selection process are outlined in Appendix "A".

On February 5, 1999, the Works and Emergency Services Department received four proposals in response to its Request for Proposals dated December 10, 1998. Detailed technical proposals, including separate sealed cost proposals, were submitted by CH2M Gore & Storrie Limited, Thorburn Penny Limited, Proctor & Redfern Limited, and the Greater Toronto Consulting Group.

All of the proposals were reviewed by a Selection Committee based on a pre-selection process of evaluating the proposals against specified technical criteria. Following detailed review of the technical aspects of the submissions, three firms qualified for further consideration and the price envelopes were opened. The three firms were CH2M Gore & Storrie Limited, Thorburn Penny Limited (now Azurix, North America), and Proctor & Redfern Limited (now Earth Tech (Canada) Inc.).

Interviews were held with the three short-listed firms in order to clarify and finalize the specific scope of work required and the related costs involved. Further dialogue and communication took place after the interviews.

The selection committee concluded that the proposals submitted by the three short-listed firms satisfied the overall project requirements at a fair and reasonable cost, and has recommended one company for each of the three plants.

Comments and Justification:

The Works Best Practices Program (WBPP) is an extended and involved project with the objective of integrating organization, practices, and technology to more efficiently work together as a redefined, business-driven, public utility. One of the key elements is automation of the plants and upgrading of the old computerized systems.

The objective of the Process Control System (PCS) is to contribute to the overall WBPP objectives of effective, cost efficient operation through reduced chemical, energy, and other facility operating costs. To date, the PCS design has focused on the Water Pollution Control (WPC) Preliminary Designs for the three wastewater treatment facilities at Highland Creek, Humber and Ashbridges Bay. This also includes each facility's portion of the Collection System as it was defined prior to amalgamation.

The award of these contracts for the Detailed Design of the PCS will provide for the review and verification of the performance of existing field instruments, mechanical equipment, and related components to meet newly-developed standards, and will add or replace wherever the system is deficient. The PCS project will apply standards for process operation, equipment selection and installation across the three plants. Automation in the form of field computer hardware, associated software and networks will collect information from field instrumentation (such as flow readings, valve opening status, and pump speeds, etc.) to provide full control of process operation according to predetermined performance standards or objectives.

An unattended operation philosophy has been adopted to suggest a minimal quantity of operational staff will be present at the facility to respond to exceptional and/or alarm conditions. The PCS Detailed Design RFP incorporated the necessary level of automatic control, monitoring, and alarm notification to match this environment.

To meet the organizational needs for information beyond the specific requirements of process control, the PCS will support other computer applications, such as the Performance and Operations Management System (POMS), Work Management System (WMS) and Laboratory Information Management System (LIMS). These other applications will require process information from PCS to be able to provide performance information to staff for process optimization and cost control. Work Areas, consisting of a related group of processes operated by one team, will use the PCS to execute the most cost-effective operating strategies while assessing performance via the POMS and organizing the most efficient maintenance practices using the WMS.

The original estimates were for automation of the wastewater treatment processes only, and did not include environmental or employee/facility protection systems. A future report will be issued requesting an increase in the scope of the project to cover environmental, and employee/facility protection systems.

As the Preliminary Design progressed, it became apparent that there could be benefits accrued by automating the environmental and employee/facility protection systems. The environmental systems include heating, ventilation, and equipment cooling and air conditioning (HVAC), plus the plants' water and air systems. These systems do not currently have any centralized monitoring or control system, and therefore operators are required to visit remote sites for operational inspection and control adjustment of the equipment.

The employee/facility protection systems that are also planned to be automated include local alarm systems for smoke/fire, hazardous gas releases, odour control, site security, and flooding. Automation would provide alarms to specified staff for resolution.

The proposed revisions to the design will provide for continuous process and alarm monitoring of the complete working environment and employee/facility protection systems from anywhere within a plant. The process control system will allow for operator adjustments from anywhere in the plant and the protection alarm systems will advise of a problem/emergency and allow staff to react accordingly. With the proposed automation, the equipment/facilities will require fewer people to perform with better control.

We will provide for this funding as part of the 2000 Capital Works Program, complete with a business case analysis which would defend this expenditure. We will be recommending that this work be added to the assignments of the firms selected to do the PCS detailed design. A project management component has been incorporated as part of these costs to cover the increased scope. This will be further identified in an upcoming Program Integration and Coordination award report to the Works Committee.

The new benefits to be realized will include:

- monitoring of the complete working environment (HVAC, boilers, hot/cold water, steam, etc.);

- pre-emptive alarm protection for staff and facilities (smoke/fire, flooding, site security, etc.); and

- alarm and response to hazardous conditions immediately (chlorine leaks, hazardous wastewater vapours, methane etc.).

Other benefits include:

- economy of scale for design and implementation by doing the work now rather than a later date;

- standardized approach in the design, use of integrated components, and a common user interface for the process and auxiliary system; and

- lower life-cycle costs for the common implementation, such as less training requirements, fewer spare parts, etc.

The Manager, Fair Wage and Labour Trades Office, has reported favourably on the firms recommended.

The issuance of these consulting assignments pre-dates the Chief Administrative Officer's direction to use Purchasing for consulting services proposal calls.

Conclusions:

It is recommended that CH2M Gore & Storrie be awarded the assignment for the Ashbridges Bay Plant, Azurix North America be awarded the assignment for the Humber Treatment Plant, and Earth Tech (Canada) Inc. be awarded the assignment for the Highland Creek Treatment Plant.

We will be adding the environmental and employee/facility protection systems to our 2000 Capital Works Program and will seek authority to add this to the selected firms' assignments.

Contact Name:

A. Pagnanelli, P. Eng. J. Boccia, P. Eng.

Manager, Plant & Facility Construction Manager, WBPP (Acting)

Engineering Services Water Pollution Control

Works Facilities and Structures Water and Wastewater Division

Technical Services Division Tel. (416) 397-0952 Fax. (416) 397-0908

Tel. (416) 392-8245 Fax. (416) 392-4594

(1) A two-stage process was undertaken whereby Expressions of Interest were requested first, followed by a Request for Proposals from the short-listed proponents.

(2) Eleven firms with experience in similar work were chosen from a roster of qualified companies and invited to submit Expressions of Interest. Seven responses were received and evaluated according to a set of pre-established criteria by representatives from the Water and Wastewater Services and Technical Services Divisions of the Works and Emergency Services Department.

(3) Using a threshold level of 75 percent of the maximum attainable score as a criterion, evaluation of the Expressions of Interest resulted in a short list of five firms. Detailed written proposals, including separate sealed cost proposals, were requested from the five firms and received from four of the five firms.

(4) A formal selection committee was struck to evaluate the detailed proposals. As with the Expressions of Interest, the committee was comprised of representatives from the Water and Wastewater Services and Technical Services Divisions of the Department.

(5) The technical submissions were reviewed first independently and then jointly by members of the selection committee, and were evaluated according to a set of pre-established criteria. Once again, a threshold level of 75 percent of the maximum attainable score had been previously established as the criterion for the next step that was a review of the separately submitted sealed cost proposals.

(6) Accordingly, following the detailed review of the technical submissions, three of the four firms qualified for further consideration through a review of their cost proposals. The cost proposals were reviewed for the short-listed three firms, and the cost proposals for the one firm whose submission scored below the threshold level of 75 percent was returned unopened.

(7) The three short-listed firms were then interviewed in order to clarify and finalize the specific scope of work required and the related costs involved. Further dialogue and communication took place after the interviews, and all of the proponents were requested to provide written clarification to proposal items.

(8) On completion of all the above, the selection committee concluded that all three of the proposals submitted satisfied the overall project requirements at a reasonable cost, by demonstrating an appropriate level of effort to properly address the critical elements of the work.

(9) As specified in the Request for Proposals, the City reserved its right to treat the Year 2000 (Y2K) scope of work component as distinct and separate from the Process Control System (PSC) Detailed Design component because of the tight time frames for Y2K work and the fact that the funding for Y2K had already been approved. Accordingly, the Year 2000 (Y2K) Design, Remediation and Testing component of the project was dealt with separately by the City of Toronto Year 2000 Project Office. Approval of the PCS Detailed Design component is the scope of work being dealt with herein.

(10) It was recommended that each of the three firms be awarded the Y2K and PCS detailed design work for one of the wastewater treatment plants. The recommended firms for the work are as follows:

(a) Ashbridges Bay Treatment Plant - work to be done by CH2M Gore & Storrie Limited;

(b) Humber Treatment Plant - work to be done by Azurix North America (formerly Thorburn Penny Limited); and

(c) Highland Creek Treatment Plant - work to be done by Earth Tech (Canada) Inc. (formerly Proctor & Redfern Limited).

The Works Committee reports, for the information of Council, having also had before it during consideration of the foregoing matter the following communications:

(1) (October 6, 1999) from Mr. Brian Cochrane, President, Toronto Civic Employees' Union, Local 416, expressing concerns with respect to the Works Best Practices Program, and the implications of the reports for approval of expenditures on Process Control Systems, in particular the quality of services being jeopardized as a potential outcome of downsizing; and

(ii) (October 6, 1999) from Mr. Brian Cochrane, President, Toronto Civic Employees' Union, Local 416, in opposition to the selection of EMA Canada Inc. to assist the City with the implementation of the Works Best Practices Program; recommending that if the City must continue with the Program, the changes be made using City employees on an "in-house" basis; and further recommending that if the Committee approves the recommendation to retain EMA Canada Inc., EMA be directed to proceed in a manner that recognizes Local 416 as having an integral role in any operational changes.

The following persons appeared before the Works Committee in connection with the foregoing matter:

- Mr. Peter Leiss, Executive Vice-President, and Ms. Gina Gignac, Toronto Civic Employees' Union, Local 416; and

- Ms. Karen Buck, Toronto, Ontario.

(City Council on October 26 and 27, 1999, had before it, during consideration of the foregoing Clause, the following report (October 15, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

The purpose of this report is to provide further information, as directed by Works Committee, on the type of contract performance analysis and on the consulting resources, including number of persons, hours and rate, associated with the Works Best Practices Program Phase 2 initial contract award recommendations.

Funding Sources, Financial Implications and Impact Statement:

There is no direct financial impact from this report.

Recommendations:

It is recommended that this report be received for information.

Council Reference/Background/History:

At its meeting of March 2, 3 and 4, 1999, City Council reaffirmed continuance of the Works Best Practices Program (WBPP) in the Water and Wastewater Services Division of Works and Emergency Services. At its meeting of October 6, 1999, The Works Committee, by adoption of their agenda items numbered 4, 4(a), 4(b), 4(c), and 4(d), is recommending to Council awards of contracts to seven firms for the supply and delivery of software components (one contract) and for the performance of various work activities relating to process control systems preliminary design (two contracts), detailed design, software development, general administration and construction site supervision (three contracts), and program integration and coordination services (one contract). The Works Committee further directed that the Commissioner of Works and Emergency Services be requested to submit a report directly to City Council on reports 4, 4(a), 4(b), 4(c) and 4(d), which outlines in simple terms the number of persons that are being hired under these contracts, the number of hours and hourly rate of pay of those persons, and the type of performance analysis to be undertaken as this project proceeds.

Comments and/or Discussion and/or Justification:

As the Works Best Practices Program (WBPP) enters Phase 2, its major implementation phase, a number of key work packages must be contracted in order for planned work to proceed. These work packages relate to all implementation areas of the Program. New process control systems, providing industry-standard levels of automation, control, maintainability, and reliability to facility operations, need to go through the detailed stages of design and into construction and commissioning. Organizational changes need to be rolled out across approximately thirty-two "workareas" (a discrete team unit defines the bounds of a workarea, such as solids handling at the Highland Creek Treatment Plant), involving staff selection, development, and training in the new ways of operating and maintaining modern water and wastewater facilities. Supporting operational, information and management systems technologies need to be rolled out across the organization to provide people with the right information, quickly and accurately, to make decisions which will best ensure high quality, reliable service delivery at the lowest cost. All this work needs to be done efficiently and in a coordinated and fully integrated manner in order that the planned results may be achieved.

The work packages required to commence Phase 2 include the following:

- preliminary design for new process control systems in the four Water Supply plants;

- preliminary design for new process control systems in the water transmission system;

- detailed design, software development, general administration and construction site supervision for new process control systems in the three major Water Pollution Control plants; and,

- program integration and coordination services for Phase 2 of the Program.

An additional requirement exists to establish a supply contract for Supervisory Control and Data Acquisition (SCADA) software to be used on a standardized basis in all new process control systems.

As reported in the WBPP Spring 1999, WBPP Status Report (Council Meeting of May 11, 12, and 13 - Clause No. 14(f) of Report No. 5 of the Works and Utilities Committee), the Program is ahead of schedule with respect to operating cost reductions achieved. The above work packages are an integral part of the next step in Program implementation and must proceed in parallel in order to continue progress as planned and in order to ensure proper integration of best practices across the Water Supply and Water Pollution Control sections of the Water and Wastewater Services Division. Formal procurement activities have been carried out for each of these work packages so as to ensure Phase 2 work begins as planned and on time.

The seven contracts recommended are listed in Table 1, below. These contracts are numbered "A" through"G" for purposes of referencing in the body of this report.

TABLE 1: Recommended Contracts

Contract Deliverables and Resources

This section of the report will discuss the nature of products and services provided for each of these contracts and the approach to charging and payment.

Contracts "A" and "B" are for the delivery of process control systems preliminary designs for the four water treatment plants and for the water transmission system. In these types of assignments, payment is on a scheduled lump sum basis for the completion of specific, pre-agreed design and documentation services. Appendices "A" and "B" provide the dollar values for the required preliminary design components. Proposal evaluation and consultant selection is based on the proposed overall cost for the prescribed design deliverables, and as such does not take into account specific time and costs for individual consultant personnel.

Contracts "C", "D", and "E" are for the development of detailed design (drawings and specifications) for the process control systems and related equipment (instruments and field devices), general administration and site supervision for construction, and the programming and commissioning, including training and full documentation, of the new process control systems and related equipment. As in the case of preliminary design contracts, payment is on a scheduled deliverable basis. Appendices "C", "D" and "E" provide the dollar values for the required contract components. Again, proposal evaluation and consultant selection is based on the proposed overall cost for the prescribed deliverables, and as such does not take into account specific time and costs for individual consultant personnel.

Contract "F" is for the provision of professional and technical services required to manage and implement the Works Best Practices Program across all of Water Supply and Water Pollution Control. In virtually every instance, consultant personnel will be teamed with staff to produce prescribed implementation deliverables through the application of standardized methods and technologies developed in Phase 1. Approximately 32 integrated workarea implementations will be performed, with each involving a number of inter-related areas of activity. These include the establishment of the redesigned team unit, the introduction, application and development of total productive operations, program-driven maintenance and flexible workforce practices, and the configuring and implementing of the work management system and the performance management system, as well as their supporting technology infrastructure. Training and knowledge transfer to staff are emphasized in all areas of activity. In addition, quality control and systems integration functions will be performed for all of the process control systems design, construction, commissioning, training and handover activities, covering all Water Supply and Water Pollution Control operating facilities.

Program integration and coordination (PIC) services support and manage every aspect of WBPP implementation, including those under the other work packages (contracts) discussed in this report. PIC is vital to the success of the Program and the achievement of its committed goals and objectives. The scope of the PIC assignment, the term of which coincides with completion of full WBPP implementation, was developed in Phase 1, and has been designed to minimize the use of consultants and maximize the use of staff resources. The approach taken to accomplish this was to identify the work to be done in Phase 2, to isolate those activities which require external resourcing, and to trim the days of effort to be acquired (by more than one-third) in order to ensure best use of consultants, an optimal degree of knowledge transfer to staff, and acceptable probability of success.

The PIC contract will incorporate prescribed deliverables, with charges to be based on time and materials to an upset limit (contract value). Appendix "F" to this report includes a table which shows the major PIC functions, the roles and resources to be provided under the contract, a brief description of the activities and responsibilities of each role/resource, the estimated number of hours of work required to complete the prescribed deliverables, and the average hourly rate for each role/resource.

The consultant selection process has been described in the contract recommendation report, titled "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program" (September 27, 1999). That report, which also lists the prescribed deliverables and the estimated ceiling cost for each, is one of the five contract award recommendation reports forwarded by The Works Committee to the same Council meeting as this information report. The proposed PIC assignment provides the appropriate resources to accomplish the required work at rates which are competitive based on comparison with Phase 1 rates for similar services and reasonable inflationary indexing. Clearly, it would have been preferable to have more than one proposal for the work. However, the process of qualification based selection addresses this eventuality by focusing on the ability and demonstrated experience of the proponent to carry out the assignment with a high probability of success, with attendant consideration of timeliness and budget. This rationale was described in Clause No. 5(g) of Report No. 9 of the Works and Utilities Committee (Council meeting of June 9, 10 and 11, 1999).

Contract "G" is for the provision of software products only and requires no provision for consultant services and corresponding rates.

It should be noted that the recommended contract awards incorporate the ability for the City to make adjustments, as work proceeds, to work package components and to specific resource requirements, within upset limits. This will ensure that the best overall value for money expended will be achieved, in terms of minimizing costs and maximizing the quality of the results.

Contract Performance

Contract performance for contracts "A" through "E" (process control systems) will be monitored in two ways. First, the WBPP Program Management Office, with the day-to-day support of the Process Control Systems Implementation Team, will review progress against planned design and implementation deliverables and address delays or performance problems as they are encountered. Second, major deliverables as they are developed must be signed off prior to approval of final invoice payment by the Technical Services Division, who will be represented on the Process Control Systems Implementation Team. Further performance management of these and all contracts will be performed through the functions of the Quality Assurance Team, as described in the section below titled, "Quality Assurance".

For contract "F", contract performance management is as for Contracts "A" through "E", described above. In addition, there are additional performance management provisions to be incorporated into the contract, as described in the contract award report ("Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program"). Those provisions effectively retain a portion of the fees for services, totaling approximately $800,000.00, in a Performance Fund from which those retained fees will be disbursed to the contractor as Program goals are achieved and demonstrated.

Under Contract "G", the SCADA Software contract, no services are provided, and, as a result, no corresponding services performance management component is included. Performance of the software itself is addressed in the warranty and support components of the proposal and will be included in the agreement.

Quality Assurance

Phase 2 will employ an adaptation of the Phase 1 Quality Assurance (QA) methodology. It will be designed to address the specific challenges of multiple, simultaneous, integrated workarea implementations across all Water Supply and Water Pollution Control organizational units and facilities. The QA methodology employs a ten-step cycle for the creation and pre-approval of detailed workplans (including interim and final deliverables), the monitoring of progress against those workplans, the establishment of quality control teams for purposes of deliverables review, feedback and acceptance, and the final review, acceptance and signoff of completed deliverables. The payment approval process will be integrated with the QA methodology to ensure payments are released only in accordance with completed effort and receipt of prescribed deliverables. Discussions are underway with senior representatives of the Audit Department to identify and operationalize the appropriate role of Audit in the overall QA process.

Conclusions:

This report is provided to Council, as directed by The Works Committee, to present supplementary information concerning the recommendations for contract awards to seven firms for process control preliminary and detailed design, SCADA software supply, and program integration and coordination services components necessary for the commencement of Phase 2, the major implementation phase, of the Works Best Practices Program. These contract recommendations are the result of formal procurement processes carried out in accordance with approved corporate practice, and are consistent with approved funding levels. It is necessary to proceed with these assignments at this time in order to comply with Council's reaffirmation of the Works Best Practices Program and to maintain progress against committed Program benefit goals.

Contact Name:

Jim Coe

Program Manager, Works Best Practices

Water and Wastewater Services Division

Telephone No. (416) 392-3141)

APPENDIX "A"

CONTRACT FOR:

Preliminary Design for R.C. Harris, R.L. Clark, F.J. Horgan, and Island Water Treatment Plants

RECOMMENDED FIRM:

The Greater Toronto Consulting Group

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "B"

CONTRACT FOR:

Preliminary Design for Water Transmission System

RECOMMENDED FIRM:

Simcoe Engineering Group Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS

APPENDIX "C"

CONTRACT FOR:

Detailed Design and Construction Management for Ashbridges Bay Treatment Plant

RECOMMENDED FIRM:

CH2M Gore & Storrie Ltd.

CONTRACT BASED ON LUMP SUM PAYMENTS FOR WORK COMPONENTS