Que. accused of protectionism in Metro contract

Quebec is sending a message of protectionism by suspending a tender call to replace Montreal's aging subway cars and contemplating a special law to award a contract, says a Spanish firm that wants to submit a bid.

A tender call that was to be issued Thursday for new Montreal subway cars has been delayed for seven days to give Quebec's Bombardier and a French company a chance to negotiate a contract.

Transportation Minister Sam Hamad suggested that skipping the usual bidding process would eliminate a potential two-year delay in the subway project. In the past four years,legal challenges by various companies involved in the process have caused 36 months of delays, he told reporters in Quebec City.

The province was motivated to acton the subway projectbecause of the urgent need to replace the cars, which date back to 1963, Hamad said.

"The Quebec government is looking at all possible solutions to finally respond to the urgent situation of the Montreal Metro in the interests of the passengers and the citizens of Quebec," Hamad said.

But Spanish railway firm CAF, for Construcciones y Auxiliar de Ferrocarriles,says it wants to meet with Premier Jean Charest, sayingit's in the public interest to proceed with atender call.

Although Quebec is the leading proponent of a free-trade agreement with the European Union, the province is contemplating a special law that would send an extremely negative protectionist message,the Spanish company said.

"We also believe that the issue of emergency to bypass the process of international competitive bidding must not be invoked," Jesus Esnaola, general manager of international affairs for CAF, said in a news release.

He said CAF and other manufacturers can meet the original delivery schedule of Montreal's transit authority.

"CAF is committed to meeting the requirement of local content. Therefore, the creation or maintenance of employment related to this important project does not constitute an argument that can properly be invoked to eliminate CAF from the tender process."

Fewer subway cars possible

Montreal La Presse reported that the province, City of Montreal and the Socit de transport de Montreal will use the delay to negotiate a smaller contract with a joint venture between Bombardier and French railway manufacturer Alstom.

The contract would be for 500 cars, instead of the 1,053 worth about $3.4 billion US that attracted the interest of CAF and a Chinese company.

'This positive announcement would be well timed for a government that has been plagued with scandals of late.' Benoit Poirier, Desjardins Securities

Benoit Poirier of Desjardins Securities said he believes the province will do everything in its power to avoid the delay of 18 to 24 months that would result from a tender call.

"Moreover, this positive announcement would be well timed for a government that has been plagued with scandals of late," he wrote in a report.

The province's move comes ahead of an expected byelection to replace Claude Bechard, a Liberal member of the national assembly who died after a battle with pancreatic cancer.

Bechard had spearheaded the Bombardier contract because its La Pocatire assemblyplant was in his riding.