The cancellation of Montreal's controversial water meter contract could cost 10 times more than initially announced by the city.

The firm that lost the contract is now billing the city for $33.8 million, up from the $3 million figure Mayor Gerald Tremblay announced as a cancellation cost weeks before the 2009 election.

The GENIeau consortium is threatening that its fee could be even higher if it has to fight the matter in court.

Controversial deal

The $356-million water meter deal, the largest contract ever awarded by the city of Montreal, was cancelled by the mayor in 2009 because of allegations the bidding process was rigged.

The city wanted to install 30,000 water meters in Montreal companies and monitor water usage remotely with a private company (GENIeau) maintaining and overseeing the meters and software for 25 years.

Last year there were allegations that the city overpaid by $150 million.

Frank Zampino, who sat on the city's Executive Commitee when the contract was awarded, resigned from his position with one of the companies involved in the consortium, after confirming he had spent time on a yacht owned by Antonio Accurso.

When the contract was finally cancelled, Projet Montreal leader Richard Bergeron said cancellation fees would likely be $25 million, and not the $3 million that Mayor Tremblay insisted would be paid.

Compensation demands

The city of Montreal says it has received the thousand-page compensation request, and its legal team will study it before any city officials comment on the matter.

GENIeau is claiming it already incurred $2,732,000 for research, inventory, legal fees, and the costs of preparing its compensation claim.

It is also asking for $28,234,000 as the value of work already executed, namely the information and communications system.

The firm also wants $2,850,000, the equivalent of one percent of the total value of the contract.

Opposition reacts

Opposition leaders at city hall were quick to denounce the mayor after GENIeau's request for compensation was made public.

"It's a very bad time because we have to pay for the negligence and the incompetence of the Tremblay administration," said Vision Montreal leader Louise Harel.

Projet Montreal leader Richard Bergeron said taxpayers should not be on the hook for such a large sum of money.

"Thirty-four million dollars is a huge amount of money. And for what? For nothing," said Bergeron.