Montreal Mayor Gerald Tremblay says he's cancelling the scandal-ridden water-meter contract and that two top bureaucrats are leaving their posts.

The mayor made the announcement Tuesday afternoon at city hall a day after an auditor's report highlighted cost overruns, poor oversight and an inadequate bidding process for the $356 million contract.

"In the coming weeks and months, we will speak with the GéNIeau firm to see how we can cancel this contract given the information that we have today," the mayor told a news conference.

Two city managers left their posts after meeting the mayor: director-general Claude Leger and Robert Cassius de Linval, chief director of corporate services.

"They agreed, just as I did, that the situation described by the auditor general was indefensible," said the mayor.

"Following our meeting we decided by mutual consent that it would be better that they leave their posts."

Assistant director-general Rachel Laperriere will take over for her boss immediately, said Tremblay.


The city auditor's report, tabled on Monday evening, says the contract to install water meters in non-residential buildings would have actually cost taxpayers more than $600 million, not the $356 million that was initially forecast in 2004.

Auditor-general Jacques Bergeron said the contract was awarded to the GéNIeau consortium without giving other firms a chance to submit potentially-lower bids.

"We can only conclude that the contract ... did not encourage the pursuit of the best price," the 175-page report concluded.

The mayor insisted he and the executive committee were not kept abreast of the cost overruns. He said the city would take immediate measures to:

  • Tighten the process of awarding contracts to the private sector
  • Review the role of the private sector in preparing plans and managing contracts
  • Make sure that elected officials are better informed about all contracts.

No mention of scandal

Bergeron's report made no mention of the scandal that has surrounded Tony Accurso, whose Dessau firm was co-managing the contract as part of the consortium. The mayor suspended the contract after some of Accurso's other firms were raided earlier this year on allegations of tax fraud.

One of the companies, Simard-Beaudry Construction Inc., belonged to the water-meter consortium.

It was later revealed that the mayor's former right hand man, Frank Zampino, vacationed on Accurso's yacht and was later hired by Dessau after leaving politics last year.

Zampino quit Dessau this spring when the connection was reported.


The city awarded the contract to GéNIeau in 2007 to more precisely measure water usage in city.

Some 2 million cubic metres of water are distributed in Montreal every day but studies indicate that 20 to 40 per cent of it is lost because of aging infrastructure.

The new meters would be part of a larger plan to replace the infrastructure and revamp water-treatment and distribution facilities.

But Bergeron says the meter project was flawed from the start.

He says elected officials hired GéNIeau before they were properly informed about exactly how the consortium was managing the project.

The auditor says that certain aspects of the program could in fact have been run by existing city staff instead of paying millions to outside firms.

Initial costs in 2004 were pegged at $355.8 million, but soon ballooned to $423.6 million when costs of managing the project over 25 years were factored in.

The true costs, including maintenance, could actually be upwards of $600 million, said the report.

What's more, the city would have been required to replace all of the water meters after 15 years, adding even more costs to the project.

Sweeping Audit

The auditor-general's office examined 16,000 pages of documents and interviewed 27 people including elected officials and bureaucrats.