Request for Approval to Apply Proposal Fees and Break Fees on Gardiner Expressway Rehabilitation Section 4, Grand Magazine Street to York Street

Break fees are similarly meant to partially offset proponent costs, but they are made when a procurement is cancelled before it is awarded ("Break Fee"). The amount of the Break Fee is pro-rated based on the timing of the cancellation, to reflect the amount of work completed. These mechanisms were previously authorized by Council and used on the procurement for Gardiner Section 2 - Dufferin Street to Strachan Avenue, a Design-Build project that is nearing the end of the construction phase. The City's Owner's Engineer and Technical Advisor, Stantec Consulting Ltd., is currently advancing the design of Gardiner Section 4. Based on the current level of design and engineering completed, it is expected that Gardiner Section 4 will be delivered in two parts. Part 1: Grand Magazine to Spadina Avenue and Part 2: Spadina Avenue to York Street. The two-stage procurement for Part 1 and the subject of this report is targeted to begin with a Request for Qualifications in early 2026, followed by the Request for Proposal phase to which the Proposal Fee or Break Fee would apply. It is expected that construction will begin in 2027. The Design-Build delivery method passes construction risk to the contractor and encourages innovative construction methods to achieve the City's goals for the project. This method contributed to the successful delivery of Gardiner Section 2. In order for the City to evaluate the design element of proposals, proponents will be required to do significant design work (up to 60 percent) throughout the Request for Proposal procurement process. Qualified bidders capable of undertaking such projects expect Proposal Fees to partially compensate unsuccessful proponents for the effort expended on their proposal preparation. Similarly, a pro-rated Break Fee would also be expected in the unlikely event that the procurement is cancelled prior to contract award. The up-front cost to the City of such fees is justified by, among other things, the quality of proponents that would be willing to bid on the project, the progression of design through the procurement process and robust participation by proponents, as well as the benefits of shifting the design risk from the City to the successful proponent.

2. City Council directs that Confidential Attachment 1 remain confidential in its entirety, until the procurement processes for all sections of the Gardiner Expressway Rehabilitation Project are complete, as it contains commercial and financial information that belongs to the City of Toronto and has monetary value or potential monetary value.