Written By Yannick Beaudoin, Alexis Fol and Chloe Cho

Québec continues to grapple with a metaphorical “perfect storm” in its infrastructure and project world. Several factors converge at the same time, such as:

• Increased Demand for Public Infrastructure: Across sectors—social, renewable energy, power, public transit, and transportation—Québec experiences heightened demand for infrastructure projects.
• Worforce Shortage and Cost Pressures: A shortage of workforce, coupled with inflation, rising interest rates and supply chain issues and costs, poses significant challenges.
• Complexity and Risk Aversion: Projects grow increasingly intricate, involving multiple stakeholders, regulatory requirements, and technical aspects. Market participants hesitate to take unmitigated risks in this complex environment, involving an increased number of stakeholders.

Faced with such a storm, the Québec government is proposing some solutions to address the challenges.

On May 9, 2024, Québec witnessed a significant legislative development with the tabling of two crucial bills aimed at transforming the province's public infrastructure projects. Ministers Geneviève Guilbault and Jonatan Julien introduced Bill-61 and Bill-62, respectively, each proposing strategic changes to how major infrastructure projects are procured and executed.

Bill-61, introduced by Minister Guilbault, seeks to establish Mobilité Infra Québec, a new state agency dedicated to enhancing public transit project management.

On the other hand, Bill-62, spearheaded by Minister Julien, focuses on diversifying procurement strategies and increasing agility in the execution of public infrastructure projects by various governmental bodies.

These initiatives collectively represent a pivotal shift in Québec’s approach to developing its public infrastructure landscape.

Highlights of Bill 61

Bill-61 outlines several key changes aimed at enhancing the planning and execution of public transit infrastructure:

• Establishment of Mobilité Infra Québec: A new legal entity that acts as a mandatary of the state, governed by the Act respecting the governance of state-owned enterprises.
• Primary Mission: To perform opportunity analysis, planning, and implementation of complex transportation projects as assigned by the government.
• Scope of Projects: This includes the construction, overhaul, or repair of transportation-related buildings or civil engineering works, and the development or enhancement of intelligent transportation systems.
• Exclusive Jurisdiction and Powers: Mobilité Infra Québec will have exclusive control over the planning and execution of specified complex transportation projects.
• Partnerships and Subsidiaries: It can form partnerships or establish subsidiaries to manage these projects, with the subsidiary inheriting all powers and obligations of Mobilité Infra Québec.
• Maintenance and Operation: The agency is not typically responsible for the maintenance or operation of transportation infrastructure unless specified otherwise.

Highlights of Bill 62

Bill-62 introduces significant updates to the procurement and management of major public infrastructure projects in Québec:

• Introduction of Partnership Contracts: Under the Act respecting contracting by public bodies, Bill-62 introduces a new type of contract termed a "Partnership Contract." This contract allows public bodies to delegate to private partners the responsibilities of designing, constructing, and potentially financing, operating, or maintaining public infrastructure.
• Collaborative Approach: Partnership Contracts mandate a collaborative approach between public and private entities. This includes bilateral workshops, resource pooling, and shared decision-making concerning the project’s risks, savings, profits, and losses.
• Regulatory Guidance: Details of the collaborative approach will be further defined by a regulation from the Treasury Board, ensuring that each partnership adheres to a standardized framework yet allowing for project-specific adaptations.
• Flexibility in Public Tenders: Public bodies will have the flexibility to define the criteria and conditions for public tenders under these contracts. This aims to optimize the value derived from public infrastructure projects by incorporating innovative, collaborative procurement strategies.
• Legislative Amendments for Implementation: Bill-62 also amends existing legislation to accommodate these Partnership Contracts, aligning them with the flexibility typically associated with public-private partnerships.

Potential Implications for the Infrastructure Sector

• Efficiency and Cost-Reduction: In theory, a streamlined process under Mobilité Infra Québec will reduce transit project timelines and costs. As projects grow more complex, costly and urgent, the new legislation could expedite project delivery. The bills target the slow and costly nature of current project implementations by introducing a streamlined framework for decision-making and project management within a single, specialized entity.
  
  It will also be interesting to monitor whether the new legislative framework will allow for (or move the parties to agree to) an accelerated alternative dispute resolution process allowing private partners to receive payments on undisputed amounts while the disputes move forward.
• Strategic Partnerships: The new legal frameworks must be understood by bidders and stakeholders to ensure the bills deliver on its promises. As stakeholders become familiar with the concepts, progressive procurement models will force public authorities and private partners to seek more collaborative solution to real issues.
• Opportunities for New Business: Public authorities clearly need new infrastructure projects to be completed and private partners are willing to proceed provided that the allocation of risks is more in line with current realities. In order to remain competitive, private partners may need to reduce contingency reserves, assuming that the collaborative approach bears results.

What’s Next

As the legislative session approaches its summer recess on June 7, 2024, the timeline for the adoption of both bills remains tight. The coming months will be crucial in determining the trajectory of these transformative measures.