Council Member Inquiry/Motion Form

Demande de renseignements d’un membre du Conseil /Formulaire de motion


From/Exp. :


Councillor Bloess

Date :


27 January 2010


File/Dossier :


CC 03-10


To/Dest. :


City Manager

Deputy City Manager, Infrastructure Services and Community Sustainability

City Clerk and Solicitor


Subject/Objet :


Conditions in the contract for Orgaworld


Inquiry/Demande de renseignements



What are the conditions in the contract for Orgaworld to be day-one readiness and operating?


Are there penalty clauses in the contract and what are the escape clauses?





Response to be listed on the Planning and Environment Committee Agenda of February 23, 2010  and the Council Agenda of February 24, 2010.



The phrase, “Day-one readiness” is addressed in the Orgaworld service contract as a Commencement Date. 


The original contract provided for a Commencement Date of January 1st, 2010, subject to any extension proposed by notice from Orgaworld to the City of Ottawa and agreed to by the City.  The timeline had to be extended as a result of the relocation of the proposed Orgaworld facility to the property that Orgaworld is currently occupying.  The resulting delay in construction of the Orgaworld facility required the Commissioning Date, Commencement Date and Drop Dead dates to be changed as per an Amending Agreement that was executed on February 4th, 2010.


The current Commencement Date is April 1st, 2010.  If Orgaworld is not in a position to commence full operations by April 1, 2010, Orgaworld is responsible for all incremental costs incurred by the City as a result of this delay. 


A Commissioning Date was incorporated into the contract to allow for testing of the facility (processing of up to 100 tonnes/day) prior to full operations on the Commencement Date (400 tonnes/day).  The original contract included similar provisions imposing delay payments upon Orgaworld for incremental costs incurred by the City as a result of Orgaworld not meeting the Commissioning Date (October 1, 2009, later re-negotiated as January 27, 2010, with actual commissioning being January 28, 2010).


The penalty clause with regards to failing to meet the Commencement Date is, as stated above, the requirement to pay for all incremental costs incurred by the City as result of the delay.


The agreement also contains a Drop Dead Date of June 1st, 2010 (originally, March 31, 2010).  If the Orgaworld facility is not operating at full processing capacity by June 1, 2010, the City, may terminate the contract in its entirety, by notice having immediate effect, without any cost, obligation or liability to the City.  In the case where Orgaworld knows it cannot meet the Drop Dead Date, it must notify the City. 


The contract also contains provisions that allow the City to terminate the contract for convenience at any time after the Commencement Date but subject to penalties and a one-year notice period.  The earliest date the City may terminate the Orgaworld contract is at the end of Orgaworld’s first year of operations..  The penalties payable are based on a sliding scale formula whereby the earlier the contract is terminated, the higher the penalty costs payable.


Despite these revisions to the original contract, it has been possible to implement the program in accordance with Council’s direction for a January 1, 2010 start date, within the now approved budget.