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Review nixes sole-source Gateway Newsstands deal

Patricia Blythe peruses magazine racks in Toronto on Tuesday, April 3, 2012. Canadian magazine publishers lost $50 million in newsstands sales last year but industry polls into consumer habits hint at a brighter future.

Michelle Siu for The Globe and Mail/michelle siu The Globe and Mail

A contract for the operation of newsstands and kiosks within Toronto's subway system is expected to be thrown open to bidding as a result of a third-party review of the operation.

Released Sunday night, the review recommends that negotiations be concluded with the current contract-holder, Gateway, in favour of an open bidding process.

The multimillion-dollar contract became contentious in recent weeks as Gateway sought a 15-year, sole-source contract.

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Toronto Transit Comission Chair Karen Stintz tabled a notice of motion Monday that will could see the issue discussed at the next commission meeting, on March 27. At that meeting a two-thirds vote by commissioners will be needed to re-open the debate and then a second vote would be required to get staff to issue an RFP for the contract.

Ms. Stintz said in a release Sunday night that TTC staff predicated its position on the contract without fully recognizing that millions of dollars were at stake.

The controversy provoked a verbal tussle over the approval of the 15-year, sole-source contract between Ms. Stintz and Mayor Rob Ford, who has been critical of Ms. Stintz for sole-sourcing the leases.

Councillor Doug Ford, also a vocal critic of the plan to extend the contract with Gateway, said Monday he was pleased the TTC chair had made the right decision and will support a bidding process for the deal.

'It's a no-brainer," he said, adding later, "They are doing the right thing for the taxpayers of Toronto. You have to go out for an RFP, make it transparent, especially on a $50-million contract. "

Ms. Stintz argues that putting the contract out for competitive bids means the transit system will be out of pocket $3-million this year – money it must make up in other areas.

Mr. Ford countered that potential revenue to the TTC could have been lost by awarding a single-source contract. "We are going to have to agree to disagree on that, " he said.

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For her part, at Monday's meeting of the Toronto Transit Commission, Ms. Stintz said: "We have a 19-year relationship with Gateway. It is common to extend leases. Again, the whole issue has become issue has become quite political, unfortunately, so I think we do need to move forward with an RFP and I hope that we get on with it and we can close this issue off once and for all"

The disagreement between Ms. Stinz and the Fords played out in front of media at the end of January when Ms. Stintz crashed a news conference in Rob Ford's office, suggesting it was the only way she could hear what the mayor had to say.

Mr. Ford countered by offering to show reporters his cellphone records as proof he had tried to reach the TTC chair.

Mr. Ford had earlier gone public with his unhappiness over the contract, using a radio show to question the $50-million deal with the operator of the 65 Gateway outlets, two cafés, two bakeries and eight lottery booths.

Mr. Ford called the 10-year deal with a five-year extension "absolutely appalling" and vowed to "get to the bottom" of it.

Sam Davis, head of rival firm International News, has publicly stated that he would have offered a better deal to the TTC.

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Ms. Stintz responded to the offer from Mr. Davis by asking for a third-party review to compare the Gateway and International News proposals.

With files from Elizabeth Church

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