OTTAWA -- The Ford government will consider imposing a public inquiry into Ottawa’s LRT debacle, sources tell CTV News Ottawa.

Cabinet could look at a number of measures to bring renewed public accountability to a project that is clearly not working, according to a senior provincial government source.

Cabinet could look at withholding further millions of dollars from the LRT project.

“This is not just the city of Ottawa’s money. This is Ontario’s money too,” the source said.

City council narrowly voted against a judicial inquiry into the LRT project on Wednesday. The 13-10 vote was Coun. Catherine McKenney’s second attempt to order an inquiry.

“This might look like a victory for Mayor Jim Watson, but it’s not over,” the source said about the council vote.

In a statement to CTV News Ottawa, a spokesperson for transportation minister Caroline Mulroney's office confirmd that "all options are on the table," saying the province is concerned about the system.

"With Ottawa City Council’s recent rejection of a judicial inquiry into problems plaguing Phase 1 of the LRT, we are increasingly concerned with the City’s ability to carry out future phases of work. Additionally, we have continuously heard from industry stakeholders and City councilors who have expressed concern and frustration about the execution of Phase 1," the statement said.

"Given the size and scope of Stage 2, we need to have full confidence that the City will be able to successfully deliver. As a result, we are looking at options that will increase the province’s oversight of the project, in an effort to protect taxpayers and transit riders. This may include a judicial inquiry, a review by Ontario’s Auditor General and further measures that may require provincial legislation.

"All options are on the table."

The LRT has been shut down since Sept. 19 after it derailed for the second time in six weeks. Partial service is due to resume on Friday.

The Ontario government has already threatened to withhold a $60 million hold back from Stage 1 of the project, which opened in 2019.

The province is contributing $1.2 billion to Stage 2 of the light rail project, and contributed $600 million to Stage 1.

'No contact from provincial officials,' Watson says

Speaking to reporters following Wednesday's city council meeting, Mayor Jim Watson said he had not heard anything from the province regarding the possibility of an inquiry.

"We've had no contact from provincial officials to do with any potential inquiry," Watson said, noting that Premier Doug Ford said complimentary things about how the city was handling LRT when he was last in Ottawa.

"The cost, if the province imposes, is borne by the provincial government and not the city. I think that you saw here today that the desire of council is to let the independent auditor general take a top-to-bottom review of all of the safety elements of the LRT project and report back to us in an efficient and expedited fashion."

City manager Steve Kanellakos said having a judicial inquiry and an audit happening at the same time would stretch city staff to their limits and could distract from the ongoing work on the LRT.

"There's no question that being committed to meet the requirements of the auditor general in addition to a judicial inquiry is going to distract and require a lot of attention by our senior managers, not only at OC Transpo, but across the whole organization in various departments who were engaged in that process over the last 10 years," he said.

Kanellakos said there could be millions of documents that could potentially be involved at multiple steps of both the auditor general's investigation and a potential judicial inquiry.

"My concern is that if you're into this double jeopardy process, if you want to call it that, or simultaneous process, we're going to have key staff at the city effectively distracted, trying to keep pace with the legal requirements to come up with the information and be present for interviews and all of the other things they have to do, to meet the requirements of the judicial inquiry and to meet the requirements of the auditor general."

'A blow to our reputation': McKenney

Reacting to the news as it broke, McKenney told Newstalk 580 CFRA's "Ottawa Now with Kristy Cameron" that they were worried about the possibility of other levels of government getting involved.

"I wanted other levels of government to see that we were taking responsibility for what happened as a council and we were getting to the bottom of it ourselves. Now, it looks like another level of government is doing that for us, potentially," McKenney said.

"It is a blow to our reputation. This light rail system has been an embarrassment for the city of Ottawa. People know that. It's why they're demanding answers and today council said no," McKenney added. "This is the result of that. Now we have another level of government stepping in, potentially, and saying, 'Now, we will do it for you.'"

McKenney said they would welcome a judicial inquiry no matter where it comes from.

"I really believe that we need that so that we are not here a year from now, five years from now, with the same issues in Stage 2."