Region's restricted bidding continues to drive up costs: study

News Dec 07, 2017 by Bill Jackson Kitchener Post

Contractors attending a business lunch put on by the Greater Kitchener-Waterloo Chamber of Commerce on Wednesday were asked a no-brainer during a presentation that followed.

“How many of you would rather be in an environment where you’re bidding against 3.7 compared to eight?” asked Brian Dijkema, work and economics program director at Cardus, a not-for-profit, non-partisan think tank.

The difference represents the average number of contractors no longer bidding on an infrastructure project commissioned by the Region of Waterloo after a closed tendering process took effect several years ago.

So now there are more than 50 per cent fewer, Dijkema said.

“And there are numerous projects that have only one bidder,” he added. “If you have only one bid, you’re not competing against anyone.”

Overall, the region used to draw from 91 bidders when it built infrastructure. Now that pool contains just 15, meaning that 16.5 per cent of former bidders now get 100 per cent of the work, Dijkema said.

Cardus, which released its annual study on the effects of closed tendering in Ontario, says restricted competition due to outdated labour laws in various provinces, including Ontario, is akin to letting go of a helium balloon — “prices go up and up.”

Its most recent study Up, Up and Away compares the costs of similar infrastructure projects in municipalities operating under a restrictive bidding process, versus those using an open one.

According to findings, the gap between the price of the winning bid and runner up is 105 per cent higher in the restricted jurisdictions.

Under the Ontario Labour Relations Act, municipalities, utilities and school boards can be unionized by craft unions and are deemed to be “construction employers,” restricting them to allow only certain companies to bid on municipal construction projects, such as roads, bridges, water treatment plants and recreational facilities.

Bidding in some cases is restricted to contractors who have the experience, financing and safety record to complete the work, but in other instances, restrictive tendering is based solely on union affiliation.

In 2014, two regional workers putting up a shed at the Baden library signed cards with the International Brotherhood of Carpenter and Joiners, certifying the region as a construction employer. The region wanted to be deemed a nonconstruction employer but was denied in a ruling by the Ontario Labour Relations Board in 2014.

When this occurs, as it has in jurisdictions such as Toronto, Hamilton, Sault Ste. Marie and the Waterloo Region, the municipality utility or school board may only hire contractors affiliated with that craft union to perform work that is within that craft union’s scope of work.

Such a law was useful back in the 1970s when municipalities looking to build major infrastructure only had one or two players capable of doing the work. But in 2017, that simply isn’t the case anymore, said Dijkema.

Health and safety laws have been modernized and closed tendering shuts out many qualified companies that are capable of doing the jobs.

“What this means is local councillors have zero certainty that they’re getting the best bang for their buck,” he said.

According to the study, closed tendering affects $1 billion worth of work each year in Ontario and drives up the cost of infrastructure projects in Waterloo Region by as much as 30 per cent.

With a provincial election hanging in the balance, the issue is a timely one, added Dijkema, who said "any party worth its salt should have the public interest as its primary interest."

“We believe that public work should not be distributed based on private choice.”

Representatives from non-unionized contractors’ associations were at Wednesday’s presentation calling on local politicians to speak up.

Giovanni Cautillo, executive director of the Ontario Sewer and Watermain Construction Association, said tendering restrictions being applied to civil construction projects was never the original intent of the legislation.

“Our concern is that sewer and water main contractors, who have been successfully performing this work for decades, won’t be allowed to keep working on the Region of Waterloo projects unless elected officials step up and address this issue. The question is, why aren’t they?”

Cautillo says local politicians should be speaking out and providing leadership on the issue.

Local contractors have raised the issue at the region, but no elected officials seem concerned about the fairness or the waste of taxpayer dollars, said Mike Doupe, vice president of McLean Taylor Construction limited, a member of the Conestoga Heavy Construction Association.

Regional chair Ken Seiling, who was on hand for Wednesday’s presentation, declined to comment on the issue, but said council was considering a presentation made by non-unionized contractors at a recent meeting.

Change ultimately rests at the provincial level, said Dijkema, adding that large organizations serving the public interest, including Ontario Power Generation and the Toronto Community Housing Corporation, are still prone to the outdated law, subjecting Ontarians to higher utility and social housing construction costs.

 

 

Region's restricted bidding continues to drive up costs: study

News Dec 07, 2017 by Bill Jackson Kitchener Post

Contractors attending a business lunch put on by the Greater Kitchener-Waterloo Chamber of Commerce on Wednesday were asked a no-brainer during a presentation that followed.

“How many of you would rather be in an environment where you’re bidding against 3.7 compared to eight?” asked Brian Dijkema, work and economics program director at Cardus, a not-for-profit, non-partisan think tank.

The difference represents the average number of contractors no longer bidding on an infrastructure project commissioned by the Region of Waterloo after a closed tendering process took effect several years ago.

So now there are more than 50 per cent fewer, Dijkema said.

“And there are numerous projects that have only one bidder,” he added. “If you have only one bid, you’re not competing against anyone.”

Overall, the region used to draw from 91 bidders when it built infrastructure. Now that pool contains just 15, meaning that 16.5 per cent of former bidders now get 100 per cent of the work, Dijkema said.

Cardus, which released its annual study on the effects of closed tendering in Ontario, says restricted competition due to outdated labour laws in various provinces, including Ontario, is akin to letting go of a helium balloon — “prices go up and up.”

Its most recent study Up, Up and Away compares the costs of similar infrastructure projects in municipalities operating under a restrictive bidding process, versus those using an open one.

According to findings, the gap between the price of the winning bid and runner up is 105 per cent higher in the restricted jurisdictions.

Under the Ontario Labour Relations Act, municipalities, utilities and school boards can be unionized by craft unions and are deemed to be “construction employers,” restricting them to allow only certain companies to bid on municipal construction projects, such as roads, bridges, water treatment plants and recreational facilities.

Bidding in some cases is restricted to contractors who have the experience, financing and safety record to complete the work, but in other instances, restrictive tendering is based solely on union affiliation.

In 2014, two regional workers putting up a shed at the Baden library signed cards with the International Brotherhood of Carpenter and Joiners, certifying the region as a construction employer. The region wanted to be deemed a nonconstruction employer but was denied in a ruling by the Ontario Labour Relations Board in 2014.

When this occurs, as it has in jurisdictions such as Toronto, Hamilton, Sault Ste. Marie and the Waterloo Region, the municipality utility or school board may only hire contractors affiliated with that craft union to perform work that is within that craft union’s scope of work.

Such a law was useful back in the 1970s when municipalities looking to build major infrastructure only had one or two players capable of doing the work. But in 2017, that simply isn’t the case anymore, said Dijkema.

Health and safety laws have been modernized and closed tendering shuts out many qualified companies that are capable of doing the jobs.

“What this means is local councillors have zero certainty that they’re getting the best bang for their buck,” he said.

According to the study, closed tendering affects $1 billion worth of work each year in Ontario and drives up the cost of infrastructure projects in Waterloo Region by as much as 30 per cent.

With a provincial election hanging in the balance, the issue is a timely one, added Dijkema, who said "any party worth its salt should have the public interest as its primary interest."

“We believe that public work should not be distributed based on private choice.”

Representatives from non-unionized contractors’ associations were at Wednesday’s presentation calling on local politicians to speak up.

Giovanni Cautillo, executive director of the Ontario Sewer and Watermain Construction Association, said tendering restrictions being applied to civil construction projects was never the original intent of the legislation.

“Our concern is that sewer and water main contractors, who have been successfully performing this work for decades, won’t be allowed to keep working on the Region of Waterloo projects unless elected officials step up and address this issue. The question is, why aren’t they?”

Cautillo says local politicians should be speaking out and providing leadership on the issue.

Local contractors have raised the issue at the region, but no elected officials seem concerned about the fairness or the waste of taxpayer dollars, said Mike Doupe, vice president of McLean Taylor Construction limited, a member of the Conestoga Heavy Construction Association.

Regional chair Ken Seiling, who was on hand for Wednesday’s presentation, declined to comment on the issue, but said council was considering a presentation made by non-unionized contractors at a recent meeting.

Change ultimately rests at the provincial level, said Dijkema, adding that large organizations serving the public interest, including Ontario Power Generation and the Toronto Community Housing Corporation, are still prone to the outdated law, subjecting Ontarians to higher utility and social housing construction costs.

 

 

Region's restricted bidding continues to drive up costs: study

News Dec 07, 2017 by Bill Jackson Kitchener Post

Contractors attending a business lunch put on by the Greater Kitchener-Waterloo Chamber of Commerce on Wednesday were asked a no-brainer during a presentation that followed.

“How many of you would rather be in an environment where you’re bidding against 3.7 compared to eight?” asked Brian Dijkema, work and economics program director at Cardus, a not-for-profit, non-partisan think tank.

The difference represents the average number of contractors no longer bidding on an infrastructure project commissioned by the Region of Waterloo after a closed tendering process took effect several years ago.

So now there are more than 50 per cent fewer, Dijkema said.

“And there are numerous projects that have only one bidder,” he added. “If you have only one bid, you’re not competing against anyone.”

Overall, the region used to draw from 91 bidders when it built infrastructure. Now that pool contains just 15, meaning that 16.5 per cent of former bidders now get 100 per cent of the work, Dijkema said.

Cardus, which released its annual study on the effects of closed tendering in Ontario, says restricted competition due to outdated labour laws in various provinces, including Ontario, is akin to letting go of a helium balloon — “prices go up and up.”

Its most recent study Up, Up and Away compares the costs of similar infrastructure projects in municipalities operating under a restrictive bidding process, versus those using an open one.

According to findings, the gap between the price of the winning bid and runner up is 105 per cent higher in the restricted jurisdictions.

Under the Ontario Labour Relations Act, municipalities, utilities and school boards can be unionized by craft unions and are deemed to be “construction employers,” restricting them to allow only certain companies to bid on municipal construction projects, such as roads, bridges, water treatment plants and recreational facilities.

Bidding in some cases is restricted to contractors who have the experience, financing and safety record to complete the work, but in other instances, restrictive tendering is based solely on union affiliation.

In 2014, two regional workers putting up a shed at the Baden library signed cards with the International Brotherhood of Carpenter and Joiners, certifying the region as a construction employer. The region wanted to be deemed a nonconstruction employer but was denied in a ruling by the Ontario Labour Relations Board in 2014.

When this occurs, as it has in jurisdictions such as Toronto, Hamilton, Sault Ste. Marie and the Waterloo Region, the municipality utility or school board may only hire contractors affiliated with that craft union to perform work that is within that craft union’s scope of work.

Such a law was useful back in the 1970s when municipalities looking to build major infrastructure only had one or two players capable of doing the work. But in 2017, that simply isn’t the case anymore, said Dijkema.

Health and safety laws have been modernized and closed tendering shuts out many qualified companies that are capable of doing the jobs.

“What this means is local councillors have zero certainty that they’re getting the best bang for their buck,” he said.

According to the study, closed tendering affects $1 billion worth of work each year in Ontario and drives up the cost of infrastructure projects in Waterloo Region by as much as 30 per cent.

With a provincial election hanging in the balance, the issue is a timely one, added Dijkema, who said "any party worth its salt should have the public interest as its primary interest."

“We believe that public work should not be distributed based on private choice.”

Representatives from non-unionized contractors’ associations were at Wednesday’s presentation calling on local politicians to speak up.

Giovanni Cautillo, executive director of the Ontario Sewer and Watermain Construction Association, said tendering restrictions being applied to civil construction projects was never the original intent of the legislation.

“Our concern is that sewer and water main contractors, who have been successfully performing this work for decades, won’t be allowed to keep working on the Region of Waterloo projects unless elected officials step up and address this issue. The question is, why aren’t they?”

Cautillo says local politicians should be speaking out and providing leadership on the issue.

Local contractors have raised the issue at the region, but no elected officials seem concerned about the fairness or the waste of taxpayer dollars, said Mike Doupe, vice president of McLean Taylor Construction limited, a member of the Conestoga Heavy Construction Association.

Regional chair Ken Seiling, who was on hand for Wednesday’s presentation, declined to comment on the issue, but said council was considering a presentation made by non-unionized contractors at a recent meeting.

Change ultimately rests at the provincial level, said Dijkema, adding that large organizations serving the public interest, including Ontario Power Generation and the Toronto Community Housing Corporation, are still prone to the outdated law, subjecting Ontarians to higher utility and social housing construction costs.