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GNWT falls flat on BIP

Bid quotes support Northern contractors

Mike W. Bryant
Northern News Services

Yellowknife (Aug 02/02) - Contractors are saying recently posted quotes on bids for Phase II construction of the North Slave Correctional Facility show that Northern firms are not to blame for ballooning project costs.

NWT Construction Association's BIP committee chair, Keith Houghton, said the proof is in the pudding after comparing the price differences between Northern and southern firms making bids for Phase II of The North Slave Correctional Facility. - Mike W. Bryant/NNSL photo

Public Works Minister Vince Steen told the legislative assembly last June his department believed Northern contractors routinely bid the maximum 20 percent allowed under the government's long-standing Business Incentive Policy, in order to win contracts at the highest price possible.

Cabinet rescinded the BIP on Phase II construction of the North Slave Correctional Facility last May after projected costs for the new jail rose from $35 million to over $40 million.

Steen said cabinet wanted to test the waters by killing the BIP on Phase II to see if it could attract cheaper bids from southern contractors.

Quotes from bids appearing on the NWT Construction Association's web site, however, appear to indicate otherwise.

While most of the firms that made bids are from down south, in many instances the numbers supplied by Northern contractors are on par or even lower than their southern counterparts.

Steen was available for comment, and Finance Minister Joe Handley did not return phone calls as of press time.

The most expensive contract is for supplying mechanical services to the new jail. Out of the three firms that made bids -- two are from down south -- Yellowknife's JSL Mechanical was the lowest at $3,371,205.

The next lowest bid, by Comstock Canada, which has offices throughout southern Canada, came in at $4,397,000.

President of the NWT Construction Association, Bill Aho, said the numbers show that Northern contractors are competitive.

"Any person that were to indicate that, because the BIP wasn't included in this particular tender, that the reason Northern prices are lower are because Northern contractors sharpened their pencils is dreaming," said Aho.

"It supports the argument that the Northern contractors have been making all along," added Keith Houghton, chair of the NWT Construction Association's BIP committee.

"That is that the BIP does not cost the government 20 per cent like they're screaming, and that Northern contractors are not gouging the government. They're quoting competitively."

Houghton is also owner of JT Electric, who made a bid of $1,725,000 for Phase II electrical wiring of the facility.

Their bid was the second lowest out of five companies. Canem Systems Ltd., a company from Red Deer, Alta., had the lower bid at $1,639,700.

Houghton said if the BIP were in place, JT Electric would be awarded the contract, but not at the 20 per cent premium. Their bid would only cost the government an additional eight per cent or an extra $87,000.

"For that eight per cent you would get seven man-years worth of work in the North, and $1.7 million worth of revenue flowing through the North," said Houghton.

"Whereas Canem, most of their money, all the man-years, taxable benefits, most of it goes down South and we don't get any of it."

Instead of blaming contractors for rising projects costs, said Houghton, the government should have taken into account the volatile marketplace in recent years. Costs have gone up since the project started two years ago.

Tenders for Phase II have yet to be awarded. Public Works acting deputy minister Sue Bevington said the numbers are still under review, and could not comment on them at this time.