Transport Committee on June 6th, 2013

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

So open competition: yes?

[Clyde Sigurdson]

Open competition, absolutely yes.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Mr. Miller?

[Harvey Miller]

Absolutely.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Mr. Perrin?

[Dennis Perrin]

Absolutely.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Mr. Blakely, I'll give you a chance. Are your members prepared to engage in the same competition, or do you support the labour monopoly?

[Robert Blakely]

We support competition. We engage in competition.

In the case of the City of Hamilton, having made itself a construction employer under the provisions of the act, it's bound by its collective agreement to contract in accordance with the act—for carpenters only.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Toet, you have seven minutes.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Thank you, Mr. Chair.

I want to welcome our guests here. I just want to start with some clarification.

Mr. Sigurdson, I had talked to you a while ago, back in Winnipeg, and invited you to come and join our committee as the president of Ken Palson Enterprises Ltd. At that time, I had no idea even that you had anything to do with Merit construction.

I think it's important that's on the record, that the Merit Contractors Association.... That was not an invite that was placed to you on the basis of that but as a local construction company that I know had some concerns about some of the tendering processes. I just feel it's important that's on the record.

I want to start with a question that I've asked several of the witnesses here who have come forward. It's very much in regard to Mr. Blakely's surmising, based on the evidence, that this whole process has been about low bid. I've asked this question of almost everybody, and I also want to ask it of the people who are here today.

If all things are equal from a company as far as capability, quality, etc., are concerned, does price become the only factor even then? Or should historical factors weigh in, such as having been on a site before?

I use the example of an expansion on a hospital. There's a certain familiarity with that hospital, a certain familiarity with the needs of building a particular operating room or whatever it might be. I use the example of an operating room, where you want continuity from one operating room to another to another, so that there are some familiarities for the nurses and for the doctors who are working in there.

Would you see that as part of the process, where, everything being equal, somebody could have a particular knowledge of a particular project area or particular structure, and that would also be part of the process?

[Clyde Sigurdson]

I believe this happens a fair amount in the private sector, with some contractors you work with. If you've been doing a job for them and your prices are very similar, for a matter of 5¢ you're not going to go to the low bid. That practice is very good if you're qualified and you're open to do it. But if you've been doing that work for a long time for a certain customer, I think there should be nothing wrong with taking that customer and staying with that work.

[Robert Blakely]

A whole bunch of tender evaluation systems actually have those sorts of things built into them. If you're building 100 kilometres of road, 40 kilometres a season, you bid the entire road so they can stockpile the material, and they'll have the workforce and the equipment. You can actually get your costs down. If somebody knows how to do that style of work, then they're perhaps the preferred bidder over somebody who would be doing it for the first time.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Mr. Perrin.

[Dennis Perrin]

For the record, at no point would we ever advocate for the lowest bidder or the lowest cost. Obviously, doing that could impact quality. All of the things you mentioned weigh significantly into the decision-making process within tendering. Other factors to take into account are things like health and safety. Those are paramount in the construction industry in this day and age, and the safety of our members is certainly the number-one priority.

Back to the question of competition and some of the items that the committee is wrestling with, we continue to say that we would absolutely never say that you want to go towards the lowest bidder. Lowest cost doesn't mean the cheapest at the end of the day, as even Mr. Blakely has said. But in these particular types of agreements, specifically in Manitoba, it's the same end result in that you've taken the pool of a potential workforce from what it could be into what it is because of the restrictions specifically based on union affiliation. That's where we say this is not fair to Canadian taxpayers.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Mr. Miller, are the members of the Merit Contractors Association in Manitoba held to exactly the same safety standards and regulations as any other construction company in Manitoba?

[Harvey Miller]

Yes, they are. In order to bid on any of the government projects in Manitoba, all companies are required to be COR certified. It's a safety standard, and they're all certified to the same standard in order to bid.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

I'm quite familiar with COR certification from my own work in Manitoba, so there's a common playing field there as far as safety and health issues go, also.

Mr. Miller, from what I've understood there are some examples of cost overruns, or increases in costs, on the Manitoba floodway project because of the lack of competition and the lack of openness. From what I understand, there are some questions and concerns about some of the pile drilling and the costs of that. Would you be able to tell me what the cost of a pile in that kind of construction would typically be in Manitoba, and what some of the costs are actually driven up to today?

[Harvey Miller]

I'm sorry I don't have the direct costs on that for you. We had information that came to us that the cost of piles had increased as much as threefold on the project. Having heard that, I prepared my presentation, and the best I could find was that there had been a significant increase, but I couldn't get specifics on that.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Okay, but there are significant increases. What do you attribute those to from what you've heard? I know there are a limited number of people in Manitoba who have that capability. How many are able to bid on this particular work on the floodway project due to the contract?

[Harvey Miller]

One of the largest and most competitive contractors who does piling didn't bid on the project. His employees had requested specifically that he not bid on the job because of the collective agreement and the union components that were imposed. As a result, when that company no longer bid, in some cases there was just one bidder and it was a union company bidding, and the costs were considerably higher because obviously there was no competition.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Typically in Manitoba, for the one contractor you're talking about, do you have any idea of what percentage of work he actually does overall in this particular aspect in Manitoba?

[Harvey Miller]

What his market share would be prior to the agreement...?

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Yes.

[Harvey Miller]

It was much smaller than it was during the period of the....

Clyde, maybe you...?

[Clyde Sigurdson]

I couldn't say exactly what the numbers are, but I would say that the amount of work he does is very significant compared to anybody else in the province.