Gov't snub irks N.B. firm
Published Thursday June 4th, 2009
Local workers question Liberals' commitment to 'self-sufficiency' after $5,000 difference sends contract to Ont. company
The Liberal government's purchasing policies are making a mockery of Premier Shawn Graham's self-sufficiency agenda, says the president of a union local at Kent Homes.
Paul Bastarache said he can't understand how a $700,000 government contract to build 10 mobile classrooms for the New Brunswick government was awarded to a Mississauga, Ont., company that outbid Kent Homes by less than $5,000.
"I can't understand what he is doing, he is always preaching self sufficiency, and now he is buying portable classrooms from Ontario," said Bastarache, referring to Graham's often-repeated mantra.
"I wouldn't say anything if it was a private company, but it's my tax money going to Ontario."
Provincial officials say they are simply following rules as stipulated by interprovincial trade agreements, but Bastarache said some common sense is needed to keep New Brunswickers working.
He said he was even more surprised that Graham would allow the work to slip away from workers in the riding he represents in the legislature.
"Work in his riding is going to Ontario," said Bastarache. "Is he asleep at the wheel?"
Bastarache said the contract would have given the Bouctouche manufacturing facility a shot in the arm during tough economic times, and pumped much more back into the community in spinoffs and taxes than the $5,000 difference between the two bids.
"Everybody is concerned," he said. "It was two weeks of work for about 150 members of my local.
"You don't need big calculations to show that will pay more than $5,000 in income tax per week."
Kent Homes manager Rheal Maillet said the company was disappointed to lose a contract by less than one per cent of the total value of the bid.
"For that amount of difference, we would have put more back into the community," Maillet said.
Kent Homes produced 38 of the same mobile classrooms for the provincial government last year.
Maillet said he understands there need to be provincial purchasing policies, but there should also be some common sense.
"Depending on the size of the contract, we have agreements between provinces; but when it's that close, I think it should be reviewed," said Maillet.
"Especially in these tough economic times, they should allow some more flexibility."
Maillet said he is perplexed as to how the Mississauga company, Provincial Partitions, could underbid Kent Homes when expensive shipping and delivery costs are considered.
A spokeswoman for the Department of Supply & Services, Chrystiane Mallaley, confirmed that the shipping and delivery costs were included in the bid.
"When you look at the fact they are from Mississauga, Ontario, you have to scratch your head and ask yourself how they do it," said Maillet.
"I guess we can all come to our own conclusion, but I don't understand."
Maillet said it usually costs Kent Homes $6 per kilometre for each box it ships. This contract would have required 20 boxes.
At a distance of about 1,107 kilometres between Mississauga and Edmundston, according to Google Maps, it can be calculated that the contract would have cost Kent Homes $132,840 in shipping costs to send 20 boxes over that distance.
Maillet said Kent Homes will continue to work for every contract it can get during the current global economic downturn.
"We are operating right now at full capacity but, obviously, this year has been a bit slower than previous years," said Maillet.
"That is why it is disappointing, because we are fighting hard for all contracts we get."
Maillet said the Kent Homes bid was clearly competitive, and noted that another New Brunswick had bid $110,000 above the Bouctouche-based company.
Mallaley said government officials had zero flexibility to intervene in the purchasing process to favour a New Brunswick company due to interprovincial trade agreements.
"There was really no sound legitimate reason why we would not accept this bid under the circumstance. Everything checked out," said Mallaley, noting that the winning bid was extensively researched by department staff.
Mallaley said government can exhibit a preference for a New Brunswick company if its bid is within 10 per cent of the lowest bid on a contract that's worth less than $10,000.
She said government can also favour an Atlantic Canadian company that bids within 10 per cent of the lowest bid on any contract worth less than $25,000.
But government can't intervene when the price tag is higher than $25,000 without compromising the "free and fair" flow of trade, she said.
"It is really important that we continue to comply with the terms of trade agreements we have entered into with other jurisdictions. If we don't, it compromises our trading relationships with other provinces," said Mallaley.
"It also might affect the chances of New Brunswick companies when they bid on projects in other provinces."
Mallaley said all government contracts valued at more than $20,000 go to full public tender.
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I think as an export driven province we should expect these things, and encourage them to get more bids. I'll bet the next time a project like this gets tendered the Kent Home beancounters will sharpen their pencils and compete a little harder. $5000.00 is better in the hands of the taxpayers than in the hands of the company.
"When you look at the fact they are from Mississauga, Ontario, you have to scratch your head and ask yourself how they do it," said Maillet.
"I guess we can all come to our own conclusion, but I don't understand."
To allude that somehow, because they beat you in a bid they were somehow being unfair is sour grapes. Perhaps the union should complain to their bosses for marking their products up too much. If the Ontario company can land them here $5,000 cheaper, then perhaps Kent Homes should lower its profit expectations, instead of whining that they are uncompetitive and ask taxpayers for a subsidy.
Kent should stop making excuses, look at its practices, and start bidding on contracts in Ontario. Kent still has lower labour and plant costs, and if an Ontario company can figure out how to bridge the distance, so can Kent. The same goes for other companies in New Brunswick, who choose to complete by closing ranks and freezing out competition, rather than by improving product and workflow.
I wonder about those lower bids...where there is flexibility where the contract is worth under $25000 or $10000.
When were those limits set? Do they need revising upwards if they were set some time ago?
The business about the worth to the province being more than the saving...surely that was taken into account when the agreement was made wasn't it?