"Buyers of Construction – Some Creative Practices!"
For new members or those who were not already aware, the OGCA acts on behalf of all of our members on tender issues. This service is provided to members that bring bidding related matters to the attention of the OGCA. The association, in turn, writes to the buyers of construction on behalf of all members and the general contracting industry as a whole, to ensure that tendering language and practices are kept transparent and balanced.
Included in this newsletter is a recent letter that the OGCA submitted to the Art Gallery of Ontario (AGO) on a current tender. The first reason that we have included this in our OGCA Newsletter is to illustrate the type of language that the OGCA tables to the buyers of construction, as onerous and unattainable language in tenders. The second is to communicate out to any general contractors bidding this project that the letter was submitted on behalf of the industry.
Typically, the OGCA would communicate directly with those contractors prequalified or that have indicated their intention to bid this project, but on this project, the AGO did not prequalify any specific general contractors and instead decided to do an open tender. Additionally, the AGO did not disclose who collected the bidding package. Due to these actions, the OGCA and those bidding this project, have no transparency or knowledge of who may be bidding the project. This makes communicating directly with each contractor increasingly difficult on a direct basis, which is how the OGCA generally communicates these matters.
The OGCA sees these practices of not prequalifying contractors on a specific project and not being transparent on who has obtained the bidding documents, as increasingly problematic and the OGCA believes that the latter point is in direct contravention of the Ontario Broader Public Sector Procurement Directive.
As you will read in the letter to the AGO, the OGCA is strongly against some of the technical requirements that they have listed as a condition to bid this project. Specifically, any language that will reduce the pool of qualified bidders that may be able to bid this or any project.
The AGO, like many other buyers of construction, have taken to making their requirements to bid increasingly onerous and limiting. This practice confuses the OGCA since we would believe that it would benefit the AGO, and all buyers of construction, to be less restrictive and to align the need of the requirements to those of the project.
The OGCA would like to demonstrate this by noting some of the onerous clauses in question.
Let us illuminate some of the problematic conditions:
a. The Proponent confirms that they are in the process of constructing or have completed at least one (1) major museum or art gallery in Canada with a minimum hard cost of $ 100,000,000 in the past ten (10) years, and at least two (2) major cultural projects (theatre, concert hall, performing arts centre) with a value of more than $75,000,000 each.
As the OGCA communicates in our letter, this requirement is problematic for two reasons.
Firstly, The AGO links two separate and distinct requirements into one compound requirement. There may be multiple general contractors that have completed either one or the other of the projects indicated, but by linking the two together into one condition, the AGO has greatly limited contractors able to submit a proposal.
Secondly, the AGO notes within the requirement the value of one of the conditions as being 35% higher than the noted preliminary budget for the project. The OGCA cautions buyers of construction from overstating the thresholds to these requirements since this action only further depletes those who can price these projects.
Another major issue that the OGCA raises with this tender is the following requirement:
c. The Proponent has completed at least three (3) major hospital additions and/or renovations in Canada with a minimum hard cost of $300,000,000 each.
The OGCA is confused by the inclusion of such a condition since we cannot see any clear connection to how having the experience and expertise to construct a major hospital directly relates to the construction of an art gallery.
As we noted to the AGO, “the OGCA sees the inclusion of these types of requirements as a means for the AGO to publicly appear as if they are adhering to Ontario’s Broader Public Sector Procurement Directive, but ultimately the criteria are set at a threshold that will clearly only avail one or two possible bidders. The inclusion of this criterion can be interpreted by the industry as a means for the AGO of circumventing the Ontario Broader Public Sector Procurement Directive and should not be employed.”
These are just a few of the types of onerous and incongruent conditions that the OGCA strongly recommends be removed from tenders in order to allow for the greatest number of qualified potential bidders on any project.
Understandably, we could list problematic provisions and conditions for days, but instead wanted to communicate to our members that this is one of the services that the OGCA does for the benefit of our members and the industry.
Buyers of construction need to understand that public procurement needs to adhere to open and transparent conditions as noted by the Ontario Broader Public Sector Procurement Directive. Anything that limits complete and open transparency may be construed as an intentional or wanton circumvention of their responsibilities.
The OGCA will continue to work alongside and on behalf of our members to have all procurement processes be open, transparent, and balanced to the benefit of all parties.
Should any of our members have questions regarding the OGCA’s tender services, or if you require any assistance from the OGCA, please contact me directly at email@example.com or via phone at 905.671.3969.