On Oct. 6 I attended a council meeting at Kingston’s city hall to observe the awarding of a $15 million dollar contract for the city’s Princess Street Road reconstruction.
The RFP was issued for the third phase of this project in the city’s downtown core. The city received two bids for the project, one from Len Corcoran Excavation Ltd (total financial proposal price of $12,944,673 excluding HST), and the second from Taggart Construction Limited (total financial proposal of $11,908,877 excluding HST).
When this RFP was evaluated the higher priced company Len Corcoran Excavation Ltd was awarded the contract. This was based on the fact that the review panel concluded that the proposal provided by Len Corcoran Excavating Ltd was the highest scoring proposal received with an average score of 87 out of 100 points. The score combined with the price as outlined in the RFP determined that the higher priced contractor was the overall winner of the contract.
This is all standard practice for a contract awarded using the RFP process. The conversation in council that night revolved around the idea that the contract should have been a tender and not an RFP. This is when the confusion over the process became clear. Many calls were received by council members from taxpayers complaining about spending $1 million more for a contract that they felt should have been a tender, and could have been done just as well from the lower priced bidder.
The debate in council chambers went on most of the night with the city defending its position to use an RFP instead of a tender. Three different delegations spoke to this issue during the night as to the proper use of the RFP versus tender debate.
In general terms, a tender is used to get the benefit of the most competitive price. What is essentially involved in a tender process is a cost comparison. The fundamental goal of a tender is to generate a contract competition in which the contract award decision will be focused on price.
Such an arrangement requires the contracting authority to provide a detailed specification as to what is required.
While the purpose of an RFP is to move to the final decision away from purely consideration of price towards more complicated determinants, it does not follow that the law of tender has no application at all.
I talked to the city manager as well as some council members that night to get some idea as to how they viewed the process. I explained to them, regardless of the outcome of this particular contract, that contractors would no longer bid to the city if they feel that they are not being treated fairly. This project should have received at least five bids and it only had two bidders submit to the RFP.
During the night I also had the chance to talk to some local contractors before the meeting. They felt strongly that the city needed to work closer with the construction industry in order to deal with some of the concerns they have been expressing to staff over many years. When the bidding pool drops to only one or two bidders the price of the project will go up, due to the lack of competition.
Council did recommend to staff during the meeting to work with the local construction association and its members to sort out some of these issues before the next bid is issued for construction work.
In my opinion, it is critical that this meeting take place as soon as possible. I have seen this same situation in other cities and when contractors decide not to bid for certain municipalities, it gets very expensive for the taxpayer and the capital budget.
Stephen Bauld is a government procurement expert and can be reached at email@example.com.
Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.