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Industry Perspectives: It’s time restricted tendering supporters backed up their claims

Karen Renkema
Industry Perspectives: It’s time restricted tendering supporters backed up their claims

“Show me the money.”

That famous catchphrase from the movie Jerry Maguire comes to mind each time the Carpenters’ Union or the Provincial Building and Construction Trades Council of Ontario try to discount the latest study demonstrating the public benefits of fair and open construction tendering.

While it’s one thing to offer an opposing view, it’s quite another to make an argument without any statistics to back it up. If critics have one iota of hard evidence to prove that restricted tendering is even remotely fair or fiscally responsible, then we invite them to show us.

For those who haven’t seen the movie, the expression “show me the money” became the motto for a sports agent whose football player client insisted that idle talk be backed up with a concrete offer. Opponents of fair and open tendering have been using hyperbole, misinformation and intimidation to defend the status quo for years.

Yet, not once have they put forward any legitimate, concrete evidence to prove their claim that the public is somehow better off by allowing a select group of companies and affiliated unions to control almost $1 billion worth of construction work in Ontario each year.

For example, restricted tendering supporters were quick to dismiss the findings of a new Cardus report, No Longer the Best: The Effects of Restrictive Tendering on the Region of Waterloo as “inflammatory, offensive and flawed.” Again, it’s a statement with no proof to support it.

Cardus analyzed bids on 30 construction projects from 2009 to 2014, back when construction tendering was competitive, and then from 2014 to 2017 when tendering was restricted. The study found that almost 84 per cent of construction contractors were shut out of bidding, which drove up project costs.

“The Region of Waterloo has created a coercive oligopoly that disproportionately benefits a small group of construction firms, which are able to increase their profits at taxpayers’ expense,” concluded Brian Dijkema, work and economics program director at Cardus, who has spent many years studying the issue and its impact.

The study found taxpayers were over charged a whopping eight to 25 per cent on $315 million in construction work.

Still, the Carpenters’ Union was quoted as saying “the situation has been improving with more and more contractors bidding.”

Really? Then by all means show us how.

The reality is Cardus is not alone in its findings. There’s a growing and compelling body of research demonstrating the benefits of increasing construction competition. A study published in the Journal of Construction Engineering and Management by Cornell University professor Paul Carr concludes competition is good for taxpayers. Carr notes there is no credible evidence suggesting that less competition has any benefit whatsoever — not lower prices and not better quality, especially when contractors must already adhere to strict standards and regulations.

“On taxpayer funded construction projects, government officials should be doing all they can to find savings and increase competition,” says Carr. “It’s in the public interest.”

Last summer, a Forum Research poll commissioned by the Progressive Contractors Association of Canada (PCA) found that 84 per cent or four in five Ontarians believe greater fairness for taxpayers and better value for infrastructure investments should be a priority in the upcoming provincial election.

We have not seen any polls suggesting that taxpayers are perfectly fine with paying inflated costs for construction work or any evidence that restricted tendering results in tax savings or greater fairness for workers and companies.

The City of Sault Ste. Marie knows that first hand. Although it’s the smallest municipality impacted by restricted tendering, it’s making the biggest effort to put a stop to it.

However, that will only happen when the Ontario government is willing to listen to the Association of Municipalities of Ontario, the Ontario Chamber of Commerce, the Ontario Good Roads Association, the Large Urban Mayors Caucus of Ontario and many others. They have joined the PCA in urging the Ontario government to do what’s only fair: amend provincial labour laws to allow open construction tendering in all municipalities.

Fair and open construction tendering would allow all qualified companies and workers to bid on municipal projects. It’s a way of maximizing infrastructure dollars and making sure taxpayers are getting good value. Should naysayers have any credible research to the contrary, we encourage them to release it.

It’s time, as Jerry Maguire would say, to “show us the money.”

Karen Renkema is the public affairs manager with the PCA. Send comments and Industry Perspectives column ideas to editor@dailycommercialnews.com.

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