Funding The Ottawa Hospital expansion has been the subject of debate during this municipal election campaign and for good reason.
Ottawa taxpayers deserve to know why they should pay the price for such a glaring lack of project oversight.
While it’s not uncommon for municipalities to help pay for new hospitals, something isn’t quite right about The Ottawa Hospital asking the city to chip in $150 million towards construction of its new Civic Campus; not when it had other options.
The Ottawa Hospital had every opportunity to save taxpayers millions of dollars, rather than ask for more.
It could have followed what is standard practice on all large health care infrastructure projects and allowed all contractors and workers to build the $2.8 billion project.
Instead, The Ottawa Hospital entered into an exclusive agreement with the Eastern Ontario and Western Quebec Building and Construction Trades Council. Only contractors affiliated with this labour group can build the project.
No other contractors had a chance to compete and demonstrate their expertise.
They were shut out of the project, along with hundreds of skilled tradespeople, because they do not carry a specific union card. This agreement is unfair to a lot of workers and costly for taxpayers.
When there’s too little competition, it affects all of us. It drives up the cost of everything from our hydro to cellphone bills.
The same goes for construction.
It’s been well-founded that when there’s a lack of competition, construction costs rise by at least eight to 15 per cent.
The reason is simple.
The greater the number of bids on a project, the lower the cost. Competition forces contractors to sharpen their pencils. This ensures the public gets good value on its infrastructure investments.
Quite the opposite happened here. A sweetheart deal was cut to construct the largest infrastructure project in Ottawa’s history, with little regard for the public.
A study earlier this year by the independent Montreal Economic Institute (MEI) calculates The Ottawa Hospital expansion could wind up costing taxpayers between $168 and $525 million more by 2028.
It’s a staggering overrun and it’s all because competition on the project was restricted.
According to the MEI, “it is unacceptable for a public entity to make taxpayers pay more by granting exclusivity to only a certain group of affiliated workers.”
So why did the hospital make such a deal?
The answer may be found in the fine print of the agreement which states, “each year while this Project Agreement is in force, each Bargaining Agent that is a member the Eastern Ontario and Western Quebec Building and Construction Trades Council will make a charitable gift to The Ottawa Hospital that is roughly proportional to work opportunities provided to members.”
When a newly elected Ottawa City Council considers the hospital’s funding request, it can demand answers from both the hospital and the province.
There should be no more sweetheart deals.
Members of the public deserve to get their money’s worth on each and every infrastructure project built with their tax dollars.
Karen Renkema is VP, Ontario at the Progressive Contractors Association of Canada. Send Industry Perspectives comments and column ideas to firstname.lastname@example.org.