Infrastructure Ontario launches vendor of record process

Infrastructure Ontario (IO) is introducing a vendor of record (VOR) process for general contractors, architects, engineers and interior designers bidding on projects managed by the successor organization of Ontario Realty Corp. Clive Thurston of the Ontario General Contractors Association explains the benefits of the rotating bid schedule.

The VOR lists will replace the current source lists, and IO is starting with general contractors in June, said Toni Rossi, executive vice-president of real estate management for the provincial crown corporation.

“The hurdle to get on the source list is not quite the same as the pre-qualification to get on the vendor of record list,” she said.

IO aims to reduce the number of vendors bidding on any one project, to rotate vendors through so they get an opportunity to bid and to have stronger performance measurements.

Rossi said with the current process, many projects have 20 to 40 bids, but when the VOR is implemented, projects costing $100,000 to $750,000 would have at most five bidders while projects costing more would have a maximum of eight bidders.

The VOR list only applies to the real estate management division and not to the larger, more complex alternative financing and procurement (AFP) projects, where IO oversees procurement, often using design-build-finance-maintain models. Last year, the province merged IO, Ontario Realty Corp. and Stadium Corporation of Ontario Ltd. into the same organization, branded as IO.

The organization has a Strategic Opportunities Committee, which includes industry representatives including the Ontario General Contractors Association (OGCA).

For the last year and a half, that committee has worked on a new VOR, which culminated in the system announced May 7, OGCA president Clive Thurston said.

“There were issues like far too many bidders were showing up for small jobs sometimes, 20 or 30 bidders, which really doesn’t get you anywhere,” he said.

“The low bid system has been under question for probably the last 10 years.”

For example, he said, many contractors who did not get work because they did not not submit the lowest bid felt that the lowest bidder who got the job knew less about the work.

But IO plans to introduce a new vendor performance rating, which will take up an increasing portion of the bid score.

During the first year, while vendors are still being rated, the price of the bid will be weighted 85 per cent, project team members and qualifications 10 per cent while the remaining five per cent will be project schedule.

No weight will be given to vendor performance record during the first year, while IO starts to rate vendors.

During the second year, the price will be weighted only 75 per cent, while the vendor performance rating will be 10 per cent. Then in the third year, the weight given to bid price will drop again to 70 per cent while the weight give to vendor performance rating will increase to 15 per cent. The weights given to project schedule and project team members and qualifications will not change.

Thurston said the rotating bid schedule ensures “everyone gets a fair shot and you don’t overload the system.”

Rossi said real estate jobs will go into the marketplace through IO’s project management service providers, which are the operations and maintenance division of SNC-Lavalin Group Inc., CBRE Ltd. and MHPM Project Managers Inc.

At press time, IO had held five information sessions on the VOR process and a webinar was held, in conjunction with the OGCA, on May 16.

Rossi said the VOR is expected to be up and running for general contractors around June, while the system for architects, engineers and interior designers is expected to be ready by the fall.

Thurston said the overall intent is to move towards quality-based selection rather than selection based on the lowest bid. He suggested the industry will benefit if it also applies to architects.

“The problem there is, we are getting 70 per cent of the drawing,” he said.

“Architects and engineers are not being paid (enough) to do the necessary work to give us proper drawings and specifications and you can imagine all the problems that incurs.”

Thurston added the VOR process will be monitored “very closely” by both the OGCA and the strategic opportunities committee.

“Nothing is carved in stone,” he said.

“We’re going to try this and see what the feedback is. If it works, great, if it needs tweaking, we’ll tweak it. If it isn’t working, we will fix it or get rid of it and do something else.”

Asked whether OGCA would like to see a similar system among other public owners such as municipalities, school board, universities and hospitals, he said, “absolutely.”