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An international accounting and consulting firm has been hired by BC Hydro to identify problems with its contracts and find out why so many contractors will no longer work for it.
VANCOUVER
An international accounting and consulting firm has been hired by BC Hydro to identify problems with its contracts and find out why so many contractors will no longer work for it.
“In looking at suppliers, we want to view them as partners and work collaboratively,” said Dan Olsen, BC Hydro’s chief procurement officer.
“Some of the perception out there is we are not collaborative when putting out tenders and RFPs. We are looking at how we can do a better job of sharing plans and requirements, before we go out to the RFP and tender process.”
Some contractors object to BC Hydro’s standard conract forms.
“From an industry point of view, BC Hydro is not a preferred client,” said Philip Hochstein, president of the Independent Contractors and Businesses Association (ICBA). “Their contracts are too one-sided and their approach to contractors is antagonistic and lacks respect.”
Independent consultant Dennis Truss and Deloitte began a survey of contractors on Oct. 19, which aims to identify problems with BC Hydro’s contracts and improve relationships with suppliers.
Construction lawyer Mike Demers, a partner with Jenkins Marzban Logan, provided the ICBA with his opinion about BC Hydro’s standard form of contract in early 2009.
Demers said it could be considered to be an “owner-favoured” form of agreement, which could be perceived as being unfair or onerous by the typical contractor in B.C.
For example, he said the contract is set up so the “Hydro Representative” is responsible for interpreting the contract documents, reviewing progress draws and issuing changes in the work.
Under the CCDC and CCA standard form contracts, these functions are normally handled by a “consultant” who is hired by an owner.
They are expected to perform their role independently from the owner and serve as an objective third party.
Demers argued that the Hydro Representative is a conflict of interest between the role as a hydro employee and the duty to act in a fair and impartial manner. As a result, the contractor can be exposed to unfair treatment from the owner.
“The flip side of this argument is that you want someone who is conversant with all issues related to the project and who can provide adequate instruction and consultation,” said Olsen.
Under the BC Hydro contract, the contractor is not entitled to compensation when there is a change in the contracted scope of work or contract schedule.
Instead, the contractor makes an application for an “equitable adjustment.” This involves a process of negotiation that includes whether to grant compensation at all.
According to Demers, the contract places full responsibility for ambiguity, conflict or error on the contractor, if they fail to report it immediately to the Hydro Representative.
“From my perspective, it comes back to the quality of the contract in place,” said Olsen.
“Defining the scope and requirements of a project is paramount. We want to make sure when a change is required that it is brought to our attention in a timely manner.”
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