Two large Infrastructure Ontario (IO) hospital projects have only one bidder each as they proceed through the Request for Proposals stage, but that apparent lack of competitive bidding should not be cause for alarm, IO’s CEO says.
IO announced Oct. 4 that EllisDon emerged from the RFQ process for the $500-million-plus Trillium Health Partners Queensway health centre job in Toronto and was invited to submit a proposal.
Four days earlier, IO announced that the RFP stage had closed for the $2-billion Trillium Mississauga long-term redevelopment project and that the team of EllisDon + PCL Health Care Partners had submitted the only proposal.
IO president and CEO Michael Lindsay said in an interview the procurements are taking place amidst “once-in-a-generation” market challenges that include volatile construction costs, and that the two projects are extraordinarily complex.
“I think we’re still seeing good competition,” said Lindsay. “I think what you’re seeing in these two projects, especially in respect of Mississauga site, is just the sheer size and complexity.
“We had really robust discussions…At the end, one joint venture, with two of Canada’s largest construction firms, decided to bid it together.”
Addressing the huge Trillium Mississauga project, which involves a major precinct redevelopment and construction of a new hospital, Lindsay said IO adopted a new progressive-P3 approach for the build that included extensive consultations and will lead to a development phase agreement and a design-build-finance-maintain project agreement.
Lindsay said the progressive approach allows IO to define the project, advance it to close to 100 per cent of construction with drawing readiness, and then retain options as the contracting authority to assess the price it’s given by the counterparty for value for money.
The longer period of interacting with a counterparty and progressively designing and defining the asset results in a de-risking of the project that benefits the project owners, Lindsay explained.
Over the next few months, IO and Trillium will evaluate the RFP submission and, if satisfied, enter into a development phase agreement. With a multitude of costing and other safeguards on the Trillium Mississauga project, Lindsay said, there is no disappointment that only the EllisDon/PCL team was left standing.
“I am deeply confident that thanks to the things that we’ve done to adopt a more aggressive form of project definition, we will be able to ensure that value for money is present when it comes time to ultimately lock in the price,” said Lindsay. “I’m hoping that taxpayers have confidence that that animates everything that we do.”
Over the next phase, IO said it will be adding more collaborative topic meetings on pricing, schedule and specification co-ordination and will have independent cost benchmarking to assess the competitiveness of the submission and ensure overall value for money.
Lindsay said it is not necessarily the case that in future, projects using progressive P3 will always end up with fewer bidders.
“It isn’t a characteristic of the progressive model that we only get one submission,” said Lindsay. “We would always prefer to have more, but I think equally what I would tell you is we did talk to many teams that were forming for the Trillium Health Partners project. There was a lot of interest.”
The Queensway project is listed by IO as a build-finance.
Lindsay did want to make clear, “This is not a single source contract, not even close.”
“This is a competitive procurement for which we’ve had one submission. We’ll be demonstrating to the government and taxpayers value not only in what that counterparty is proposing to charge when it comes to the development phase of the work, but also, once development and project definition is done, that there’s value inherent in the price that we’re getting to actually construct it.”
Aside from the two Trillium projects, Lindsay said, IO had had a strong track record of competitiveness recently, including the Weeneebayko Area Health Authority Health Campus project, the Scarborough Subway Extension Stations, Rail and Systems project, Highway 3 and the Grandview Children’s Treatment Centre.
“We always do everything that we can to ensure that we have as competitive a response as we possibly can to the tenders that we put out on behalf of the Province of Ontario,” said Lindsay.
“I think the record even of recent accomplishments shows that the things that we’ve been doing in what clearly is a market that’s a little bit rocked by volatility and turbulence, capacity limitations, is still a record of success.”
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