Bid process lets funny smell taint Ridley Island deal
Don Cayo
Vancouver Sun
Friday, October 28, 2005
A bad smell is emanating from the few known facts concerning the likely sale of Ridley Island coal terminal in Prince Rupert.
The short story is that Ottawa is poised to turn over a facility that cost $250 million (in 1980s dollars) for just $20 million, most of which won't be paid until years from now. The only "preferred bidder" has no track record in running a port. And even though the coal industry is on a roll, the bidder isn't asked to pledge even-handed access to all companies wanting to use the terminal.
Would you like to know why there's only one bidder on the list, or who else would like to make a bid, and what they might bring to the table? Me, too.
Yet, if there's a scandal here, it's not that this basic information is being kept secret. Fact is, these days it's the norm for a government to invite some bids and refuse to consider others for reasons they never explain.
Governments like pre-qualified bidders, particularly for complex procurement contracts or large construction jobs that are complicated by a design component, because the bidding process has become so convoluted and expensive. Companies balk at going through such hoops unless they see a reasonable chance of winning; "pre-qualification" limits the competitors and tells them who they're up against. And the government people who pick the winning tender no doubt find it more convenient and less risky to deal with known quantities.
So in theory, pre-qualified bidders are companies proven to possess the expertise and resources necessary to do the job. I have enough faith in the general integrity of the system to believe that's often the case.
But a pre-qualified bidder could be one who pays bribes, who is friends with or related to a decision-maker, or is a political ally. With so much of the process hidden, how can the public tell?
With complex contracts there may be cases where it's justified for a government to take what looks on the surface like a second-best bid. But in the absence of detailed information and independent assessment, it's hard to have confidence that any given instance is a valid case.
And certainly it's possible to manipulate the criteria for pre-qualification to ensure a certain bidder gets, or doesn't get, a job. That's what I think happened last year when BC Ferries called for proposals on three big new ferries that are now being built in Germany. The criteria for yards to be allowed to make a final bid included basing 40 of 100 points on an examination of each yard's recently built, similar-sized ships. Since no B.C. yard had built any such ships, they had no chance of winning the contract -- yet BC Ferries CEO David Hahn and Premier Gordon Campbell were able to maintain the political fiction that they hadn't arbitrarily excluded B.C. bids.
The danger of losing accountability when public contracts are negotiated in private first hit my radar screen several years ago when I started looking at public-private partnerships. They're inherently complex, often involving not just design and construction, but also operation. Trade secrets are involved in many bids, and it's not fair to ask a bidder to tip its hand to competitors.
I wrote about P3s and accountability during the Campbell government's first stumbling forays into that turf, and later during its more successful hand-off of P3s to Partnerships BC.
And, lo, Partnerships BC came up with a full-disclosure policy. It publishes all contract information, except the details of the losing bids, once a contract is awarded. It also releases a value- for-money report on what it would cost if government did the work. And a fairness commissioner -- the first one was the independent-minded Ted Hughes -- observes each bid process and reports publicly on it.
This is a made-in-B.C. template that could provide the basis for accountability policies for other arms of government. Unfortunately, it has so far been ignored.
For example, the province's Alternative Services Secretariate, the body that steers through all privatization initiatives, releases only summaries of contracts and withholds key information such as performance penalties and/or rewards. And Vanoc, with all its pricey Olympic construction looming, can't or won't even tell me how extensively it will be requiring bidders to pre-qualify, let alone what its disclosure policy will be.
Which is a pity. Because when things are hidden, people are certain to wonder why.
So whenever there are questions -- when something smells funny as it does now in Prince Rupert -- many will assume the worst. And, as with the Ridley deal, the process and the projects will be tainted -- whether they deserve to be or not.
© The Vancouver Sun 2005