When is a losing bidder, NOT a losing bidder? When it involves bidding on a Ministry of Transportation project!

Without a doubt, it’s when the losing bidders have bid on a Ministry of transportation project with the BC Liberals! 

It came as a shock to me, anyways, when I recently read in the South Fraser Perimeter Road Request for Qualifications, that the losing proponents( bidders) would still be receiving  so-called ” Stipends” to the tune of $1. 5 million dollars each.  My God, I thought, I’m clearly in the wrong line of business, if even a losing bid could be so lucrative!  MLA Guy Gentner agreed wholeheartedly with me when I recently talked about just this topic on his radio show  ” Live from the Leg” 

Now, one must remember that submitting any bid to the province and the MOT is a risk venture at best, because the MOT makes all the rules, and often changes or breaks them as the bidding process goes along. The right and ability to do this, often with no notification to the bidders, is clearly written into the wording of the most recent large projects, and to be honest, reading some of these Request for Proposals makes it seem like the bidding process is as safe as jumping into a pit of cobra’s who’ve been tortured for a while already.  But still,  big business is never without risk, and in many other private sector industries there is no such thing as a consolation cheque for not getting the job.  

So why is the Ministry of Transportation still handing out such lucrative stipends to these losing bidders?  That is a question for Shirley Bond, I would say. 

Take for example the losing bidders for the Sea to Sky highway, who each walked away with a cool $1.5 million each : Page 51/77 section 6.2 

 The Province will pay a $1.5 million stipend ( the Stipend) to each proponent that is not selected as the Preferred Proponent… 

And let us not forget the most recent announcement concerning the South Fraser Perimeter Road preferred proponent ( bidder) – each of the losing bidders there also receive a lovely cheque in the amount of $1.5 million each, just for losing… http://www.partnershipsbc.ca/pdf/SFPR_RFQ_072908.pdf   Page 16/62, Section 2.3 : 

…a Stipend in the amount of $1,500,000.00 will be paid to each Proponent that is not selected as the Preferred Proponent… 

 

But the award for the largest consolation prize in the history of BC bids that I am aware of has to be given to the RAV line losing bidders, each of whom received … are you ready for this? $ 4 million each. 

You read that right, $ 4 million dollars for NOT making the cut : http://www.ravprapidtransit.com/files/uploads/docs/doc173.pdf  Page 42/96. section 12.5 : 

RAVCO upon Closing will pay an honorarium to the unsuccessful BAFO Proponent covering a significant portion of its costs up to $4 million 

 

You can do the math, these amounts add up in to a massive sum of money when you consider this is the way it’s done on most large projects initiated by the provincial government.  And while I’ve only started to crack the surface of the muck that covers every surface of the MOT, it leads me to wonder if these kind of consolatory offerings are the norm for losing bidders in other ministry projects and contracts! I highly suspect it is. 

It’s hard to imagine that in these tough economic times, that these kind of top dollar “Stipends” are still being handed out, especially in light of the massive cuts the government have ordering in various other sectors, such as health care, education and special needs.  There is no justification for it, no matter what angle I look at. 

I’ll let you be the judge of whether these cheques are fair or not, but to me, this is a clear-cut case of  typical BC Liberal extravagance – perhaps even  Liberal callousness, at worst, when one looks at the many children, elderly and handicapped going without needed diagnosis, treatment and care  all over the province. 

What do you think? 

( now scroll down to why I think the Basi-Virk trial is just the tip of the iceberg…)

14 thoughts on “When is a losing bidder, NOT a losing bidder? When it involves bidding on a Ministry of Transportation project!

  1. As I’ve stated before in the BC Rail fiasco, we paid CN 235 Million to take our railway. With this post Laila you have the evidence to say that they are not only giving away the farm, they are paying some businesses to take it.
    The only way to stop these crooks is RECALL IN THE FALL.

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  2. SB

    This is about teh beurocratic end of how politics works im sure NDP freindly union contractors had similar results in their time although less sell off and giveaway and at least it was developing BC infrastructure and keeping money in our economy then, liberal projects seem so corrupt at every level now who knows how much weve paid Campbells freinds and insiders i am sure NDP has some idea but unless its got paper evidence MSM will do nothing and even with evidence they do little lets all encourage laila and others to dig up as much as they can find make sure as much of the public can see the truth as possible .

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  3. That’s what I’ve been thinking, too, Laila.

    Ever since July 14, 2009 in fact. Remember that? The 5th anniversary of the BCR-CN deal (still partially secret), a date which triggered additional give-aways — or — grounds for re-possession.

    A group formed at my place and we naturally thought that the BC Opposition is being paid to advocate for these things. Ha. Known thereafter as the day my eyes really opened to the fact that there is — as you say — NO OPPOSITION in the BC Legislature.
    .

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  4. North Van's Grumps

    To have a fair response from bidders on such a massive construction job as the Sea to Sky Highway project, time requirements spent on the part of contractors to obtain Engineer reports (not the same off the shelf reports) etc, I can well understand why there is a Stipend offered. It would only take one contract to bankrupt a company, and before you know it there would be only ONE company getting all of the contracts.

    The Sea to Sky Highway project involved a Capital cost of $600 million which covered the use of heavy duty equipment, manpower galore in the actual construction, materials and Engineering reports, However if you want to focus on something that is near and dear to our hearts, and possibly involving Stipends, how about BC Hydro and its call for a Smart Meter.

    No bridges to be built, no roads to be constructed, no tons of earth to be moved, but the BC Hydro project of the Smart Meter will come in at almost TWICE the cost of the Sea to Sky highway.

    Will there be Stipends offered to Smart Meter contractors? Here’s one Source:

    http://www.docstoc.com/docs/5891890/BC-Hydro-Transcript-of-the-BC-Hydro-SMI-Supplier

    As an aside comment, I have to wonder that in light of the recent ruling in the BC Supreme Court on the validity of municipalities to use inspectors, without a warrant, to decide on whether or not there is a grow up in a house…….. is the design and the introduction, at this time, of the Smart Meter, a means to skirt the ruling…… Not that I’m in favour of grow ops, but the Smart Meter monies are coming out of BC Hydro which will raise its funding from its Customers pockets. Shouldn’t a large portion of the Smart Meter be coming out of the Solicitor General’s pocket to fight crime, real crime.

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  5. The smart meter is no smarter than a regular meter when it comes to grow ops, simply because grow ops are wired in ahead of the meter.
    As for recording power consumption a regular meter and smart are equal. (I assume)
    What a smart meter will do is, tell your hydro suppler how much electricity you consume at “peak’ hours and low demand hours, once wired into your home it will know exactly were and what consumed hydro.
    The hydro company will praise to us of how wonder full this technology will be, that we will be able to phone our meter to start up the kitchen stove or air conditioner, etc,etc.
    The means to the end here is to force us to pay extraordinary amounts for peak hour usage. Hydro will make more money while supplying less power.
    One other tidbit, for all the folks who have electric cars,the smart meter will know when and how much charging the car requires when plugged into its receptacle, the government will now know how much electricity your car consumed will be able apply a levy ( road tax, environmental tax, carbon tax) to be paid accordingly on your hydro bill.
    And don’t worry about the meter person having to walk up to read these meters in inclement weather, when they drive by all the info from your meter is transmitted to an on board computer in the meter persons vehicle
    My neighbour has a smart meter , its probably outdated now as far as smart meters go. I was told some time ago the the new smart meters are even smarter than my neighbours and probably they will send all data back to the hydro via their own transmission wires.

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  6. RWC

    I’m a proposal manager in a similar construction industry to this one, so I can perhaps shed a little light on the value of stipends and why your outrage at stipends may be based on false economy.

    When evaluating an RFP, the first thing we do is evaluate the risk of responding. Do we have a good chance of winning? How much will it cost to win it? If the cost is 2 million to respond and there are three other solid competitors, putting the chances of winning around ~25%, it’s probably not worth risking the 2 million if your competitors are bigger fish.

    So the smaller (and often cheaper) fish drop out. This means there are now only 3 competitors. Or maybe 2. This means that the remaining competitors chances of winning go up and they will likely boost their profit margins by a percent or two to reflect the lack of competition. On a 600M contract, that’s between 6 and 12 million.

    Now if the government promises to cover most of your costs to respond by offering a 1.5M stipend, they probably keep a couple of other potentially cheaper competitors in the running. Even if they aren’t cheaper, the winning bidder will post a tighter bid and ultimately, the government saves money by underwriting competition.

    Hope that makes sense to you all.

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  7. Maurice Quinn

    As a Structural Engineer who has worked professionally on very large projects both in Canada and overseas (New Zealand), I have to back RWC up on this one…

    If you have a large enough project, a stipend is justifiable. However, I do think they can be abused and need to be strictly monitored… That said, seeing them used on a highway project as large as the Sea to Sky highway. I can’t comment on the RAV line at all, as I would guess the total cost was much more about the trains than the tracks and other infrastructure.

    One small aside, of a sort: With buildings & bridges (works of the type that I am most familiar with), an up front investment of 10% for better insulation, materials, details, etc, can often net a reduction of the lifetime cost of ownership in excess of 30%. That’s a rule of thumb used frequently, and while it isn’t very scientific, it bears out under scrutiny on many projects.

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    1. Laila

      I am sorry for the horribly late reply to some posters here, but I would like to say that I appreciate both of you sharing your side of things. I have been studying the industry hard, and I really welcome all opinions here. I think you, Maurice, have summed it up with the statement that these stipends can be abused, and call me inflammatory, but in the case of the MOT, I do believe this is the case. The ” losing” contractors are the same companies over and over again. I would love to hear from both of you privately, if I may be so forward to ask if I may pick your minds in this regard? Especially Maurice, with regards to your last paragraph.

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  8. Maurice Quinn

    If you take the time to ask, I’ll take the time to do my best to answer you. And I must admit I’d probably be flattered, as I greatly respect your opinion and enjoy the blog, so you’ll get good value for your investment of time. Please feel free to e-mail me.

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  9. Pingback: BC Liberals pat themselves on the back over SFPR ‘highway’ opening a year late and $464 million over budget | No Strings Attached : Laila Yuile on politics and life in B.C.

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