Governments continue to make it more difficult to bid on construction projects.
It is unfortunate that municipalities continue to write complicated one-sided policies and procedures to discourage contractors from bidding on construction projects.
After many years of industry partners trying to explain the unfair effects that these rules impose on the construction industry, it is difficult to understand why they continue with this practice.
To make things even more difficult, municipalities refuse to take advice from contractors, who are in fact experts in the industry, not the municipal lawyers and risk management staff.
Not infrequently, in fact on a daily basis, there are countless complaints from the business community that it is too difficult to be a supplier to government. Often, there is more than a degree of merit in these complaints. Local preference policies, for instance — which discriminate against suppliers solely on the basis that they come from down the road — more than fit the bill of being unreasonable barriers to entry. Other unreasonable barriers grow out of excessive zeal for creating the appearance of integrity.
Consider, for instance the following instruction given to prospective suppliers by New York City:
"For every proposed contract, a City agency is required to consider whether the contractor has the requisite 'responsibility' for the contract award. Before engaging in the City procurement process, you may want to take a hard look at your firm's history of business integrity as well as whether your firm has the capability of fully meeting the demands of the work. To do business with the City you must:
1) Be prepared to demonstrate that your firm has the resources and experience to do the job successfully;
2) Be prepared to publicly and truthfully disclose your firm's management and ownership, and (key people), with an expectation that any of their legal or performance problems will need to be explained;
3) Be current on your obligations, including paying, real property, payroll taxes and social security contributions, as well as water, sewer, and other local assessments; and
4) Pay prevailing wages, where legally required.
If you are selected as a winning bidder or proposer, and your contract exceeds certain statutory dollar thresholds, you will have to submit a 'VENDEX' Questionnaire to substantiate that your firm has the experience and business integrity to perform the City work.
The questionnaire is a sworn statement made on behalf of the firm and its (key people) particularly where past legal or performance problems were disclosed, will be subject to rigorous examination."
It may be that New York City, which purchases more than $9 billion Canadian in construction, services and materials a year, has so much business that it can get away with being so demanding although no doubt it will discourage some suppliers from competing for city business, nonetheless. But even for New York, it must be difficult to secure compliance with these requirements when the contract relates solely to occasional or short-term contracts, particularly those of a low dollar amount.
As I continue to explain to municipalities, the more exacting the requirements of the tender, the more costly it is to participate in the process. From the time we are small children we are told that time is money.
Yet for some reason this basic principle of commerce is often forgotten by the people who put together tender instructions, which require a supplier to provide page after page of information that at best is only distantly related to the supply that is to be made under the contract.
All other options being equal, when faced with the choice of pursuing a municipal contract that entails filling in copious questionnaires and reports, or a private sector contract that requires the provision of only minimal information, it is a fair bet which of the two options the average sales person will prefer.
Stephen Bauld is a government procurement expert and can be reached at email@example.com.
Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.