GNWT violating contracting rules, critics charge

Health Minister Kelvin Ng came under attack in the legislative assembly last week for handing a $700,000 contract to a southern-based firm without first checking if northern-based firms might be able to provide the service.



A $700,000 consulting contract recently awarded to a private health care management firm in Ontario has prompted calls for a review of the GNWT’s largely secretive procurement and contracting practices.

Last week, Nunavut Tunngavik Incorporated (NTI) accused the territorial government of openly violating terms of the Nunavut Land claims agreement by giving the contract to Med-Emerg Inc. of Mississauga, Ont. without going to public tender.

And for several days in the legislative assembly last week, Health Minister Kevin Ng fielded similar queries from Yellowknife Centre MLA Jake Ootes, who wondered aloud if the GNWT was not in breach of its own contracting guidelines.

“That’s why we need more openness in the whole capital spending area,” Ootes said.

The government’s own contracting regulations require public contracts worth more than $25,000 to be issued through a competitive process, unless the service is urgently required and delay would cause injury to the public interest.

The Med-Emerg contract, for the review and assessment of current health-care programs and services in the North, was urgent, Ng told MLAs in the legislative assembly.

Time of the essence

“I had made commitments in this House to try to bring on stream the Iqaluit and the Inuvik hospitals in as timely a fashion as possible.” the minister said.

“Trying to meet a ’98 start-of-construction schedule required a plan for funding for the ’98 budget, which would have been required by the fall of 1997.”

In explaining why no northern companies were invited to submit proposals, Ng cited a lack of available northern expertise.

That’s when NTI cried foul.

“Our agreement recognizes the rights of Inuit to be included in planning health and social services as users of the system,” NTI secretary-treasurer Natsiq Kango said in a news release. “This is entrenched in the Nunavut Lands Claim Agreement.”

Article 24 of the Land Claims Agreement compels both the federal and territorial governments to ensure that qualified Inuit firms are included in the list of firms solicited to bid on work performed in Nunavut.

Not only were Inuit organizations not consulted prior to the awarding of the multi-phased contract with Med-Emerg, NTI claims it wasn’t invited to submit a bid for the provision of air-ambulance services in the Baffin region either.

Policies not consistent

NTI’s criticism echoed in the legislative assembly again this week. Premier Don Morin told the Assembly on Monday that the GNWT was working on more comprehensive guidelines for sole-sourced contracting.

Ootes said he was “flabbergasted” by the current lack of consistency between departments.

In the case of Med-Emerg, he pointed out, “we have a time-frame problem. We go to a southern firm with a sole-sourced contract for $700,000, but we do not have time to go and check with northern firms to see if they can do part or parcel of this whole contract?”

“I don’t believe that,” Ootes charged. “I just don’t believe that delaying that contract would have caused injury to the public.”

Relevance questioned

At one time in the Northwest Territories, sole-sourced, negotiated government contracts were deemed necessary to help local business in smaller communities.

But many question that wisdom now that public spending is increasingly under scrutiny.

“If the government uses a lot of non-competitive bids, how do we know we’re getting value for our money?” Ootes asked.

Nowhere are concerns about sole-sourced contracting more openly expressed than in the construction industry, where the impact of fiscal restraint will mean a sharp reduction in overall work in the coming months.

“The reason people are really upset about negotiated contracts right now,” says Richard Bushey, executive director of the NWT Construction Association, “is that the government has cut back on capital spending by about $60 million this year. Because of that there’s a smaller pie for everyone.”

Bushey said the perception that GNWT departments favor some firms with negotiated contracts creates animosity in the rest of the industry.

“Many people believe it’s a form of political patronage, it’s how to reward people who are in favor with the government.”

$30 million a year?

The legislative assembly’s standing committee on finance estimated the value of privately negotiated contracts to be in the order of $15 million in 1994-95. The member for Yellowknife Centre thinks it could be as high as $30 million.

Worse, critics say, the discussions and decisions regarding the selection and awarding of negotiated contracts are conducted in secret by the territorial cabinet, and are not documented for public review.

“In other jurisdictions in Canada where you have political parties it’s impossible to pull this off because they would be accused of patronage,” Bushey said.

“We don’t have that checks and balances within our system. Consequently that’s why the government does use negotiated contracts this way.”

There were signs from Premier Morin this week that the government had reached an agreement with NTI clarifying its responsibilities under Article 24 of the land claims agreement.

In the Assembly this week, Premier Morin defended negotiated contracts as tools for economic development, explaining that cabinet’s policy was to seek out local, regional and northern expertise in that order.

“There is no room within negotiations to have any southern input at all or any southern benefits from our contracts,” Morin said. “It has to be 100 percent northern or we would not consider it.”

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