Cabinet rejects lowest bid on Rankin contract

In a decision that appears to put politics ahead of fiscal prudence, Nunavut cabinet ministers have thrown their contracting policies out the window and rejected the lowest bidder in a public tender for construction of Rankin Inlet’s new $13-million health centre.

The move will cost the Nunavut government roughly $540,000 more than it would otherwise pay. It has also decided to handle it as a “negotiated” contract, not a public tender.

“What exactly are they buying for half a million dollars? If half a million dollars and a really good benefits package didn’t win the contract for us, then what I need to know is what would have won the contract for us,” said Alan Vaughan, the executive vice-president of Ninety North Construction and Development, in a telephone interview with Nunatsiaq News this week.

Vaughan, whose firm submitted the lowest bid for the job in response to a routine public tender, said cabinet’s decision sends a bad message to businesses.

“It’s not just an issue for us, it’s an issue for any company bidding on any government contract. Is the government now reserving the right to set aside tender results? What are the ground rules?” Vaughan said.

After a special cabinet meeting before the start of their sitting in Baker Lake last week, a majority of Nunavut cabinet ministers agreed to award the work to a joint-venture firm comprised of two companies: the huge Clark Builders firm of Edmonton, and the much smaller Sanajiit Construction Ltd. of Rankin Inlet.

Nino Wischnewski, the GN’s director of communications, said civil servants in the department of public works recommended Ninety North, but that cabinet rejected that recommendation.

“The contract need not go to the lowest bidder. Cabinet is well within its rights to make a decision that might be different to the recommended proposal. Public Works did recommend the lowest bidder, and cabinet decided that the civil service makes the recommendation and the cabinet decides. In this case, they decided that they didn’t wish to go with the lowest bidder and they went with another company,” Wischnewski said.

Wischnewski said the job is now being handled as a negotiated contract between the GN and Clark-Sanajiit.

“What happened in this case is that Sanajiit-Clark committed to working with subcontractors to maximize the use of local Inuit labour in all trade disciplines involved in this project, and will also work with agencies to create training programs,” Wischnewski said.

Political lobbying?
Public tender documents show the Clark-Sanajiit firm submitted a bid of $13.439 million. That’s roughly $540,000 higher than Ninety North’s bid of $12.908 million.

Anonymous sources in Rankin Inlet and Iqaluit allege some cabinet ministers supported Clark-Sanajiit in response to political lobbying and arm-twisting.

“We were informed that this was a decision made by politicians. We can only assume that because our bid was overturned, that it took politicians to be able to do that,” Vaughan said.

But he wouldn’t comment on suggestions that political lobbying caused his firm to be rejected against the advice of Nunavut civil servants.

Clark Builders brags on its Web site (www.clarkbuilders.com) that the use of its own “skilled in-house crews” is what gives the firm a competitive advantage.

“Ninety-eight per cent of our buildings we erect with our own crews, and I would never give it up for the world,” a Clark employee is quoted as saying in a promotional blurb published on the Web site.

Sanajiit, its smaller partner in the joint-venture, is owned by the Evaz Group of Companies, based in Grimsby, Ont.

Vaughan said the Clark-Sanajiit joint-venture is not on the list of Nunavut companies eligible for bid adjustments under the Nunavummi Nangminiqaqtunik Ikajuuti policy, or NNI. The NNI is based on an arithmetical formula that gives bid reductions to Nunavut-based firms.

“The contract was actually won by a company that is not NNI-listed. But even the NNI policy results in a bid adjustment. It does not say that you can chuck somebody’s bid out,” Vaughan said.

Ninety North isn’t on the NNI list either. But Vaughan insists his company has a solid record in Nunavut of hiring and training Inuit labour, and farming out work to local sub-contractors.

“We’re one of the groups that move Inuit between communities to work on construction projects…. We’ve participated in a lot of training programs and we have a very high participation rate. We’re more than prepared to have our track record matched against that of Sanajiit or Clark Builders,” Vaughan said.

Lowest bid under NNI
Any company, whether it’s Nunavut-owned or not, may receive competitive bid adjustments based on commitments to hire Inuit labour and local sub-contractors.

“It is our understanding, although we don’t have the documents, and we have been orally advised, that after the bid-adjustment process under the NNI, we had a superior bid under the NNI. We still had the best bid,” Vaughan said.

Ninety North has nearly finished work on Inuvik’s $40-million replacement hospital, in partnership with a firm called Stewart Olson. It is building the Cambridge Bay health centre, in partnership with the Inuit-owned KitNuna Corp., and health centres in Holman Island, Pond Inlet and Igloolik.

“It’s our understanding that the only reason you can set aside a low bid is if you fundamentally believe that someone does not have the capacity to complete the work according to the tender. We have lots of experience and we certainly have the capacity,” Vaughan said.

Don Worall, the executive director of the NWT Construction Association, which represents companies in Nunavut and the Northwest Territories, said the association is contacting the Nunavut government to find out why it rejected the lowest bidder on the Rankin Inlet job.