Let the Elections Begin
Ontario is deep in municipal election campaigns across the province. One issue without question within Ontario governments is the need to address an increasingly aged and inadequate public infrastructure system.
Investment in infrastructure is a key concern for citizens and politicians, but the million dollar question is how to pay for it. Well one would suppose higher taxes, special levies, unique financing schemes and cuts to other spending are being thrown around. One question that does need to be asked is how taxpayers can get their improved infrastructure via more efficient spending of the current dollars available and eliminate a system that is increasing the risk of fraud, waste, and corruption.
A report by Cardus (a think tank dedicated to the renewal of North American Social Architecture), found a wee little provision of the Ontario Labour Relations Act that is allowing some municipal construction projects to cost 20 to 30% more than they should. This provision allows municipalities to practice “closed tendering” – where only companies whose employees are members of a specific union are eligible to bid on public construction projects. So what’s the problem with that? If there are only three lucky companies who are members of that specific union, the bidding skyrockets, and lucky lowest bidder (20 to 30% higher than it should be) gets hired. And that equals more tax dollars being spent.
Toronto, Hamilton, and Sault Ste. Marie already work on this system – Waterloo is soon to jump on the band wagon of wasteful spending. Need an example? In the City of Kitchener, the lowest bid submitted for a simple brick public washroom building in a park came in at $564,744 – 40% higher than a budget of $400,000 that some already thought was already too high.
Need another example of this governmental mismanagement? $143 was spent to install a pencil sharpener at a Toronto school… was it gold plated?
Less competition results in higher prices. Governmental waste of tax dollars is nothing new. There are many cases of fraud, waste and abuse. But this engagement of closed tendering is a puzzling practice. It goes against the principal of public procurement policy (doing what’s right for the citizen essentially) and reduces transparency, and fairness. As such, costs are higher as are collusion and corruption. Competitive bidding between limited (and chosen) companies is a flawed system. And local companies are prevented from bidding on these projects.
Testimony at the Charbonneau Commission provides oodles of examples of fraud, waste and corruption in closed tendering for the construction industry – public procurement is the governmental activity that’s most vulnerable to fraud and corruption.
The Public Is Tired of Paying More Than It Should
It’s safe to say the public is questioning closed tendering as a practice. Nobody can find this system effective or efficient. There is simply no public policy objective being served – those who defend closed tendering are either the unions benefiting from the system, or the politicians who allow it to happen.
When construction projects are tendered in such a way that costs rise 20 to 30%, there’s clearly something wrong. Case in point, the $143 pencil sharpener being “constructed”.
Government agencies are responsible for managing and monitoring the disbursement of billions of dollars of public funds. Demands for transparency and accountability have been the highlighted focal point during increased negative media exposure.
It’s vital for government, local and federal, to take proactive measures to combat fraud and misuse of funds while supporting positive public perception.