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Monday, August 5, 2013

Buying local in the far Northwest Territories

Protest over contract to south
The city of Yellowknife recently awarded the contract to build Yellowknife's new water treatment facility to Ontario-based NAC Contractors Ltd. which submitted a $30,280,950 bid for the project. Northern companies Det'on Cho Nahanni Construction Ltd. and Clark Builders put in respective bids of $30,978,876 and $31,153,755, but because the procurement for the project had gone through an invitation to tender, the contract had to legally be awarded to the lowest bidder.

"I don't believe the city does enough to ensure this work stays North," said Bob Doherty, president of the NWT and Nunavut Construction Association. "They just take this attitude that we have to follow the provisions of this inter-provincial trade agreement, so we can't do anything, when in fact they can," said Doherty.

"The bottom line is that Northern companies should get Northern contracts," added Leslie Campbell, executive director of the Yellowknife Chamber of Commerce. "We've developed a construction industry that is second to none. These companies know what it's like to build in the North, they understand our local labour force, they are facing higher costs, and they understand the cost of doing business here," said Campbell.

Campbell said while there is no point dwelling on the water treatment facility, the city should look at finding ways to keep future contracts from going south. "The point is what can council do going forward to make sure this doesn't happen again," said Campbell. "It's time to take a look at this."

The greatest barrier to the city's ability to give preference to local contractors is the Agreement on Internal Trade (AIT), which was an inter-provincial agreement signed by all Canadian provinces and territories in 1995. The purpose of the agreement is to reduce and eliminate barriers to free trade within Canada.

In 1999 all provinces and territories, except for the Yukon and Nunavut, signed Annex 502.4 of the AIT, which binds municipalities to the agreement and prevents them from showing preference toward local businesses when they award contracts. The GNWT, however, has an exemption written into the AIT, which allows it to apply its Business Incentive Policy (BIP) to the tendering process for territorial projects.

The policy, which was adopted in 1976 and was subsequently grandfathered into the AIT, was created to level the playing field for Northern businesses by compensating contractors for the higher costs associated with operating a business in the North. "There's a recognition that it is a relatively high cost place to operate. And if you have a bigger domestic business sector it gives a lot of spinoffs in terms of jobs and training and experience. It's a good thing," said Kevin Todd, director of investment and economic analysis with GNWT's Department of Industry, Tourism and Investment.

The BIP allows for a set of fixed percentages to be applied to adjust the cost of bids based on the territorial and local content of certain contracts to a maximum of $500,000.

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