Losing bidder raised concerns about new Stanton Hospital contract

One of the failed bidders for the new Stanton Territorial Hospital raised concerns that the winning contractor may provide sub par maintenance services such as cleaning, waste management and security, according to an independent, third-party fairness report.

2 complaints made to fairness advisor reviewing bidding process

Construction is well underway on the new Stanton Territorial Hospital in Yellowknife. (Guy Quenneville/CBC News )

One of the failed bidders for Yellowknife's new Stanton Territorial Hospital raised concerns that the winning contractor may provide sub par services such as cleaning, waste management and security, according to an independent fairness report.

The Final Fairness Advisor Report was released in November 2015. It reviews the process by which the N.W.T. government selected Boreal Health Partnership as the successful bidder to take charge of the project.

The process was "fair, open and transparent" and "respected all the principles of fairness and is free from bias or favouritism," says the report.

There were three key players competing for the $750 million contract to design, build and run the territory's largest hospital: Boreal Health Partnership (the winner), Plenary Health and EllisDon Corporation. The three companies were each asked to submit proposals, which the government assessed and scored.

The fairness report reveals that one of the two unsuccessful companies was not convinced of the government's decision to award the contract to Boreal Health Partnership.

'Cough up more money or live with an inferior product' 

On Sept. 4, 2015, one of the unsuccessful companies submitted two complaints for the fairness advisor to review. The first questioned the "reasonableness" of Boreal Health's proposed rates for "soft services" such as hospital cleaning, landscaping, security personnel, reception, parking control, waste management and repairs.

"The unsuccessful bidder is looking at what [Boreal Health] did and they're saying 'look, in our opinion, there's no way that they can deliver the goods and services based on the prices they submitted,'" says Fraser Johnson, a professor specializing in purchasing with Western's Ivey Business School.

"So maybe the building won't be cleaned as often, maybe the landscaping won't be what they originally expected them to be, and to be able to get it up to what the original spec was, the government is going to have to cough up more money or they're going to have to live with an inferior product."

Johnson offered another possible explanation. He says that Boreal Health may have found a lower cost source.

"Maybe they have other projects in the area, maybe they have better relationships with their suppliers."

The second complaint raised issues of discrepancies in the project documents, questioning the "conformance" of the final project contract to the initial request for proposal document, as well as with Boreal Health's proposal.

The fairness advisor reviewed and responded to both complaints, stating that "prices received were reasonable" and that they are "satisfied" with the consistency of their proposals and contracts.

One of the failed bidders raised concerns that winning contractor Boreal Health Partnership may provide sub par maintenance services such as cleaning, waste management and security, according to an independent, third-party fairness report. (CBC)

No concern at all, says GNWT 

The N.W.T. government refused to answer questions relating to the content of the proposals but said that it is confident in Boreal Health's plan that "met the requirements" and is not worried about the quality of services that the company will provide, despite the losing bidder's complaint that Boreal undercut costs.

"We have no concern at all," said Mike Burns, the assistant deputy minister of N.W.T.'s Public Works and Services.

When asked about what controls are being implemented to avoid the risk of overspending millions of public money — which Boreal Health, led by Carillion, had done in the past with the Royal Ottawa Health Centre and the William Osler Hospital in Brampton — the government said that the company will "assume the risk for the delivery of the project" and pointed to its 2,113-page project agreement.

"Those things are in there," said Burns.

Plenary Health responded to CBC News, but was ordered to not provide comment by the territorial government "due to confidentiality and issues related to the competitive process."

EllisDon could not be reached for comment.

The two unsuccessful companies were awarded honoraria for their participation, but the government said it cannot disclose the amounts.

'Only time will tell which side of this is right'

Unsuccessful bidders coming out with allegations are not unusual, says Marvin Ryder, a professor at McMaster's Degroote School of Business who also served on the board for the construction of Hamilton Health Sciences, the second largest hospital in Ontario.

"Look, no one likes to lose a $300 million contract, so it's not unusual one person makes a couple of allegations against another one — saying 'you know, I don't know why you picked them, because…'" says Ryder.

"Only time will tell which side of this is right."

But he says in his experience, this process was smooth compared to big projects in Ontario.

"I have seen situations where every loser says something was wrong and they've all got a list, not just two [concerns]."

Ryder says it's "unusual" to have the government issue an independent fairness report for projects, and applauds the N.W.T. government for its thoroughness.


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