FEDERAL INFRASTRUCTURE BONANZA JUST A TRICKLE SO FAR
- 14 Jan 2017
- National Post – (Latest Edition)
- CLAIRE BROWNELL Financial Post
INFRASTRUCTURE BONANZA JUST A TRICKLE SO FAR
THERE COULD BE HUGE SAVINGS OUT THERE. INDUSTRY SHOULD BE UP IN ARMS.
The federal Liberals have been talking up their $ 60- billion infrastructure plan since the election, but there’s been little concrete progress to show for it so far.
In the 12 months since Prime Minister Justin Trudeau took office on Nov. 4, 2015, the federal government awarded $9.6 billion in contracts. That’s about one-third of the $ 28 billion awarded the previous year during the Conservatives’ final year in office, a Financial Post analysis has found.
In opposition, the Liberals relentlessly pushed the Conservatives on open competition in military contracts. In government, however, the overall proportion of contracts the Liberals awarded without a competitive process has been 17 per cent, the same as the previous regime.
But the dollar value of sole-sourced contracts awarded by the Liberals actually increased. About onequarter of the value of contracts awarded under Trudeau went to non- competitive deals compared to 14 per cent during former prime minister Stephen Harper’s final year.
The Liberals campaigned on an infrastructure spending bonanza to boost the economy, but, just as important, they promised a transparent, modernized procurement system to facilitate it all. More than a year into their term, Canadian companies and workers are still waiting for the promised spending, job creation and system changes to materialize.
The importance of a competitive and efficient procurement system to the economy is no small thing. Public procurement, or the purchase of goods and services by governments and government- owned businesses, accounts for about 12 per cent of the gross domestic product of developed countries.
On Tuesday, the Parliamentary Budget Officer released a report noting the announced infrastructure money isn’t being spent as quickly as the government promised.
“There is a growing risk that money the government originally expected to be spent in 2016-17 will actually generate economic activity in subsequent years,” the report said.
In a statement, Public Services and Procurement Canada noted most of the difference in spending between the current and previous governments comes from three multi- billion- dollar contracts awarded during Harper’s final year, including a new bridge for the St. Lawrence Corridor and new naval ships from Irving Shipbuilding Inc.
Public Services and Procurement Minister Judy Foote s aid changes are underway to make the procurement system more transparent, less complicated and technologically up-todate.
“Canadians expect modern tools from their government,” Foote said. “I am committed to finding innovative and modern approaches to procurement to generate meaningful economic and social benefits for Canadian industry and create good, middle- class jobs for Canadians.”
Federal Finance Minister Bill Morneau said Friday he’s comfortable with the amount of infrastructure money the Liberal government has managed to get into the economy, despite the PBO report questioning the speed of the federal government’s spending program.
“We have a significant number of projects already underway. The numbers are actually, from our perspective, in the range that we expected,” Morneau told reporters after emerging from a meeting with private sector economists in Toronto.
But interim procurement ombudsman Lorenzo Ieraci, who reviews complaints related to federal contracts and reports to the Minister of Public Services and Procurement while working at arm’s length, said he’s still waiting for talk to translate into action.
“I’ve been told stuff is being worked on, but I can’t give you anything specific,” he said. “I can’t point to anything tangible that’s being done.”
There are plenty of plans, however. In the fall, the Treasury Board of Canada Secretariat told the office of the procurement ombudsman that a new centralized database for government contracts would be available by Jan. 1. A spokesman for the treasury board said the cabinet committee now intends to publish centralized data for the first quarter of 2017 by April 30.
Last April, Public Services and Procurement Canada announced plans to move the procurement process from a paper- based system to an electronic one. At the time, the ministry said it planned to award a contract for the new e- procurement system in the fall of 2016, but the government is still in the process of accepting bids from interested suppliers.
Under the current system, companies trying to figure out whether a market exists for their products or services have to first figure out which of four websites has the information they’re looking for. From there, they can only break down information into broad categories.
For example, it’s possible to calculate how much the federal government spent on medical, dental and veterinary supplies in a given time period, but not how much it specifically spent on, say, needles.
Former procurement ombudsman Frank Brunetta bluntly summarized the situation in a report filed at the end of his term in December 2015.
“Transparency, information disclosure as a means of holding public officials accountable, is opaque in Canadian federal procurement,” he said. “Anyone suggesting otherwise is inflicted with a severe case of credulity, is misinformed or is just plain dishonest.”
Allan Cutler, a former public servant best known as the sponsorship scandal whistleblower who now runs a procurement consultancy, said he’s not optimistic the Liberals’ proposed changes will result in meaningful improvements.
He brought up the Phoenix pay system implemented last year, which was supposed to automate the payroll of federal employees but instead resulted in delayed or incorrect paycheques for about 80,000 workers.
“Every time they try to do a system, it costs way more money than what they said it was going to and it usually doesn’t work as well as they thought it would,” Cutler said. “Nothing is simple.”
Tracking sole- sourced contracts certainly i sn’ t simple.
Cutler said the true number is underreported, with many going unchallenged because suppliers don’ t want to upset the government departments they’re trying to woo as clients.
The Harper government came under frequent criticism for sole- sourcing large defence contracts, such as its plan to purchase Lockheed Martin’s F-35 fighter jet without a competitive process. The Trudeau administration has yet to award any contracts worth more than $ 1 billion, but the track record in its first year suggests it is sole- sourcing just as often.
“There could be huge savings out there,” Cutler said. “Industry should be up in arms.”