Special Event and Policy Report Launch December 6th: “Fair & Open Tendering – The Public Costs of Restricted Procurement in Ontario”

· by Huzaifa Saeed

Hamilton, ON, December 6th, 2017: The Hamilton Chamber of Commerce is partnering with the Greater Kitchener-Waterloo Chamber of Commerce, Cambridge Chamber of Commerce to support the launch of a new independent economic analysis report by Hamilton-based Think Tank Cardus and University of Toronto Professor of Economics, Dr Morley K Gunderson titled “Up, Up and Away: The Impact of Restrictive Municipal Tendering in the Province of Ontario”. The report was launched at a well-attended luncheon at the Holiday Inn, Kitchener. 

The report is focused on the Province of Ontario’s provision under the Labour Relations Act that allows Municipalities and School Boards to be formally categorized as “Construction Employers”. As a result, a single labour union can submit an application to be recognized as the exclusive collective bargaining entity for the entire Municipality. Meaning, no other non-unionized private business or even a business with workers unionized with a different union are allowed to bid for contracts with the City.

The current system has created monopolies in some of the province’s largest municipalities, including Toronto, Hamilton, and Sault Ste. Marie. These monopolies limit the number of companies that can be considered for jobs, and thereby restrict otherwise qualified candidates from bidding on jobs.

This system stifles competition and often results in unnecessarily high infrastructure costs. Fair and open tendering would free public employers, like municipalities, from restrictive agreements that prevent them from maximizing tax dollars.

The report provides evidence of this of this for contracts awarded by City of Hamilton under these restrictions as such:

  1. The gap between the winning bid and the next highest bid in Hamilton (restricted since 2005) was more than twice – 105% — as wide as that in neighbouring municipalities (like Halton or Brant) that had open tendering.
  2. And when we compared the gap between the winning bid and the average (mean) bid in open and closed municipalities, the difference was 114% wider; the gap for the highest bid was also wider: 155%.
  3. The Participation of vendors in the newly restricted environment shrunk by over 83%.

The Hamilton Chamber of Commerce has been advocating on the issue for the past decade, more recently our advocacy has been endorsed by the Ontario Chamber of Commerce. The Hamilton Spectator Editorial Board and other media outlets have also raised their concerns.

Speaking further on the impacts, one of the co-authors, Brian Dijkema, Work & Economics Program Director at Cardus stated: “The effect of restricting competition is akin to a kid letting go of a helium balloon: prices go up and up,” says Dijkema. “And the results are the same: you’re crying for more balloons. So, places like Toronto, Waterloo Region, and Hamilton can afford less infrastructure unless they raise taxes or cut spending in other areas, like social programs,” added Dijkema.

With Hamilton facing a significant infrastructure deficit, we hope the report will trigger an evaluation from the Government on the value of open competition.

“Despite endorsement from Municipalities, the Ontario Chamber of Commerce, Unions and Contractors across the Province, we’ve seen consecutive governments and parties on all sides reluctant to respond to our simple recommendation, which is a simple clarification within the Labour Relations Act that Municipalities and School Boards cannot be deemed as construction employers,” added Keanin Loomis, President & CEO of the Hamilton Chamber of Commerce. “With a Provincial Election coming up next year, we hope that today’s discussion is a beginning towards a new movement and coalition, now supported by the robust economic evidence you’ll see today,” added Loomis.

Click here to download the report:  Up, Up, and Away: The Impact of Restrictive Tendering in Municipal Contracting in Ontario

For more information, please contact: Huzaifa Saeed | Policy & Research Analyst | Hamilton Chamber of Commerce | t: 905-522-1151 ext: 230 | e: h.saeed@hamiltonchamber.ca request a ticket.