Departure Bay Tendering Process

Commission Enquiry to BC Ferries

October 18 2007

From correspondence with the Independent Contractors and Businesses Association, the commission gathers that, earlier this year, BCFS tendered road realignment and parking facility work at Departure Bay, worth some $10 million. The assertion is that, unlike similar work at Swartz Bay and Tsawwassen, this was not broadly advertized; and that while several firms did bid after a key telephone invitation originated by your project team, there were still qualified firms who did not have a real opportunity to bid.

Is this true? If so, there would be two issues of concern to us. One is fairness among suppliers. But our main concern would be whether the procurement process can find the best-value contractor for the work — bearing in mind your terminal development programme accounts for a significant part of the price cap growth for performance term two.

In our section 55 determination on the acquisition of the three Super C vessels, we reviewed the procurement process, to satisfy ourselves on this same account: in this case we determined that BCFS was indeed using best practice.

As you know, we do not normally address individual complaints about the company’s service or business conduct, but in this case the matter concerns several suppliers and does raise the broader issue of effective capital deployment.

Would the company please prepare a written explanation and response to the Commission on this matter:

  • outlining the procurement process on the referenced Departure Bay contract(s);
  • clarifying whether in this case there was a deviation from best practice, or from the parallel process used at Swartz Bay and Tsawwassen; and
  • if there was such a deviation, whether the company considers corrective action is warranted, and if so, what.

BC Ferries’ Response to Commission

October 25 2007, stating in part:

“The current overheated climate in the construction industry has led BC Ferries to assess the most cost effective and efficient process for its terminal and marine infrastructure related projects. BC Ferries undertook to create a bid process that not only provided excellent value, but also fostered partnership arrangements, in order to engage qualified contractors on a regional basis during the design period. Significant participation from a broad cross-section of contractors was obtained, ensuring competitive bidding and pricing. The process chosen enhances the ability of BC Ferries to work closely with qualified contractors, improving the design process, and facilitating active participation by experienced and qualified contractors with the resources to complete the project in a timely manner and within an established budget. It also was seen as desirable to proceed on a general contractor model, to facilitate project management and ensure certainty of responsibility for the quality of work performed and the timeliness of such work in an overheated market experiencing shortages of skilled workers. BC Ferries chose to work with certain general contractors through an “Expression of Interest” and short-list competitive bid process.

“The process successfully identified a number of qualified potential bidders. BC Ferries held a meeting and invited twenty–two general contractors that BC Ferries had either worked with on previous occasions or of whom BC Ferries had knowledge through their previous work partners or relevant businesses. The meeting provided an overview of upcoming work at Departure Bay which was divided into three packages: buildings, marine and civil engineering works. Of the twenty-two, only two contractors were capable of bidding on the marine work, primarily due to the specialized nature of the work. The remaining participants were more or less equally divided between the building and civil engineering packages. The number of participants assured competitive bidding.

“If interested in the work, the participants were asked to submit an Expression of Interest. Those respondents were issued a follow up questionnaire that requested further information regarding safety, the contractor’s future commitments, personnel, previous project history, etc. This information allowed BC Ferries to short-list and categorize contractors into the separate bid packages. The following companies were successful in being invited to bid:

  • Buildings: Windley, Robinson, Knappett, Ledcore
  • Civil Engineering Works: Hazelwood, JJM, Copcan, Kato
  • Marine: Fraser River Pile and Dredge, Vancouver Pile Driving

“It should be noted that contractors involved in the process confirmed that the optimum number of general contractors submitting a tender in today’s construction climate would be three or four. This number presents a reasonable opportunity for contractors to win the bid thus encouraging fully developed bids, and for BC Ferries to receive sufficient valid and competitive bids from qualified contractors. It also provides greater certainty as to the ability of the bidders to perform quality work in a timely manner within established budgets.

“The successful general contractors were the following:

  • For the Building package: Knappett Projects Inc.
  • For the Civil Engineering Works package: Hazelwood Construction Services Inc.
  • For the Marine package: Fraser River Pile and Dredge Ltd.

“BC Ferries is confident that the approach taken in the Departure Bay bid process was appropriate to the current construction climate and resulted in advancing the following objectives:

  • Engagement of bidders able to manage a large project and retain responsibility for timely delivery of the project within an established competitive budget in a challenging construction market
  • Improved quality of bids – the short-listed contactors were able to participate in the design stage and this improved the understanding of the project scope and resulted in “tighter” bids.
  • Achievement of greater cost effectiveness – by limiting the number of contractors, BC Ferries was able to engage qualified contractors that would put in the time/energy to produce a fully developed “tighter” bid with competitive pricing.
  • Support of local contractors.”

Commission Position

at October 31 2007

The Commission proposes no further action.