June 13, 2019
Toronto District School Board
5050 Yonge Street, North York, ON
Re: 2019-20 Proposed Balanced Budget Plan
Dear Dr. John Malloy and Trustees:
We’re urging you not to be misled by rhetoric and misinformation aimed at discounting the millions of dollars in savings the board could realize by embracing Bill-66.
First, Stephen Bauld’s recent comments questioning the major cost savings that result from opening up construction competition at the Toronto District School Board lack any credibility whatsoever. It’s worth reminding you that Bauld co-authored a research paper called “Hiding in Plain Sight.” That paper, evaluating the merits of construction competition, suggested that increasing the pool of bidders could result in savings ranging from 20 to 30 percent on public construction projects. The paper also concluded the following:
- “Numerous studies have shown that these closed tendering arrangements lead to significantly higher costs for taxpayers without providing any clear benefits in return.
- “Limiting public procurement by union affiliation does not promote the public interest.”
- “The results of this paper should cause politicians, regardless of their partisan affiliation to find cause to remove the “construction employer status” obstacle from public bodies’ bidding practices. The result will be a more open, fair and transparent bidding environment in Ontario – and one which will help the government achieve its difficult objective of balancing the budget.”
- “Closed tendering can also undermine workers’ rights to choose what organization they associate with and restrict their ability to work on the public contracts that their own tax dollars fund.”
Bauld highlights several of his “Hiding in Plain Sight” findings in this YouTube video, in which he says: “By reducing competition the price escalates tremendously … what is the point of closed tendering. What is the point of not getting value for money and how does it affect the taxpayer …”
It’s also worth noting that from one of Bauld’s own textbooks on procurement, he states the following:
- “A party conducting a tender process is well advised to structure it in a way it in a way that attracts the maximum number of bidders.”
- “A greater number of bidders is more likely to lead to greater value for the purchaser; a government is more likely to receive better quality construction for a lover price as the number of bidders increase.”
- “Put simply, reducing competition increases price.”
Since the publication of “Hiding in Plain Sight,” Cardus, the Hamilton based think tank, has partnered with noted procurement scholar Dr. Morley Gunderson from the University of Toronto. Together they’ve conducted further and more extensive research on the cost implications of limiting competition on public construction work. That research again confirms that competition leads to cost savings.
There is a growing global body of research confirming the benefits of an open construction market. For example, a study published in the Journal of Construction Engineering and Management by Cornell professor Paul G. Carr, concludes: “On taxpayer funded construction projects, government officials should be doing all they can to find savings and increase competition. It is in the public interest.”
Carr, who is well recognized and respected for his research in the field of public procurement also finds that increasing competition not only adds more contractors to the mix, but also subcontractors and suppliers, all of whom are forced to sharpen their pencil to win contracts. “As the additional prime bidders involve their favourite suppliers and subcontractors to the project, the overall competition increases at all levels. The more interaction among the prime contractors and subcontractors, the more opportunity for the cost implications of that creativity and competition to be carried through to the low bid offered.”
The TDSB does not have to revert back to granting only certain unions an exclusive contract on construction work. When construction costs are higher, we all know that fewer funds are left over for student programs and services. But it doesn’t have to be this way.
Quibbling about the amount of cost savings is pointless. Even by the most modest of measures the board will save taxpayer dollars by embracing Bill-66. Faced with a major budget shortfall, is the board really in a position to discount any savings that could save programs and prevent cuts?
Bill-66 is a better way and a much fairer way to address the board’s funding shortfall. Putting students and parents first should be the priority, not protecting select labour groups who’ve had it too good for too long, at the public’s expense.
Vice President and Regional Director, Ontario
Progressive Contractors Association of Canada