The $85 Million Manitoba Hydro Contract Controversy: A Case Of Looking For Phantom Monsters Under The Bed?

Posted on March 1, 2016


Earlier today, an old friend from Winnipeg posted a CBC News article on Facebook titled “$85M contract with Manitoba Hydro was not tendered” with the sub-title “Manitoba Hydro says contract was justified, but won’t say why for competitive reasons.”

Based on a cursory view of the above headline, one might be inclined to jump to the cynical conclusion that something is amiss. Perhaps something unsavory, if not illegal.

The truth is that such sentiments are based on the persistent and outdated view that purchasing – especially in the public sector – is all about getting the absolute best price through a love all- serve all, open bidding process.

While this approach may work when you are dealing with commodity items that are readily available through unlimited sources in which little after sale support is required, complex projects are little more, well . . . complicated. Projects such as the one referenced in the $85 million Manitoba Hydro article is one such example.

In 1972, The Brooks Act was passed in the United States. Basically, it requires the U.S. Federal Government to select engineering and architecture firms “based upon their competency, qualifications and experience rather than by price.” It is a logical approach for two reasons . . . 1) lowest cost is widely recognized as the poorest criterion for service selection and, 2) the services are highly specialized and cannot be properly priced until the project has begun. While there is always the potential for abuse, given the circumstances it is about time that Government’s in Canada adopted the same approach. Certainly studies such as the following would support this position; 

The above is the comment I posted on the Facebook stream discussion, in which I made reference to the possible basis for what appears to be a Quality-Based Selection or “QBS” contract award by Hydro.

While I do not have all the details at this particular point in time in terms of the specifics of the award of a single-source contract to Tetra Tech, it is certainly not an unusual procurement method given the nature of the work being done.

I will of course follow-up on this story, and keep you posted.

MB Hydro1


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