Dawson’s $25M sewage contract vindicated

The Yukon government was right to give Vancouver-based Corix Water Systems a $25-million contract to build Dawson City's sewage treatment plant, the territory's bid-challenge committee has concluded.

The Yukon government was right to give Vancouver-based Corix Water Systems a $25-million contract to build Dawson City’s sewage treatment plant, the territory’s bid-challenge committee has concluded.

The committee was asked to look into the tendering process after Whitehorse-based Ketza Construction made a stink over the rejection of its $16.5-million bid last April. The bid was rejected on technical grounds.

There were many mistakes in the bid evaluation, said Ketza’s president Peter Densmore, who, at the time, outlined the perceived goofs in a 15-page letter.

He claimed he was penalized for, among other things, promising to finish the project on time.

He accused the territory’s technical consultant of “professional misconduct.”

And he derided Corix’s proposal as a “white elephant” in the making.

Ketza’s subcontractors chimed in. Some complained the work ought to go to Yukoners, rather than Outside contractors.

Another, Dan Huras of Calgary’s Sapphire Group, wrote an angry letter to federal Transport Minister John Baird.

But the bid challenge committee found little evidence to support Densmore’s claims.

“Ketza Construction was not deliberately treated unfairly and no obvious bias existed against it,” the committee’s report states. “The government accepted the better proposal.”

Densmore is now uncharacteristically quiet. Over the past month he’s been asked repeatedly to comment on the committee’s conclusions.

Several phone messages for him have gone unreturned. The three times he answered his phone, he brushed the Yukon News off, saying he was too busy to talk and making unfulfilled promises to return the call.

“I’ll call you right back,” he said yesterday afternoon. As of deadline this morning, he had not.

Ketza’s bid received a failing grade of 45 per cent. The bid challenge committee concluded “the awarded points gap spread between Ketza Construction and Corix Water Systems appeared reasonable.”

That’s not to say the tendering process was free of confusion or mistakes.

Perhaps most damningly, the committee judged the contract’s evaluation team – made up of representatives from the Yukon government and town of Dawson -“appeared to lack the necessary depth of technical expertise.”

As well, “there was the appearance that the evaluation committee relied too heavily on only a single technical advisor,” and “there should have been more ‘voting’ evaluators with a technical background specific to the project.”

To fix this, the committee recommended in the future “all, or at least most, of the ‘voting’ members of evaluation committees have a level of expertise consistent with the nature and complexity” of the project.

The committee also recommended the detailed scoring systems used to evaluate bids be released when a request for proposals is made.

But Jeff O’Farrell, deputy minister of Community Services, disagreed with most of these suggestions.

“There is significant support in the professional procurement community for both the use of technical advisors as non-voting members of evaluation committees, and for not disclosing detailed scoring breakdowns in solicitation documents,” he wrote in response to the committee’s report.

“I also note that, in this particular instance, the complainant did not believe the level of information provided concerning the breakdown of scoring was an issue.”

The committee identified one gaff made by the evaluation committee, having to do with the instructions it gave to bidders to separate technical and financial information.

This is because the contract was value-driven. This means the technical merits of each proposal were judged before their cost estimates. So technical information went into one envelope and cost-related material went into another.

In Ketza’s case, their cost envelope was never opened because they flunked the technical evaluation, so the $9 million price difference between bids was never considered.

But the committee questioned why bidders were instructed to include a detailed equipment list in their cost-related envelope. This prevented Ketza’s detailed equipment list from being considered.

But Ketza’s bid would still have failed, even if its equipment list received top marks, noted O’Farrell.

He calls the equipment list a “very minor” part of the proposal. Its placement in the second envelope is “the only possible example of something being missed,” he wrote.

The committee also suggested that Ketza be paid $26,538 for its troubles, in light of the confusions that occurred. But O’Farrell made it clear in his letter that this won’t happen.

The territory’s contracting regulations won’t let him, he said.

Complaints need to be valid for a payment to be made. But the bid challenge committee never found evidence to support Densmore’s claim that he was treated unfairly, said O’Farrell.

And none of the committee’s own objections “had any bearing on the outcome,” he wrote.

O’Farrell also warned that awarding money to Ketza would set a dangerous precedent that “could cause significant uncertainty and liability in future contracts.”

The bid-challenge committee is made up of members appointed by the territorial government and Yukon’s business community. It doesn’t have the power to overturn the awarding of a contract. Its job is simply to review a case when a complaint is made and make recommendations.

Three members of the committee formed a panel that examined Ketza’s complaint. The panel was screened to ensure none of its members would be in a perceived conflict of interest.

The report was produced by the committee November 3. The report’s conclusions were released by the territorial government this week, accompanied by the government’s response.

Most of the report’s body was withheld by the territory. It states it did so to avoid disclosing Ketza’s proprietary information.

Contact John Thompson at

johnt@yukon-news.com.

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