Efficiency and competitive pricing are virtues in the business world, but the Yukon government’s forestry branch punishes companies that exhibit these qualities when bidding for contracts, claims one upset logger.
“They’re punishing me for being too efficient,” said Romeo Leduc of Haines Junction, who has worked as a logger for 34 years and is president of Duke Wilderness Shows.
Not so, counter territorial officials, who insist their procurement practices are fair.
Part of Leduc’s business is to plan timber layouts. He maps forests and advises logging companies what to cut and what to leave behind, and he estimates timber volumes.
He’s not impressed with how the territory calculates the value of this work.
Yesterday, bidding closed on a contract to prepare for logging a swath of land near Teslin that contains, by Leduc’s estimate, approximately 125,000 cubic metres of timber.
He didn’t bid on the contract. He’s still bitterly upset from the results of his last try, in 2006, to secure similar work near Dawson City.
“It’s a waste of my time,” he said.
When the forestry branch evaluates bids on layout contracts, it determines 40 per cent of a bid’s worth based on its price.
But the best price isn’t the lowest. It’s the one that happens to be closest to the median average of all bids.
Any bids that are either considerably above or below the median lose many points in this marking scheme.
Leduc’s bid fell far short, at $50,250, when the average price was $91,854.
Pricing aside, the remainder of Leduc’s bid received a score of 76, putting him at the bottom of the pile. Environmental Dynamics Inc., which won the contract, had a bid score of 98.
Leduc insists the scoring methodology is “vague” and “subjective,” and that he was marked down for having too small a company, despite his capability of doing the work.
“They don’t evaluate anything that’s of value to a logger, like dollars per cubic metre,” he said.
Dwayne Muckosky with the forestry branch disagrees. “What we’re looking for is fair work for fair value,” he said.
This method of ranking prices is not unheard of in government procurement. The intent is to filter out bids with outlandishly high or low prices.
Alberta grades bids in a similar manner, said Muckosky.
If the forestry branch isn’t satisfied with any of the bids it receives, there’s no obligation to award the contract, Muckosky said.
“We could redo it, or we could just cancel the process,” he said.
And for the past two years the forestry branch has retained the services of procurement experts National Education Consulting Inc., a firm that counts as clients the provinces of BC, Alberta and Ontario.
But Leduc contends that this way of evaluating bids drives up the price, because contractors don’t want to find themselves bidding too low.
And these inflated prices aren’t used for just one contract. They’re incorporated into standing-offer agreements and applied to other work over three years.
Leduc believes he could do the work for one dollar per cubic metre. He expects competitors to secure the job for about three times that amount.
The winners in this arrangement are Leduc’s BC-based rivals who have received the bulk of the territory’s layout work, he insists. The losers are small, Yukon-based companies like his.
Leduc maintains these bigger companies have done a poor job assessing the volume of wood fiber in a lot. Making the situation even worse is the territory’s practice of putting in logging roads and later charging an engineering levee to loggers, which Leduc says creates an exorbitant cost for doing business in the territory’s forests.
Rather than helping to grow the forestry industry, which the territory states is one of its goals, “they’re killing it,” said Leduc.
Contact John Thompson at